Fixed-term employment contract – when a lawsuit for indefinite employment is worthwhile

Your fixed-term employment contract is expiring, and no one is talking about an extension. Or worse: you find out three weeks before the end that there will be no further employment. Now you are faced with the question of whether you have to accept this - or whether you can fight back against it.

The answer depends on whether the fixed-term nature of your employment contract was actually effective. This is because many fixed terms are not. And if the fixed term is ineffective, you are entitled to continued permanent employment under the Part-Time and Fixed-Term Employment Act (TzBfG). You can enforce this claim with a lawsuit for permanent employment – also known as a fixed-term review lawsuit.

Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. This article provides general legal guidance and does not replace individual legal advice. Fixed-term contract issues are often complex in practice and require an examination of your specific employment contract. Please contact a for advice regarding your situation. Employment lawyer.

What is an injunction?

A claim for continued employment is a declaratory action brought before the labour court. It is not directed against a dismissal, but against the fixed-term contract itself. The objective: The court is to determine that the agreed fixed term was invalid and that the employment relationship continues indefinitely beyond the intended end date.

The legal basis is found in § 17 of the TzBfG. It states in essence: Anyone who wishes to claim that the fixed-term nature of their employment contract is legally invalid must file a lawsuit with the Labour Court within three weeks of the agreed-upon end date. The lawsuit for permanent employment is therefore functionally related to the Ruling of the Federal Labor Court – it follows a similar deadline mechanism and serves the same fundamental purpose, but it is an independent type of legal action under the TzBfG, not a sub-category of § 4 KSchG.

If the lawsuit is successful, the employment relationship will be treated as if it had been permanent from the outset (§ 16 TzBfG). It will then not end automatically, but only through a regular termination – with all the requirements that the Protection Against Dismissal Act (KSchG) imposes.

When is a fixed-term employment contract actually effective?

The Part-Time and Fixed-Term Employment Act provides for two basic forms of fixed-term employment: fixed-term employment with a factual reason and fixed-term employment without a factual reason. Both are subject to strict requirements. If these are not met, the fixed-term employment is invalid – and therefore contestable.

Firstly, an important distinction: the law knows, alongside the Time limit (calendar-related fixed-term contract with a fixed end date) also the Fixed-term contract (§ 3(1) sentence 2 of the German Fixed-Term Employment Act). In the case of a fixed-term contract for a specific purpose, the employment relationship does not end on a fixed date, but when a specific purpose is achieved – such as the completion of a project or the return of the employee being covered. Special rules apply to fixed-term contracts for a specific purpose: The employer must inform the employee in writing at least two weeks before the end (§ 15(2) of the German Fixed-Term Employment Act), and the three-week period for bringing legal action only begins after receipt of this notification. Fixed-term contracts for a specific purpose can also be ineffective and be challenged with an action for an indefinite contract.

Fixed-term employment with a factual reason (§ 14 para. 1 TzBfG)

Fixed-term employment with a factual reason (Sachgrund) is generally always possible if a recognised reason exists. § 14 (1) sentence 2 of the Fixed-Term Employment Act (TzBfG) names eight examples. The list is not exhaustive – the word „especially“ in the legal text makes this clear. In practice, however, these factual reasons are particularly relevant:

• Temporary operational requirement (No. 1): The most common – and most frequently judicially reviewed – objective reason. The employer only needs the employee's labour for a limited period, for example for a specific project or to cope with an increase in orders. The crucial factor is that at the time of concluding the contract, there was a plausible forecast that the need would actually cease to exist. General uncertainties about the order situation are not sufficient. This is precisely where many fixed-term contracts fail: If the supposedly „temporary“ need extends over years or the employee performs permanent tasks, the objective reason does not justify the fixed-term contract.
• Representation of another employee (No. 3): The classic case – someone is on parental leave, has a long-term illness, or is on sabbatical. The fixed-term nature of the replacement must be objectively justifiable. If the replacement is repeatedly renewed without an foreseeable end, this can become an abuse of rights.
• Trial (No. 5): The employee should first be tested before a permanent employment relationship is established. However, the duration of the fixed term must be reasonable. The Berlin-Brandenburg Regional Labour Court ruled in 2024 that a four-month probationary period for a one-year fixed-term contract is disproportionate (LAG Berlin-Brandenburg, judgment of 2 July 2024 – 19 Sa 1150/23). This decision has not yet been confirmed by the Federal Labour Court, but it provides guidance on proportionality.
• Peculiarity of work performance (No. 4): This concerns primarily artistic, editorial, or scientific activities where the fixed-term nature is justified by the nature of the work itself.
• Household remedies (No. 7): Concerning public service – if remuneration is funded from the budget allocated specifically for temporary employment.

