“Hardball” in negotiations on termination agreements

Monday, 20.06.2022

Anyone who signs a termination agreement must also abide by it. This applies in principle even if strong psychological pressure is exerted by superiors to get the signature. Supervisors therefore have a lot of leeway when negotiating termination agreements, although there are of course limits. For this reason, it is often difficult for employees to withdraw from a signed termination agreement because of inadmissible negotiation methods.

For example, the Federal Labour Court recently finally dismissed the complaint of an employee who tried to challenge the termination agreement she had signed.

Facts of the case: Offer could only be accepted immediately

The plaintiff was employed by a company as a sales team coordinator. She was invited to a meeting with the managing director and a company counsel on 22 November 2022. The counsel introduced himself as an “employment lawyer”. The reason for the meeting was not announced to her in advance. There, the plaintiff was accused for the first time of having unauthorisedly changed purchase prices in the company’s electronic system in order to feign higher sales profits. She was then offered a termination agreement with a termination date of 30 November 2022.

According to the plaintiff, she was threatened with immediate termination and criminal charges if she did not sign the contract. She asked for time to think it over and for advice. She was refused, however, and told that the offer could only be accepted immediately. After a break of about ten minutes, during which all three sat in silence at the table, the plaintiff signed the termination agreement.

Threats of summary dismissal and criminal charges possible

Superiors can threaten termination without notice or even criminal charges if, objectively speaking, they may seriously consider doing so. Termination agreements are invalid on the other hand if the threatened consequences are obviously legally untenable. In this case, however, there was potentially fraudulent conduct at issue, so that the employer had reason enough to consider termination without notice as well as criminal charges.

No unfair bargaining despite massive pressure

Somewhat surprisingly, the Federal Labour Court also ruled that the employer had not violated the requirement of fair negotiation here. In a decision from 2019, the court had still emphasised that no “psychological pressure situation may be created or exploited which makes a free and considered decision on the conclusion of a termination agreement considerably more difficult or impossible”. According to the latest decision, superiors do have a lot of leeway to exert massive pressure when negotiating termination agreements. In this case there was an unannounced meeting, being “outnumbering” with a lawyer present, threats of summary dismissal and criminal charges as well as no reflection period or opportunity for consultation come together.

Practical tips

After this decision, employers have more clarity about permissible means of pressure in termination agreements. For employees, the very urgent advice here is never to sign contracts rashly. Both sides should document the content and circumstances of sensitive discussions.

Bundesarbeitsgericht, Urteil vom 24.2.2022, Aktenzeichen 6 AZR 333/21