Headnotes

to the Order of the First Senate of 6 June 2018

– 1 BvL 7/14 –

– 1 BvR 1375/14 –

1. By limiting fixed-term employment relationships, and by ensuring that permanent employment relationships remain the regular form of employment (Regelbeschäftigungsform ), the state fulfils its duty of protecting employees – who are in a structurally weaker position – in accordance with Article 12(1) of the Basic Law and satisfies the principle of the social state (Sozialstaatsprinzip ) under Article 20(1), Article 28(1) of the Basic Law.

2. The impairment of the individual freedom of occupation, which results from limiting fixed-term contracts not based on objective reasons (sachgrundlose Befristungen ) to the first establishment of an employment relationship with the same employer, is justified insofar as employees do in fact require protection against successive fixed-term contracts that exploit their structurally weaker position, and insofar as otherwise, a permanent employment relationship as the regular form of employment would be undermined.

3. The judicial development of the law must not override a clearly recognisable intent of the legislature, and must not replace it with its own regulatory concept.

FEDERAL CONSTITUTIONAL COURT

– 1 BvL 7/14 –

– 1 BvR 1375/14 –

IN THE NAME OF THE PEOPLE

In the proceedings

– 1 BvL 7/14 –,

– 1 BvR 1375/14 –

the Federal Constitutional Court – First Senate –

with the participation of Justices

Vice-President Kirchhof,

Eichberger,

Masing,

Paulus,

Baer,

Britz,

Ott,

Christ

held on 6 June 2018:

1. § 14(2) second sentence of the Law on Part-Time Work and Fixed-Term Contracts of 21 December 2000 (Federal Law Gazette, Bundesgesetzblatt – BGBl I page 1966), last amended by the Law of 20 December 2011 (Federal Law Gazette I page 2854), is compatible with the Basic Law subject to the reasons attached to this Order.

1. 2. a) The Judgment of the Nuremberg Higher Labour Court of 30 January 2014 – 5 Sa 1/13 – and the Final Judgment of the Bamberg Labour Court of 10 October 2012 – 2 Ca 1097/11 – violate the complainant’s fundamental rights under Article 2(1) first sentence in conjunction with Article 20(3) of the Basic Law.

2. b) The Judgment of the Nuremberg Higher Regional Court of 30 January 2014 – 5 Sa 1/13 – is reversed. The matter is remanded to the Nuremberg Higher Labour Court. The Order of the Federal Labour Court of 30 April 2014 – 7 AZN 119/14 – is thus moot.

3. c) […]

4. d) […]

R e a s o n s:

A.

The referral from the Braunschweig Labour Court (Arbeitsgericht ) and the constitutional complaint concern legal restrictions limiting employment contracts for a fixed-term that is not based on objective reasons (sachgrundlose Befristungen ). The referring labour court assumes that § 14(2) second sentence of the Law on Part-Time Work and Fixed-Term Contracts (Teilzeit- und Befristungsgesetz –TzBfG) limits fixed-term employment not based on objective reasons to the first establishment of an employment relationship with the respective employer; it has referred to the Federal Constitutional Court the question whether the provision, read in this manner, was compatible with Art. 12(1) and Art. 3(1) of the Basic Law (Grundgesetz – GG). By contrast, the Federal Labour Court (Bundesarbeitsgericht ) interprets § 14(2) second sentence TzBfG to the effect that successive fixed-term contracts not based on objective reasons concluded between the same parties were permissible again after three years; the Federal Labour Court assumes that this interpretation of the statutory provision is in conformity with the Constitution. Based thereon, the constitutional complaint contends that this case-law was incompatible with Art. 2(1) in conjunction with Art. 20(3) GG, on the grounds that the Federal Labour Court exceeded the boundaries of tenable interpretation and permissible judicial development of the law (richterliche Rechtsfortbildung ).

I.

1. Fixed-term employment contracts are governed by § 14 TzBfG. [...] If they are not based on objective reasons, they are permissible only subject to the specific requirements set out in § 14(2) TzBfG. Pursuant to this provision, a fixed-term employment contract not based on objective reasons may only be extended three times, and must not exceed a period of two years in total (§ 14(2) first sentence TzBfG). According to § 14(2) second sentence TzBfG, fixed-term employment contracts are not permissible in cases where there has been a previous employment relationship, fixed-term or permanent, with the same employer. § 14(2) first sentence of the Law on Part-Time Work and Fixed-Term Contracts of 21 December 2000 (Federal Law Gazette, Bundesgesetzblatt – BGBl I p. 1966), last amended by the Law of 20 December 2011 (BGBl I p. 2854), reads as follows:

1 Employment contracts concluded for a fixed term that is not based on objective reasons are permissible for a duration not exceeding two years; a fixed-term employment contract may not be extended more than three times, and its overall duration must not exceed two years. 2 A fixed-term employment contract is not permissible in cases where there has been a previous employment relationship, fixed-term or permanent, with the same employer.