The factual reason must already exist at the time the contract is concluded. If it subsequently ceases to apply, this does not retroactively invalidate the original fixed-term contract – but it can be an indication that the factual reason was merely a pretext from the outset.

Fixed-term employment without a statutory ground (§ 14 para. 2 TzBfG)

Without a factual reason, an employment contract may be fixed for a maximum of two years. Within these two years, a maximum of three extensions are permitted. This sounds straightforward – but the details make it complicated.

„In a legal sense, “extension" means merely postponing a date, and nothing else. If the extension is accompanied by a salary adjustment, an agreement on a different role, or a change in working hours, it is not considered an extension but a new contract. And a new contract without a specific reason is not permissible if a previous employment relationship with the same employer already existed.

This so-called prior employment ban (£ 14 (2) sentence 2 TzBfG) has a chequered history of case law. The Federal Labour Court initially relaxed the regulation in 2011, restricting it only to prior employment within the last three years. In 2018, the Federal Constitutional Court corrected this interpretation (BVerfG, 6.6.2018 – 1 BvL 7/14): as a general rule, the ban applies indefinitely. In a constitutionally compliant interpretation, exceptions are only possible if the previous employment a very long time ago, entirely different in nature and of very short duration been. The BAG further specified these criteria in the subsequent decision 7 AZR 452/17: In that case, a gap of 22 years with a completely different previous occupation was sufficient for an exception. However, with a previous employment in a comparable function only a few years ago, the prohibition will regularly apply.

Comparison: Fixed-term employment with a statutory reason vs. fixed-term employment without a statutory reason

	Fixed-term employment with a substantive reason (Section 14 Paragraph 1 of the Part-Time Employment Act)	Dismissal without a specific reason (Section 14, Paragraph 2 of the Part-Time Work Act)
Maximum duration	No legal limit	Maximum 2 years
Extensions	Unlimited, as long as there is a legitimate reason	Maximum 3 extensions
Previous employment	Irrelevant	Generally excluded if there was already an employment relationship with the same employer.
Written form	Mandatory (§ 14 para. 4 TzBfG)	Mandatory (§ 14 para. 4 TzBfG)
Typical risk for the employer	There is no substantive reason or chaining of fixed-term contracts is abusive	Extension with substantive changes, previous employment overlooked, written form violated
Special provisions	Science (WissZeitVG), Universities	Start-ups: up to 4 years (§ 14 (2a) TzBfG); Employees aged 52 and over: up to 5 years (§ 14 (3) TzBfG)
In case of invalidity	The employment relationship is considered to be concluded indefinitely (§ 16 sentence 1 TzBfG)	The employment relationship is considered to be concluded indefinitely (§ 16 sentence 1 TzBfG)

When does a permanent employment relationship arise – even without legal action?

You do not need to file a lawsuit in every case to obtain an indefinite employment contract. The law provides for several scenarios in which the contract is automatically extended indefinitely:

• Continuation of work after contract termination without objection (§ 15 para. 6 TzBfG in conjunction with § 625 BGB): If the fixed-term employment relationship is actually continued after the agreed end and the employer does not object immediately, the employment relationship is considered to have been extended indefinitely. „Immediately“ means without culpable delay – in practice, usually within a few days. So if you turn up for work on the Monday after the contract ends and no one sends you home, that could already establish an indefinite employment relationship.
• Breach of written form requirements If the fixed-term contract was only agreed verbally, or if work began before the written contract was signed, the fixed term is invalid from the outset (§ 14 para. 4, § 16 sentence 1 TzBfG). The employment relationship is considered to be of indefinite duration.
• Voluntary permanent employment Employers and employees can agree at any time to convert a fixed-term contract into an open-ended one. This may sound obvious, but it is sometimes overlooked in practice – especially when the employer is actually satisfied and the issue of the fixed term is simply „forgotten“.

