No revocation right for cancellation agreements

Created by Ralf Pelz | |  Labor Law

Following the ruling (6 AZR 75/18) dated 7 February 2019 issued by the German Federal Labour Court employees cannot revoke a cancellation agreement terminating an employment relationship even if the cancellation agreement was concluded in a private residence.

The facts of the case underlying the decision is a female employee that was engaged as a cleaner. In the private residence of the employee the parties agreed on a cancellation agreement stipulating the immediate termination of the employment relationship without a severance payment. The parties disputed as to whether the employee has a right of revocation according to article 312 sec. 1 German Civil Code (BGB) in connection with article 312g German Civil Code (BGB) as the cancellation agreement is to be classified as consumer contract due to the fact that it was con-cluded outside of the business premises and thus can be revoked within fourteen days after the conclusion of the contract.

The Federal Labour Court (BAG) ruled that the right of revocation of a cancellation agreement regarding an employment relationship is legally not possible. Even though article 312 sec. 1 in connection with article 213g German Civil Code (BGB) permits consumers the right to revoke contracts concluded outside of business premises and employees are classified as consumers in terms of article 13 German Civil Code (BGB). During the legislative process the legislator has made his intention clear that cancellation agreements relating to employment relationships do not fall within the scope of article 312 et. Seq. German Commercial Code (BGB).

In the respective ruling the Federal Labour Court decided on the legal situation of the prevailing opinion until 12 June 2014 stipulating that cancellation agreements relating to employment rela-tionships are not to be classified as doorstep transactions and thus entail no right of revocation as this only covers so called “special forms of distribution”.

According to the Federal Labour Court the implementation of article 312g German Civil Code has no changing impact for the time after 13 June 2014. This means that a right of revocation is ruled out even if the cancellation agreement was concluded in a private residence.

Practical Tip

A cancellation agreement is and remains a popular and legally secure option to terminate em-ployment relationships. There is no right to revoke from such a cancellation agreement relating to employment relationships even if employer and employee conclude such an agreement in the private residence of the employee.

However, the Federal Labour Court has referred the issue back to the State Labour Court for re-negotiation and decision as it has to be examined whether the cancellation contract is to be re-garded as invalid due to the violation of the “principles of fair negotiation”. This principle is an ac-cessory obligation from a labour law point of view. This obligation is violated if one party creates a situation of mental pressure that makes it difficult for the contracting partners to reach a free and considered decision on the cancellation agreement. This shows how important it is to never conduct negotiations alone.

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