2. Initially, the Federal Labour Court had interpreted § 14(2) second sentence TzBfG to the effect that employment contracts for a fixed term not based on objective reasons that are concluded between the same parties were only permissible in the first employment relationship between the parties. According to this case-law, any subsequent fixed-term agreement in an employment relationship was invalid, pursuant to § 14(2) second sentence TzBfG (cf. Federal Labour Court, Bundesarbeitsgericht – BAG, Judgment of 6 November 2003 – 2 AZR 690/02–, Decisions of the Federal Labour Court, Entscheidungen des Bundesarbeitsgericht s – BAGE 108, 269 <274>; Judgment of 12 May 2004 – 2 AZR 426/03 –, juris, para. 28; Order of 29 July 2009 – 7 AZN 368/09 –, www.bag.de, para. 2).

3. In its more recent case-law, the Federal Labour Court adopted a different view and now assumes that § 15(2) second sentence TzBfG does not prohibit fixed-term employment contracts not based on objective reasons where previous employment dates back more than three years (cf. BAG, Judgment of 6 April 2011 – 7 AZR 716/09 –, BAGE 137, 275 <278 et seq. paras. 16 et seq.>; Judgment of 21 September 2011 – 7 AZR 375/10 –, BAGE 139, 213 <219 et seq. paras. 23 et seq.>).

[…]

II.

The order of referral from the Labour Court concerns an action seeking the conversion of a fixed-term contract into a permanent contract (action to review fixed-term contracts – Befristungskontrollklage ). The plaintiff in the initial proceedings claimed that the most recent fixed-term agreement not based on objective reasons that had been concluded in his employment relationship was invalid. He argued that the fixed-term agreement violated § 14(2) second sentence TzBfG, because he had “previously” been employed by the same employer; on this basis, he claimed to be entitled to a permanent contract.

The Labour Court has suspended the initial proceedings in accordance with Art. 100(1) first sentence GG and referred to the Federal Constitutional Court the question whether § 14(2) second sentence TzBfG was compatible with Art. 12(1), Art. 2(1) and Art. 3(1) GG. The referring court interprets this provision to mean that fixed-term contracts not based on objective reasons are limited to the first establishment of an employment relationship with the respective employer; it thus adopts a different view than the Federal Labour Court, which considers a new fixed-term contract not based on objective reasons to be permissible if more than three years separate the new and the previous employment relationship.

[…]

III.

The constitutional complaint challenges labour court decisions. In the initial proceedings, the complainant had unsuccessfully claimed that the most recent fixed-term employment agreement not based on objective reasons was invalid. He argued that the fixed-term agreement violated § 14(2) second sentence TzBfG, because there had been a previous fixed-term employment relationship with the same employer. Yet the Labour Court and the Higher Labour Court applied the recent case-law of the Federal Labour Court, thus presuming that § 14(2) second sentence TzBfG did not prohibit a new fixed-term contract not based on objective reasons because the previous employment relationship with the same employer dates back more than three years. He challenged the denial of leave to appeal on points of law, on the grounds that the case was of general significance, which was rejected by the Federal Labour Court.

The complainant claims a violation of Art. 2(1) in conjunction with Art. 20(3) GG. He contends that the Federal Labour Court’s interpretation of § 14(2) second sentence TzBfG, which was applied by the courts in the initial proceedings, exceeds the boundaries of judicial development of the law, as it overrides well-documented legislative intent.

[…]

IV.

Statements on the referral and the constitutional complaint were submitted by the Federation of German Trade Unions (Deutscher Gewerkschaftsbund – DGB), the United Services Union (Vereinte Dienstleistungsgewerkschaft – ver.di), the Federal Organisation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände – BDA) and the Federal Labour Court, and by the defendants in the initial proceedings.

V.

The constitutional complaint is admissible.

VI.

The judicial referral is admissible as well.

[…]

B.

§ 14(2) second sentence TzBfG, as interpreted by the Labour Court, is compatible with the Basic Law insofar as fixed-term contracts not based on objective reasons that are concluded between the same parties are limited to the first establishment of such an employment relationship, and any further such fixed-term contract with the same employer is prohibited. In cases where it is entirely clear that employees do in fact not require the protection provided under § 14(2) second sentence TzBfG – because there is no risk of successive fixed-term contracts that exploit the structurally weaker position of former employees –, the regular courts can, and must, limit the scope of application of this provision, to give effect to the interests protected by fundamental rights of the parties concerned; at the same time, any such limitation of the scope of application must adhere to the social policy objective that permanent employment be protected as the regular form of employment. Therefore, the Court did not find the referred provision to be unconstitutional (I).