In all these cases, you do not need an action for rescission. The action only becomes necessary if the employer disputes that an indefinite employment relationship exists.

The most common reasons why fixed-term contracts are ineffective

From legal practice, it can be said that many fixed-term employment contracts do not stand up to legal scrutiny. This is rarely due to a single gross error, but rather to supposedly minor inaccuracies that are nevertheless legally significant.

The following errors occur particularly frequently:

• Breach of the written form requirement: The fixed-term agreement must be agreed in writing before the start of employment and signed by both parties (§ 14 para. 4 TzBfG). An email is not sufficient; the handwritten signature of both parties or a qualified electronic signature (§ 126a BGB) is required. If work commenced before the contract was signed, the fixed term is invalid. This also applies if the contract is signed a few days later – subsequent „rectification“ is not possible.
• Substantive changes on extension: In the case of fixed-term contracts without a valid reason, only a purely temporal extension is permitted. If any substantive element is changed during the extension – salary, working hours, duties, notice periods – it is not an extension agreement, but a new contract. And this new contract is not permissible if an employment relationship already existed.
• Exceeding the maximum duration or maximum extensions A total duration of more than two years or more than three renewals of fixed-term contracts without a valid reason renders them ineffective.
• Previous employment with the same employer: As a general rule, anyone who has previously been employed by the same employer – even if it was years ago – cannot be hired on a fixed-term contract without a valid reason. As an exception, following the Federal Constitutional Court's decision in 2018, this applies only to previous employment that was a very long time ago, was of a completely different nature, or was very short.
• Lack of, or fabricated, valid reason: For fixed-term employments with a factual reason, the stated reason must actually exist. A „temporary need“ that extends over five years is not one. Nor is „representation“ for someone who has long since moved to another position.
• Abusive of rights Fixed-term contract chain: Even if, formally, there is a factual reason each time, repeated fixed-term employment over many years can be abusive. In one case, the Federal Labour Court (BAG) objected to a chain of fixed-term contracts where a court employee had her fixed-term contract extended 13 times within 11 years (BAG, 18.7.2012 – 7 AZR 443/09).

The three-week deadline: miss it and you've lost

First things first: the action for unfair dismissal must be filed with the Labour Court within three weeks of the agreed end of the fixed-term employment contract (§ 17 Sentence 1 TzBfG). This deadline is not a recommendation – it is mandatory. If it is missed, the fixed-term employment is deemed valid by law (§ 17 Sentence 2 TzBfG in conjunction with § 7 KSchG). Even if the fixed-term employment was obviously unlawful.

There is an exception: If the employment relationship is actually continued beyond the agreed end date and the employer only later invokes the termination, the period of limitation only begins with the employer's written declaration that the employment relationship has ended (§ 17 sentence 3 TzBfG). Oral notices do not trigger the period of limitation.

Two safety nets you should be aware of: § 17 sentence 2 TzBfG not only refers to § 7 KSchG, but also to §§ 5 and 6 KSchG. This means firstly: anyone who has missed the deadline through no fault of their own can apply for a subsequent admission of the lawsuit under the strict conditions of § 5 KSchG. And secondly: anyone who has filed a lawsuit against the employer other than the correct lawsuit to challenge the fixed-term contract within the three-week period, from which the intention to challenge the fixed-term contract can be inferred, can still rectify the correct lawsuit claim up to the conclusion of the oral proceedings in the first instance (§ 6 KSchG). However, you should not rely on these last resorts.

An action seeking to have a fixed-term contract declared of indefinite duration can also be brought before the expiry of the fixed term. According to the established case law of the Federal Labour Court (BAG), the claim period is also maintained if the action is filed before the contract ends – at least if the employer asserts the validity of the fixed term (cf. BAG, 21.8.2019 – 7 AZR 733/16).

