Fixed-term employment contracts in the context of grant projects

The law on fixed-term contracts repeatedly poses considerable problems for many employers when drafting employment contracts. There is often uncertainty as to how often, for how long and, in particular, for what reasons employment relationships can be limited in time.

Uncertainty still exists in cases where employees are to be hired for a fixed term for recurring projects.

  1. Fixed term without material reason

In the current version of the Part-Time Fixed-Term Employment Act, the employer can grant the employee a part-time employment contract in accordance with Section 14 Para. 2 TzBfG for a fixed term of up to two years. The employment relationship can be extended within this period, unless a fixed-term employment relationship already existed with the same employer.

Longer fixed-term contracts without objective grounds are possible in exceptional cases if this has been directly stipulated in a collective agreement or if the employment relationship is subject to the scope of such a collective agreement through reference clauses. Further exceptions are conceivable in cases where an employee has exceeded a certain age limit or where a company is in the start-up phase.

  1. Fixed term with objective reason

According to § 14 Abs. 1 TzBfG, a fixed-term employment contract is permissible if it is justified by an objective reason. The regulation lists a number of (non-exhaustive) reasons for which an employment relationship can (theoretically) be limited in time as often as desired.

The decisive factor for the assessment of the existence of such a reason is the respective time of the conclusion of the contract – whether the objective reason ceases to exist later is irrelevant. However, it should be noted that the objective reason for a fixed-term employment relationship that has reached the end of its fixed term is generally “used up”. A further fixed-term employment relationship therefore again requires an objective reason, which must exist at the time the contract is concluded.

In the case of several consecutive fixed-term employment relationships, only the validity of the fixed term of the last employment relationship is to be reviewed by the labor court.

  1. Project time limit

Particular attention should be paid to § 14 para. 1 No.1 TzBfG if the need for work is only temporary, for example because it is a recurring project for the (public or publicly funded) employer (so-called project limitation). In these constellations, the TzBfG presupposes that, at the time the contract is concluded, it can be expected with sufficient certainty on the basis of concrete facts that the employee will no longer have a need for employment beyond the intended end of the contract. This applies to both private and public employers.

The Federal Labor Court specified the requirements for the employment forecast in its ruling of 23.01.2019 – Ref.: 7 AZR 212/17 and 21.08.2019 7 AZR 572/17).

According to this, the prerequisite is that the operational need for the work performance is only temporary, the permanent staff deployed for the completion of a temporary project is not sufficient and the project carried out is not a permanent task.

In this context, difficulties regularly arise in distinguishing the characteristic of a “permanent task” from other definable additional tasks within the scope of normal business operations.

The BAG states in this regard:

“The permanent tasks of an employer include the activities that he performs continuously and essentially unchanged within the scope of his business purpose. Additional tasks, on the other hand, are activities that either occur only irregularly – for example for special reasons – or are associated with unforeseeable special requirements, also with regard to the qualification of the required personnel, and therefore do not cause any foreseeable personnel requirements both in quantitative terms and with regard to the qualification of the required personnel. The administration of a time-limited funding program can be considered a permanent task if such administrative tasks are performed continuously and essentially unchanged within the framework of funding programs and justify a need for personnel that can be planned for a longer period of time.

The BAG only acknowledged the situation with regard to the forecast of temporary additional requirements in relation to projects financed by third-party funds in a subordinate clause and continues to leave the actual determination to the assessment of the lower courts. The fact that the employer is provided with financial resources or benefits in kind by a third party to carry out the activities pursued in the project should in any case regularly speak in favor of the existence of a project, whereby the mere uncertainty about the funds available in the future should not be sufficient as a material reason for a fixed term. Furthermore, mere promotion without a specific reference or individual project planning subsequently undertaken by the employer, e.g. in the case of institutional promotion, is not sufficient.


Before concluding fixed-term employment contracts due to temporary additional requirements, employers funded by third parties in particular should therefore continue to check carefully, especially on the basis of the grant notification or grant agreement, whether the funding is being granted for a specific funded and therefore time-limited project or whether the funding is being granted without a specific project reference. In the latter case, a fixed-term employment relationship cannot generally be based on a temporary need. At the same time, the employment contract must ensure that the activity is actually exclusively project-related and that no permanent tasks of the employer are taken on. And finally, these stipulations must not be thwarted by the actual behavior of employers, in that permanent tasks outside of the project are assigned in the course of everyday work.