However, an interpretation of § 14(2) second sentence TzBfG to the effect that – contrary to recognisable legislative intent – successive fixed-term contracts not based on objective reasons concluded between the same parties were always permissible if separated by a period of more than three years exceeds the boundaries of permissible judicial development of the law, and violates Art. 2(1) in conjunction with Art. 20(3) GG. The constitutional complaint is therefore well-founded (II).

I.

§ 14(2) second sentence TzBfG, as interpreted by the labour courts, neither violates the right to freedom of occupation of employees (Art. 12(1) GG), nor the right to freedom of occupational and economic activity of employers (Art. 12(1), Art. 2(1) GG), nor does it violate the general requirement of equal treatment (Art. 3(1) GG). However, this is only the case because its scope of application can be limited in cases where applying the provision would be unreasonable.

1. There are no objections to the formal constitutionality of § 14(2) TzBfG. [...]

2. In principle, § 14(2) second sentence TzBfG, as interpreted by the referring court to the effect that successive fixed-term contracts not based on objective reasons are limited to the first establishment of an employment relationship with the respective contractual employer, is compatible with Art. 12(1) and Art. 2(1) GG.

a) § 14(2) second sentence TzBfG affects the freedom of contract in employment relationships for job seekers as well as for employers. In both cases, this entails an impairment of Art. 12(1) GG, as this fundamental right protects occupational freedom of contract for employees (cf. Decisions of the Federal Constitutional Court, Entscheidungen des Bundesverfassungsgerichts – BVerfGE 68, 193 <223 and 224>; 77, 84 <118>; 116, 202 <221; 128, 157 <176>). It guarantees the freedom to choose one’s employment and protects the individual’s decision to pursue a specific job opportunity in one’s chosen field of occupation, to remain in an established employment relationship, or to quit. This protection is directed against all state measures that limit this freedom of choice, i.e. that impede access to an available employment opportunity or that force the affected person to accept, to continue, or to quit a specific job (cf. BVerfGE 81, 133 <146>; 85, 360 <373>; 97, 169 <175>). Moreover, Art. 12(1) protects freedom of contract and the discretion of employers as to the conclusion of employment contracts (cf. BVerfGE 81, 242 <254>; 97, 169 <176>; 123, 186 <252>).

b) In § 14(2) second sentence TzBfG, the legislature limits the freedom of both employees and employers by prohibiting fixed-term contracts not based on objective reasons in cases where there is a “previous” employment relationship. Even in cases where the employee in fact wishes to conclude a fixed-term contract not based on objective reasons with the former employer, § 14(2) second sentence TzBfG as interpreted by the referring court would prohibit this.

Accordingly, the referred provision impairs the occupational freedom of contract of both employees and employers. It affects the right of job seekers to freely choose their occupation, given that persons who were previously employed by the respective employer are typically at a disadvantage when competing for a fixed-term position not based on objective reasons with persons who were not. It is true that the employer can still employ persons who were previously employed there, either by offering them a permanent contract or by concluding a fixed-term contract based on an objective reason (mit Sachgrund befristete Beschäftigung ). In cases where these options are not available, or where the employer is not willing to pursue them, the employer will choose not to fill the vacancy with formerly employed applicants so as to be able to conclude a fixed-term contract not based on objective reasons. Here, the employer’s decision will be informed by the interest in more flexible personnel planning and in minimising the risk of costs associated with a possible termination of the employment relationship. Indeed, approximately half of all employment contracts are concluded for a fixed-term that is not based on objective reasons (cf. Bundestag document, Bundestagsdrucksache – BTDrucks 18/2621, p. 4). In principle, § 14(2) second sentence TzBfG, as interpreted by the referring labour court, unequivocally rules out such fixed-term contracts with job applicants who had previously been employed by the same employer. The legislative intent underlying this provision is to influence the hiring practices of employers (cf. BTDrucks 14/3272, p. 14). § 14(2) second sentence TzBfG thus restricts the freedom to conclude a fixed-term contract not based on objective reasons between the same parties in case of a previous employment relationship.

c) This interference with a freedom protected by fundamental rights is justified on the grounds that it avoids the risk of successive fixed-term contracts that exploit the structurally weaker position of employees and because it ensures that permanent employment contracts remain the regular form of employment.