The three-week period is similar to the deadline for Ruling of the Federal Labor Court and follows the same logic: Those who act in time have good cards. Those who wait, risk everything.

Please note regarding the claim: Section 17, paragraph 1 of the Fixed-Term Employment Act requires a very specific application: the determination that the employment relationship, due to the fixed-term nature, not finished is. A general declaration of intent that the employment relationship „continues indefinitely“ is, according to the case law of the Federal Labour Court (BAG) Insufficient and can lead to the dismissal of the action. This is one of the reasons why legal representation is urgently recommended for an action for release from detention.

When a defrosting claim is worthwhile – and when it isn't

Not every ineffective fixed-term contract automatically justifies legal action. The question of whether pursuing a claim in the employment tribunal is actually worthwhile depends on several factors.

When a lawsuit makes sense

A claim for unfair dismissal is particularly promising if several of the following conditions are met:

• The fixed-term contract is clearly invalid – for example, due to a breach of written form requirements, prior employment, or exceeding the maximum duration. The clearer the error, the better the negotiating position.
• The Protection Against Dismissal Act is applicable. This presupposes that the company regularly employs more than ten employees and that the employment relationship has existed for longer than six months. Without Protection against dismissal Can an employer terminate employment with notice immediately after a successful lawsuit to make a fixed-term contract permanent?.
• You actually want to continue working there. Then, permanent employment is your direct route to a permanent contract.
• You would like a Severance payment reach. Even if you are not interested in continued employment, a claim for an indefinite employment contract can be the right course of action. In practice, a great many proceedings end in a settlement – often during the conciliation hearing. The employer pays severance pay, and both sides go their separate ways. There is no statutory entitlement to severance pay, but the negotiation dynamic often leads to this outcome.

When you should exercise restraint

• Small business (ten or fewer employees): Without protection against dismissal, the employer can give you regular notice after a successful lawsuit to end the fixed-term contract (§ 23 KSchG). The lawsuit then achieves little, unless the employer is willing to enter into a settlement agreement regarding severance pay.
• Probationary period not yet expired: In the first six months, the general protection against dismissal does not apply in any case. While an action to establish permanent employment would be possible, it would rarely be strategically sensible.
• The fixed-term contract is likely valid. If the substantive reason is sound, the written form has been observed, and there are no errors in the extension, the chances of success are slim. A prior legal review is advisable in any case.
• You have missed the three-week deadline: After the deadline has expired, a lawsuit is generally hopeless. A subsequent admission after § 5 KSchG (via the reference in § 17 sentence 2 TzBfG) requires that you were not at fault for missing the deadline – the requirements for this are very high.

Unblocking or severance: The strategic question

In practice, employees pursuing a claim for permanent employment do not always have the same goal. Some genuinely want to return to their jobs. Others know that collaboration would be difficult after a lawsuit and aim for a financial settlement from the outset.

Both approaches have their justification. The unfair dismissal claim is the tool for both scenarios – because it is often the pressure of ongoing proceedings that brings the employer to the negotiating table.

The negotiating position is stronger the more obvious it is that the fixed-term contract was ineffective. If the employer realises that they are likely to lose the case, they are more willing to pay a severance payment and terminate the employment relationship by mutual agreement. The amount of the severance payment depends on the individual case – flat-rate formulas such as „half a month's salary per year of employment“ are common, but not binding.

What happens after a successful de-listing lawsuit?

If you win the lawsuit, the court will rule that your employment contract was not terminated by the fixed-term clause – it continues indefinitely. The employer must continue to employ you. He can then only dismiss you according to the general rules of the Protection Against Dismissal Act, meaning with a recognised reason for dismissal.

Two practical consequences are often overlooked:

• Default in acceptance and back payment of wages (§ 615 BGB): Months often pass between the supposed end of a contract and a court decision. If you offered your labour during this time – even a brief letter to your employer stating your readiness to work suffices – and the employer still did not employ you, they are in default of acceptance. This means they owe you your salary for the entire intervening period. In a process that lasts six to twelve months, this can amount to considerable sums. This back payment makes the claim for permanent employment particularly expensive for the employer – and at the same time increases the pressure to agree to a settlement early.
• Right to continued employment Similar to the case law regarding unfair dismissal lawsuits, a claim for continued employment can exist under certain circumstances during ongoing proceedings – particularly if the employment tribunal rules in favour of the employee in the first instance.

