Regional Labour Court Cologne, 07.02.2017, Ref.: 12 Sa 745/16
In accordance with Section 626 of the German Civil Code (BGB), an employment relationship can be terminated without notice for good cause if there are facts on the basis of which the terminating party cannot reasonably be expected to continue the employment relationship until the expiry of the notice period or the agreed termination of the employment relationship, taking into account all the circumstances of the individual case and weighing up the interests of both parties to the contract. Accordingly, it must first be examined whether there is good cause for extraordinary termination at all. It must then be clarified whether the terminating party can reasonably be expected to continue the employment relationship on the basis of a comprehensive weighing of interests and taking into account proportionality, if applicable, despite the existence of good cause suitable for extraordinary termination. If one of the conditions is not met, the extraordinary dismissal is invalid and can be challenged with an action for unfair dismissal within 3 weeks.
Initiation of Legal Proceedings
In the present case, the plaintiff and the defendant are in dispute about the validity of an extraordinary termination of the employment relationship. The plaintiff had been employed by the defendant, a tax consultancy firm, as a clerk in the tax consultancy department since 1 January 2014. The dispute arose when the plaintiff changed his professional profile on the XING platform during a leave of absence. The defendant saw this as a breach of the non-competition clause in the employment contract and subsequently issued an extraordinary dismissal.
Reason for termination and employment contract
From 2015, there was an agreement between the parties regarding training costs, in which the employer granted the plaintiff a loan for the training. This loan was to be repaid in the event of termination by the employer or employee. In 2016, the parties also concluded a termination agreement that was to end the employment relationship on 31 March 2016. The agreement included a non-competition clause until the termination date, according to which the plaintiff was prohibited from working for a competing company. However, there was no provision for a post-contractual non-competition clause.
After his leave of absence on 15 February 2016, the plaintiff changed his professional status on his XING profile from "employee" to "freelancer", while the defendant continued to be listed as his employer until March 2016. The defendant took this as an opportunity to give him extraordinary notice of termination in a letter dated 9 March 2016, as it saw this as unlawful competitive activity. It argued that the plaintiff had wanted to potentially acquire new clients by presenting himself as a freelancer, which was in breach of the non-competition clause.
Action before the Aachen Labour Court
On 22 March 2016, the plaintiff filed an action for unfair dismissal against the dismissal with the Aachen Labour Court. At the same time, the defendant filed a counterclaim for repayment of the training loan. The Aachen Labour Court ruled in favour of the plaintiff on 7 July 2016. It ruled that there was no good cause for extraordinary termination in accordance with Section 626 BGB. The change to the XING profile did not constitute an act of competition. Rather, it was obvious that the plaintiff was merely adapting his professional self-presentation in order to find a new job after the end of the employment relationship. Furthermore, the plaintiff had not undertaken any specific competitive behaviour, such as soliciting clients.
As a result, the court also dismissed the defendant's counterclaim, as there was no valid reason for cancellation and therefore no obligation to repay the loan.
Appeal by the defendant before the Cologne Regional Labour Court
The defendant appealed against the judgement of the Aachen Labour Court. It argued that the change to the XING profile and the "freelancer" status during the ongoing employment relationship constituted a preparatory act that was inadmissible. Even the possibility that the plaintiff could approach potential customers through his profile change was a violation of the non-competition clause.
Decision of the Cologne Regional Labour Court
The Cologne Regional Labour Court dismissed the defendant's appeal as unfounded. The court found that there was no good cause for the extraordinary dismissal, as there was no evidence of any unauthorised competitive activity by the plaintiff. It emphasised that preparatory actions to take up a new job after termination of the employment relationship are generally permitted. The mere reference to a freelance activity in a social network such as XING was not sufficient to establish a competitive activity. The defendant had not substantiated that the plaintiff had solicited clients of the defendant during the leave of absence. In addition, the plaintiff had continued to state in his XING profile that he had worked for the defendant up to and including March 2016.
Another important point of the decision was the lack of proportionality of the extraordinary dismissal. According to the court, the defendant should have issued a warning before the termination. This warning was not dispensable in the present case, as there were no special circumstances that would have justified immediate termination. A request to change the XING profile would have been sufficient.
Conclusion and effects on the counterclaim
As the extraordinary termination was invalid, the defendant's counterclaim for repayment of the training loan was also unsuccessful. The repayment would only have been due if the dismissal had been lawful. However, since the plaintiff's action for protection against dismissal was successful, the defendant was also unable to assert a claim for repayment of the loan. Overall, the defendant's appeal was dismissed and the judgement of the Aachen Labour Court was confirmed.
Source: Regional Labour Court Cologne
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