aa) Interferences with the fundamental right to freedom of occupation under Art. 12(1) GG require a statutory basis, and they are subject to the principle of proportionality (cf. BVerfGE 135, 90 <111 para. 57>; 141, 82 <98 para. 47>; 141, 121 <133 para. 40>; 145, 20 <67 para. 121>). The legislature may limit the freedom of occupation protected in Art. 12(1) GG in order to mitigate social and economic inequalities (cf. BVerfGE 142, 268 <285 para. 63>). Moreover, it is incumbent upon the state to ensure that the law governing individual employment relationships strikes an appropriate balance between the fundamental rights of the parties concerned. To the extent that private autonomy is not a sufficient regulatory mechanism because a power imbalance allows one party to unilaterally dictate the terms of the contract, the state must intervene with regulatory measures in order to ensure the protection of fundamental rights (cf. BVerfGE 81, 242 <254 and 255>; 89, 214 <232>; 98, 365 <395>; 126, 286 <300 and 301>; 134, 204 <223 para. 68>; 142, 268 <285 paras. 63 and 64>).

The legislature is afforded a wide margin of appreciation and wide latitude with regard to the necessary balancing of the conflicting interests. It is primarily a matter of the legislature´s political responsibility to appraise the economic and social conditions that give rise to the conflict in question, and to assess future developments as well as the consequences of regulatory measures. This also entails the assessment of all interests in question, which requires the legislature to weigh the conflicting interests with regard to their respective need for protection (cf. BVerfGE 97, 169 <176 and 177>; 134, 204 <223 and 224 para. 70>; 142, 268 <286 para. 64>).

bb) § 14(2) second sentence TzBfG satisfies these constitutional requirements given that the labour courts, by interpreting the provision in conformity with the Constitution, can ensure that the provision is not applied in cases where it would be unreasonable (unzumutbar ) for the parties concerned.

(1) In its interpretation of § 14(2) second sentence TzBfG, the referring court presumes that current labour law establishes permanent employment relationships as the regular form of employment whereas fixed-term contracts based on an objective reason pursuant to § 14(1) TzBfG should remain the exception. In addition, § 14(2) first sentence TzBfG permits fixed-term contracts not based on objective reasons. This provision protects the employers’ interest in more flexible conditions, as it enables employers to react to uncertainty and fluctuations in the volume of business and to changing market conditions by means of hiring new staff, so as to ensure competitiveness (cf. BTDrucks 14/4374, pp. 13 and 14).

Yet in § 14(2) second sentence TzBfG, the legislature restricts the use of fixed-term contracts not based on objective reasons. By essentially prohibiting successive fixed-term contracts, it seeks to protect employees against job insecurity and social disadvantages. In a legal system where social security, especially in old age, is largely linked to gainful employment, employees are reliant on long-term, permanent employment contracts. In such a system, employment contracts limited to a fixed-term not based on objective reasons subject employees to considerable uncertainties. However, employees in a structurally weaker market position will often accept these terms out of necessity. And while a fixed-term employment relationship might constitute a bridge towards permanent employment providing social security, it also creates uncertainty for those concerned as to whether they will in fact be able to secure a living in the long term (cf. BVerfGE 126, 286 <300 and 301>).

Mitigating this uncertainty constitutes a constitutional objective of particular weight, as it fulfils the duty to protect arising under Art. 12(1) GG. It is true that the right to freely choose one’s occupation neither confers an entitlement that the job of one’s choice be made available, nor does it guarantee the continued existence of a chosen job. It is, however, incumbent upon the state to give effect to the fundamental rights protection of employees, who are in a structurally weaker position, in particular by means of legislation that provides protection against dismissal (cf. BVerfGE 84, 133 <146 and 147>; 85, 360 <372 and 373>; 92, 140 <150>; 97, 169 <175>; 128, 157 <177>).

Limiting the use of fixed-term employment contracts seeks to ensure that the permanent employment relationship, which is pivotal to the social security of employees, remains the regular form of employment (cf. BTDrucks 14/4374, p. 12). Fixed-term employment contracts not based on objective reasons are limited, by way of exception, to the first establishment of an employment relationship (BTDrucks 14/4374, p. 2). In this respect, § 14(2) second sentence TzBfG seeks to balance the interests protected under Art. 12(1) GG on the part of job seekers competing for employment on the one hand, and the interest of employers in more flexible conditions on the other, in order to ensure fair and equitable labour relations; by limiting fixed-term employment contracts not based on objective reasons to the first employment relationship with the respective employer, the legislature seeks to compel the latter to “either continue the employment relationship with the employee on a permanent basis or, in cases where there is a continued albeit only temporary need for additional staff, to hire another employee for a fixed term” (BTDrucks 14/4374, p. 14). Fixed-term employment contracts not based on objective reasons are permitted as a means to create job opportunities for unemployed persons and also as a bridge towards permanent employment (cf. BTDrucks 14/4374, p. 14). The objective to foster employment is afforded constitutional status under the principle of the social state (Sozialstaatsprinzip ), enshrined in Art. 20(1), Art. 28(1) GG (cf. BVerfGE 116, 202 <223>), and contributes to the overall economic equilibrium provided for under Art. 109(2) GG (cf. BVerfGE 100. 271 <285>).