The procedure of an unfair dismissal claim before the Labour Court

After the lawsuit has been filed with the employment tribunal, the court serves it on the employer. As a rule, a conciliation hearing is scheduled within six weeks.

The conciliation hearing is the most important moment in the proceedings. Here, the presiding judge negotiates a consensual solution with both parties as a single judge. Many permanent employment proceedings end here – either with a severance settlement or with an agreement on a final fixed-term extension.

If no agreement is reached at the conciliation hearing, a chamber hearing follows before the full chamber (one professional judge and two lay judges). The case will then be heard in a dispute, and a judgment will be delivered if necessary.

At the Labour Court, there is no compulsory legal representation in the first instance. Theoretically, you can file the lawsuit yourself. However, this is strongly discouraged – not only because of the complex subject matter, but also because of the strict requirements for the statement of claim (see above) and the fact that the opposing party is almost always represented by a lawyer. Errors in filing the lawsuit or in settlement negotiations cannot be reversed.

What is the cost of a de-registration lawsuit?

The costs are based on the value of the dispute. For termination by the tenant (Entfristungsklagen), this usually corresponds to three gross monthly salaries – just as it does for unfair dismissal claims.

A concrete example for guidance: For a monthly gross income of 3,000 Euros, the disputed value amounts to 9,000 Euros. This results in legal fees of approximately 1,500 Euros per party and court costs of around 450 Euros. The court costs are ultimately borne by the party that loses the case. If a settlement is reached during the conciliation hearing, the court costs are waived entirely.

At the labour court at first instance, a special rule for costs applies: each party bears its own legal costs – irrespective of who wins or loses. There is no reimbursement of costs by the opposing party.

You should be aware of two financing options:

• Legal expenses insurance Employment law disputes, including claims for permanent contracts, are generally covered by private legal expenses insurance. Check your policy and report the case early. However, please note that most employment law legal expenses insurance policies have a waiting period of three months after the contract is concluded. Those who take out insurance only after a dispute over the fixed-term contract becomes apparent may end up with no cover.
• Legal aid If you cannot afford the legal action financially, there is an option to apply for legal aid at the employment tribunal. The prerequisite is that your claim has a sufficient prospect of success and you cannot afford the costs given your personal and financial circumstances.

Chain fixed-term contracts in the public sector

Fixed-term employment – meaning the repeated conclusion of fixed-term contracts with the same employee – is particularly common in the public service. Schools, universities, authorities and public entities regularly resort to fixed-term contracts for specific reasons, especially fixed-term contracts for substitution (§ 14 para. 1 sentence 2 no. 3 TzBfG) and fixed-term contracts due to budgetary reasons (§ 14 para. 1 sentence 2 no. 7 TzBfG).

As a general rule, the same regulations apply in the public sector as in the private sector. The TzBfG is expressly applicable via § 30 (1) of the Collective Agreement for the Public Sector (TVöD).

However, the Federal Labour Court has clarified that even formally correct fixed-term contracts can, at some point, exceed the limit of abuse of rights. The courts examine, among other things, the total duration of employment, the number of extensions, and whether the stated factual reason actually supports the continued fixed-term employment. The longer and more frequent the fixed-term contracts have been, the more the employer must justify why a permanent contract is not possible.