(2) § 14(2) second sentence TzBfG, as interpreted by the referring labour court, is suitable for achieving these legitimate objectives. In this regard, it is sufficient that the chosen means potentially further the aim pursued by the legislature (cf. BVerfGE 141, 82 <100 para. 53>; 145, 20 <78 para. 149>; 146, 71 <125 para. 159>); and in this context, the legislature is afforded a margin of appreciation (cf. BVerfGE 104, 337 <347 and 358>; 145, 20 <78 para. 149>; 146, 71 <125 para. 159>). Where contracts concluded between the employer and the employee for a fixed term not based on objective reasons do, pursuant to § 14(2) second sentence TzBfG, remain the exception, this contributes to ensuring that permanent employment contracts continue to be the regular form of employment, and to avoiding successive fixed-term contracts not based on objective reasons.

(3) § 14(2) second sentence TzBfG, as interpreted by the referring labour court, is suitable for achieving these legitimate objectives pursued by the legislature. It is not ascertainable that an equally effective means were available to achieve this legislative objective that would entail a lesser degree of impairment for the fundamental rights holders affected by it. In this regard, it is sufficient that the chosen means potentially further the aim pursued by the legislature (cf. BVerfGE 100, 313 <202 para. 53>; 145, 20 <80 para. 149>; 146, 71 <126 and 127 para. 162); the legislature has a margin of appreciation and prognosis in this respect as well (cf. BVerfGE 115, 276 <309>; 116, 202 <225>; 145, 20 <80 para. 153; 146, 71 <126 and 127 para. 162).

(a) A statutory waiting period, allowing the respective employer and employee to conclude another fixed-term contract not based on objective reasons after a certain period of time has elapsed, would not be equally effective in achieving the objectives pursued by the legislature. [...] For employees previously employed by the respective employer, a waiting period would constitute a less restrictive means at the time the contract is concluded; it is not, however, equally effective in ensuring long-term social security by way of permanent employment relationships, nor for attaining the employment policy objectives pursued by the legislature. Therefore, it was not imperative for the legislature to give precedence to this option.

(b) Also, it would not constitute an equally effective means to achieve the legitimate objectives pursued by the legislature to limit the prohibition of re-hiring employees on a fixed-term basis for no objective reason to employment relationships that have a close and objective connection to the previous employment relationship. It would allow parties to conclude further fixed-term employment contracts if there is no objective connection between successive contracts. [...] It would not, however, be equally effective in achieving the employment policy objective of ensuring that, as a general rule, employment contracts are concluded on a permanent basis or, in exceptional cases, for a fixed term based on an objective reason. This is due to the fact that, upon expiry of a fixed-term contract, the employer would no longer have to choose between continuing the employment relationship with the former employee on the basis of a permanent contract or, instead, hiring a new employee for a fixed term not based on objective reasons; rather, it would be possible for the employer to re-hire the former employee with another fixed-term contract not based on objective reasons if the new position entailed significantly different responsibilities.

(4) § 14(2) second sentence TzBfG seriously impairs the freedom of occupation on the part of employees and the occupational freedom of contract on the part of employers. When balancing the protection of employees in employment relationships (Art. 12(1) GG) against the objectives of social and employment policy rooted in the principle of the social state in Art. 20(1), Art. 28(1) GG, the impairments can, however, be considered reasonable. This applies at least to the extent that employees do in fact need the protection afforded under Art. 14(2) second sentence TzBfG because there is a risk of successive fixed-term contracts that exploit the structurally weaker position of employees, and also because their social security is jeopardised when permanent employment contracts as the regular form of employment are undermined.

(a) A provision restricting fundamental rights is reasonable if it strikes an appropriate balance between the conflicting interests protected under fundamental rights. It may not be disproportionate to the aim pursued. An overall balancing of the intensity of the impairments of fundamental rights against the weight and urgency of the reasons justifying it may not exceed the limits of reasonableness and must not subject the persons affected to excessive burdens (cf. BVerfGE 121, 317 <355>; 126, 112 <152 and 153>; 145, 20 <80 and 81 para. 155>).

(b) The impairments resulting from § 14(2) second sentence TzBfG with regard to the rights of both job seekers and employers concerning the conclusion of further fixed-term contracts not based on objective reasons is not disproportionate to the objective pursued, given that the labour courts, by interpreting the provision in conformity with the Constitution, can ensure that the provision is not applied in cases where it would be unreasonable for the parties concerned.

(aa) The provision, as interpreted by the referring court, limits employment opportunities for job seekers given that they cannot be employed on the basis of a fixed-term contract more than once by the same employer. This affects the right of equally qualified job seekers to equal opportunities in gaining employment. This constitutes a serious impairment, given that the protected interests of job seekers are qualified as interests of considerable importance (cf. BVerfGE 87, 169 <177>). Generally, gainful employment constitutes the economic basis of one’s livelihood. Employment not only determines lifestyle and living conditions of the person concerned, but also social status, self-esteem, social participation and future prospects (cf. BVerfGE 97, 169 <177>). Under a social security system that is primarily financed by contributions generated in employment relationships, gainful employment, even on the basis of a fixed-term contract, is of considerable significance for the social security of employees.

In addition, § 14(2) second sentence TzBfG impairs the interest of employers in more flexible conditions, which constitutes a recognised interest under Art. 12(1), Art. 2(1) GG. Regarding personnel management, employers must be able to respond to business fluctuations and changing market conditions in a flexible manner, in order to maintain their competitiveness (BTDrucks 14/4374, p. 13 and 14). Permanent employment contracts do not always provide a solution in this respect. The impairment of the employers’ interests is mitigated, however, because several alternatives to fixed-term contracts not based on objective reasons are available to them, which allow employers to accommodate such interests in the organisation of work. The alternatives that ensure more flexibility include internal options such as working time accounts, overtime and short-time working arrangements, and external options such as hiring temporary workers and concluding fixed-term employment contracts based on an objective reason. Moreover, § 14(2) second sentence TzBfG does not provide for an absolute prohibition of fixed-term employment contracts, as employers may in fact resort to fixed-term contracts for a limited period of time; once this period has expired, restrictions apply only in relation to the specific person that had previously been employed for a fixed term. It might in fact be difficult to obtain the relevant information in cases where a previous employment relationship dates back a long period of time exposes employers to the risk that the agreed fixed-term clause is invalid, resulting in the unintended conclusion of a permanent employment contract; however, as explained in the preparatory legislative documents (Gesetzesmaterialien) (BTDrucks 14/4374, p. 19), this risk is mitigated by the corresponding right of the employer to ask questions in relation to § 14(2) second sentence TzBfG.

(bb) Conversely, the opposing interests pursued by the legislature in the context of § 14(2) second sentence TzBfG are recognised under constitutional law as interests of considerable weight.

The provision primarily protects employees against successive fixed-term contracts, whether they follow one another immediately, are concluded with delays between them, or are even used deliberately, and that exploit the employees’ dependence on gainful employment. Here, the legislature responds to the typical asymmetry in employment relationships, fulfilling its duty to protect deriving from Art. 12(1) GG. At the same time, the legislature seeks to ensure the social security of employees by ensuring that the permanent employment relationship remains the regular form of employment. It also aims to maintain the sustainability of the social security system, which is largely financed by contributions generated in employment relationships. This gives effect to the principle of the social state enshrined in Art. 20(1), Art. 28(1) GG.

In addition, the legislature pursues the employment policy objective of combating unemployment. In this respect, the legislature enjoys wide latitude regarding the means chosen to achieve this objective. It is not objectionable under constitutional law if the legislature decides to permit fixed-term employment not based on objective reasons as a bridge towards permanent employment but to limit it, in principle, to the first establishment of an employment relationship with the respective employer. […]

(cc) Ultimately, it thus appears that the burdens entailed by § 14(2) second sentence TzBfG are not unreasonable. Constitutional law does not prescribe exactly how the constitutionally enshrined interests, which are partly in conflict, ought to be weighed. The regulatory approach that informs the challenged provision is covered by the political latitude the constitution affords the legislature. Thus, it is unobjectionable that the legislature gave precedence to the interest in ensuring social security through gainful employment, over the interests of previously employed job seekers, in cases where there is a risk that the structurally weaker position of employees might be exploited. […]

(dd) However, a prohibition of fixed-term contracts not based on objective reasons in respect of repeated employment relationships with the same employer is unreasonable where there is no risk of successive fixed-term contracts that exploit the structurally weaker position of employees, and to the extent that this prohibition is not necessary in order to maintain permanent employment relationships as the regular form of employment. In these cases, the protective aim of § 14(2) second sentence TzBfG does not justify the prohibition of re-hiring persons on the basis of fixed-term contracts that are not based on objective reasons, insofar as the prohibition conflicts with the legitimate interest of job seekers to find employment, for a fixed term at least, and with the equally legitimate interest of employers in more flexible conditions.