Checklist: What you should do when your fixed-term contract is ending

• Check your employment contract: Is the fixed-term agreement in writing and signed? Does the start date of employment match the contract date? How many times has it been extended and were any changes made?
• Note the three-week deadline: From the end date agreed in the contract, the clock starts ticking. Act in good time.
• I am pleased to confirm my readiness to commence work. Inform your employer in writing that you are willing to continue your employment beyond the fixed-term end date. This secures your claim to salary in the event that the lawsuit is successful (default in acceptance of work, § 615 BGB).
• Register as a jobseeker in good time: According to Section 38, Paragraph 1 of the Social Code Book III (SGB III), you are obliged to register as a jobseeker with the Employment Agency at least three months before the end of your employment relationship. If you learn of the end less than three months in advance, you must register within three days. Failure to comply with this obligation may result in a one-week waiting period for unemployment benefit. This also applies if you file a lawsuit to make a fixed-term contract permanent – the notification requirement applies regardless.
• Have your contract reviewed by a solicitor. Whether a claim for termination can be successful can often only be determined after careful examination of the contract, the extension history, and the overall circumstances. An initial assessment by a Lawyer for labour law gives you clarity.
• Don't sign anything in haste: No termination agreement, no release form, no settlement agreement without legal review. What you have once signed can generally not be undone.

Frequently Asked Questions about the Termination Lawsuit (FAQ)

How long do I have to file a restitution claim?

Three weeks after the agreed end of the fixed-term employment contract (§ 17 Sentence 1 TzBfG). If work continues without the employer's objection, the period only begins with their written declaration that the employment relationship has ended. The action can also be brought before the end of the contract.

What is the cost of a de-registration lawsuit?

The amount in dispute is usually three gross monthly salaries. At €3,000 gross: around €1,500 in legal fees, around €450 in court costs. If a settlement is reached, the court costs are waived. In the first instance, each party pays their own lawyer. Check for legal protection insurance or legal aid.

Can I get severance pay with a dismissal protection lawsuit?

There is no legal claim. In practice, however, many proceedings end with a severance agreement – especially when the fixed-term contract was obviously invalid. The amount depends on the chances of success, length of employment and negotiating position.

What happens if I started working before signing the contract?

The fixed-term employment is invalid (§ 14(4) TzBfG). An indefinite employment relationship is automatically considered to be in effect. A subsequent written agreement does not remedy the defect.

What is the difference between a fixed-term contract and a contract for a specific purpose?

With a fixed-term contract, there is a fixed end date in the contract. With a purpose-limited contract (§ 3 Para. 1 Sentence 2 TzBfG), the employment relationship ends when a specific purpose is achieved – for example, project completion or the return of a colleague who was being covered. The employer must provide written notification at least two weeks in advance (§ 15 Para. 2 TzBfG). The three-week lawsuit deadline only begins after this notification.

Will I receive back pay after a successful unfair dismissal claim?

Under certain circumstances, yes. If you offered your labour after the supposed end of the contract and the employer did not employ you, they are in default of acceptance (§ 615 BGB). You are then entitled to back payment of salary for the entire period between the end of the contract and the court decision.

Is an unfair dismissal claim worthwhile in a small business?

Caution: Without protection against dismissal (§ 23 KSchG), the employer can give notice in the normal way after winning a lawsuit. Strategically, litigation in small businesses is particularly worthwhile if the employer is willing to agree to a severance package.

My contract has been extended multiple times – is this a chain of fixed-term contracts?

Yes, if several fixed-term contracts are concluded consecutively. Without a reason: a maximum of three extensions within two years. With a reason: no rigid limit, but the Federal Labour Court checks from a certain duration and frequency. Abuse of rights.

Is there anything special about public service?

Fundamentally the same rules (§ 30 (1) TVöD). However, chain fixed-term contracts are particularly common there and are increasingly being critically examined by the Federal Labour Court.

Can I file the lawsuit even before the deadline expires?

Yes. According to constant BAG case law, the period for bringing legal action is also maintained by legal action brought before the end of the contract – at least if the employer relies on the validity of the fixed-term employment.

Is your fixed-term contract expiring? Have your contract reviewed.

Whether your fixed-term contract is valid cannot be answered definitively. The answer depends on the specific circumstances – the contract text, the history of extensions, the presence or absence of a valid reason, and the timing. What can be said definitively: Many fixed-term contracts do not withstand legal scrutiny. And anyone who misses the three-week deadline loses their right to challenge it.

If you are unsure whether your fixed-term contract is legal, have your contract reviewed promptly by a specialist employment lawyer. Call us on 0221 - 80187670 or write an e-mail to info@mth-partner.de.

Solicitors in Cologne – Advice and Representation in Employment and Labour Law