In particular, the prohibition of fixed-term employment contracts not based on objective reasons, which derives from § 14(2) second sentence TzBfG as interpreted by the referring labour court, may be unreasonable where the previous employment dates back a very long time, was of a completely different type or only lasted for a very short period. Such cases may include minor part-time jobs taken on while at school and university or during family-related leave periods [...], work-study trainees as well as student staff completing mandatory training requirements (cf. BAG, Judgment of 6 April 2011 – 7 AZR 716/09 –, BAGE 137, 275 para. 2), or persons who, by choice or not, have a disrupted employment history and are now pursuing a completely new career path or training and further education opportunities [...]. In such cases, the courts can, and must, limit the scope of application of § 14(2) second sentence TzBfG by way of an interpretation in conformity with the Constitution.

d) While the provisions of international law set out in Art. 8(1) ECHR, the European Social Charta and Art. 6(1) of the International Covenant on Economic, Social and Cultural Rights (ICCPR) must be taken into account in the interpretation of the Basic Law (cf. BVerfGE 74, 358 <370>; BVerfGE 146, 71 <143 para. 206>; established case-law), they do not give rise to any stricter requirements.

[…]

3. § 14(2) second sentence TzBfG is also compatible with Art. 3(1) GG

a) Under Art. 3(1) GG, any differentiation by the legislature must be justified by factual reasons that are appropriate to the aim and to the extent of the unequal treatment. Depending on the matter regulated and on the criteria for differentiation, varying constitutional requirements apply with regard to the factual reasons justifying the unequal treatment, from a standard limited to the mere prohibition of arbitrariness to strict requirements of proportionality (cf. BVerfGE 138, 136 <180 and 181 para. 122>; 139, 1 <13 para. 39>; 142, 353 <385 para. 69>; 145, 20 <86 and 87 para. 171>). In the present case, limiting fixed-term contracts to the first establishment of the employment relationship with the respective employer pursuant to § 14(2) second sentence TzBfG does affect job applicants who are former employees differently than job seekers who were not previously employed by the same employer. However, this differentiation is based on social and employment policy considerations; it is also reasonable given that cases of unreasonable hardship can be avoided by the means of interpretation available to the regular courts. In this respect, the above considerations concerning Art. 12(1) GG apply accordingly (cf. paras. 53 et seq.).

b) […]

II.

The constitutional complaint is well-founded. The challenged court decisions apply the case-law of the Federal Labour Court on § 14(2) second sentence TzBfG, thereby violating the complainant’s fundamental right under Art. 2(1) in conjunction with Art. 20(3) GG. In assuming that fixed-term employment contracts not based on objective reasons were only prohibited where previous employment dates back less than three years, the courts exceed the boundaries of tenable interpretation of statutory requirements, because the legislature clearly decided against laying down any such specific time period.

1. In the interpretation and application of the law, courts observe the principle of the rule of law (Art. 20(3) GG) if they keep within the boundaries of tenable interpretation and permissible judicial development of the law. Art. 2(1) GG in conjunction with Art. 20(3) GG protects individuals by requiring that these standards be observed in court decisions affecting them (cf. BVerfGE 128, 193 <206 et seq.>; 132, 99 <127 para. 73>).

Developing the law is part of the judicial responsibilities of the courts. The legislature has long recognised this, and has expressly tasked the supreme federal courts with developing the law (cf. for the Federal Labour Court § 45(4) Labour Courts Act, Arbeitsgerichtsgesetz – ArbGG). Still, the legislature retains the power to intervene in order to correct undesirable legal developments, thus fulfilling its democratic responsibility in the interplay between jurisprudence and legislation (cf. BVerfGE 132, 99 <127 para. 74>). Generally, judicial development of the law may not result in the courts replacing the legislature’s concept of substantive justice with their own concept (cf. BVerfGE 82, 6 <12 and 13>; 128, 193 <210>; 132, 99 >127 para. 75>). The courts may not disregard the spirit and purpose of the law as determined by the legislature, as they are obliged to respect fundamental legislative decisions. An interpretation of statutory law that overrides the clearly recognisable legislative intent does interfere, in an impermissible manner, with the competences of the legislature that enjoys democratic legitimation (cf. BVerfGE 118, 212 <243>; 128, 193 <210>; 132, 99 <127 and 128 para. 75>; 134, 204 <238 para. 115>).

In addition to the wording and systematic concept of a law, the preparatory legislative documents provide relevant indications for determining the underlying legislative concept (BVerfGE 133, 168 <205 and 206 para. 66>; cf. BVerfGE 129, 1 <25 et seq.>; 135, 126 <151 and 152 para. 81>; 137, 350 <367 para. 43>; 138, 136 <186 et seq. paras. 133 et seq., 145 et seq., 225, 244>; 138, 261 <281 para. 46>; 145, 171 <215 para. 121>). These include the explanatory memorandum to the draft act if this draft is enacted without changes, the related statements by the Bundesrat (Art. 76(2) second sentence GG) and the Federal Government (Art. 76(3) second sentence GG), and the statements, recommendations for decision and reports by the legislative committees. These documents typically contain the key considerations of the organs and actors involved in the legislative process.

The principle that the clearly recognisable legislative intent be respected is an integral element of a democratic and constitutional state order. It gives effect to the principle of the separation of powers (Art. 20(2) second sentence GG). The binding normative force of the law derives from the democratic legitimation of the legislature whose documented intent thus informs the content of the law. Therefore the clearly recognisable legislative intent may neither be disregarded nor distorted (see also BVerfGE 128, 193 <209>, 133, 168 <205 para. 66>). This also gives effect to the principle enshrined in Art. 20(3) and Art. 97(1) GG that the courts be bound by “the law”, subjecting them to the democratic decision of the legislature expressed in the text of its provisions, whose underlying considerations are at least partly documented in the preparatory legislative documents.

2. The interpretation of § 14(2) second sentence TzBfG as undertaken in the case-law of the Federal Labour Court and applied in the challenged decisions does not satisfy these requirements. In the challenged decisions, the courts override fundamental legislative decisions, replacing the regulatory concept of the legislature with a concept of their own which was clearly not wanted by the legislature. This exceeds the boundaries of permissible judicial development of the law.

a) § 14(2) second sentence TzBfG reflects a legislative decision to the effect that, in principle, fixed-term contracts not based on objective reasons concluded between the same parties are permissible only once, in the first employment relationship between the parties. This means that the legislature rejected the option to restrict the prohibition to a specific time period.

b) In this regard, the regulatory approach of § 14(2) second sentence TzBfGcannot be unequivocally determined on the basis of the wording alone. Nor does the systematic concept necessarily point to only one possible interpretation. However, both the preparatory legislative documents and the legislative history present the regulatory concept informing the provision. These sources document specific considerations concerning the significance, scope and objective of § 14(2) second sentence TzBfG, and determine the meaning of its wording (“previously”), thereby linking the legislative objective pursued to a means of implementation.

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c) The assumption that § 14(2) second sentence TzBfG was only applicable to previous employment dating back less than three years is not compatible with the fundamental legislative decision – as documented in the legislative materials and legislative history – that, in principle, any previous employment relationship with the respective employer triggers the prohibition of fixed-term contracts not based on objective reasons in any new employment relationship between the same parties, irrespective of how long the previous employment relationship dates back.

The interpretation of § 14(2) second sentence TzBfG undertaken by the Federal Labour Court is largely guided by the fundamental right to freedom of occupation under Art. 12(2) GG. However, the court replaces the legislature’s regulatory concept of permitting fixed-term contracts not based on objective reasons only once, in the first employment relationship, with the concept of permitting the conclusion of further fixed-term contracts not based on objective reasons after a waiting period has elapsed, thereby undermining the legislative intent to rule out successive fixed-term contracts. In fact, suggestions to adopt the latter regulatory approach did not secure the necessary majority during the legislative process (cf. BTDrucks 14/4625, p.18 [...]), and an interpretation undertaken by the regular courts must not simply disregard this. In balancing the interests of job seekers previously employed by the same employer against the interest in ensuring social security by means of gainful employment, the Federal Labour Court replaces the decision taken by the legislature with its own decision to the contrary when it gives precedence to the latter. By itself, a waiting period of three years is not a suitable means to systematically avoid unreasonable impairments of the affected fundamental rights interests (see paras. 51, 62 and 63 above).

C.

1. The answer to the question that has been referred to this Court is that § 14(2) second sentence TzBfG is compatible with the Basic Law, provided that its application is limited to cases where there is actually a risk of successive fixed-term contracts or where the permanent employment relationship as the regular form of employment is undermined (see paras. 41, 44 et seq. above).

2. The constitutional complaint is well-founded. The challenged decisions of the Labour Court and the Higher Labour Court exceed the boundaries of judicial development of the law, violating the complainant’s fundamental right under Art. 2(1) in conjunction with Art. 20(3) GG. Also, this violation of fundamental rights was decisive for the challenged decisions, given that the validity of the fixed-term clause in dispute, and consequently the rejection of the complainant’s claim in the initial proceedings, rested solely on the unconstitutional interpretation of § 14(2) second sentence TzBfG. Accordingly, the order of the Higher Labour Court is reversed and the matter is remanded to the Higher Labour Court for a new decision (§ 95(2) of the Federal Constitutional Court Act (Bundesverfassungsgerichtsgesetz – BVerfGG). The decision of the Federal Labour Court denying leave to appeal is thus rendered moot.

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