Fixed-term Employment Under A Court Settlement

In its judgment of 4 March 2026 (case no. 7 AZR 297/24), the Federal Labour Court (Bundesarbeitsgericht, BAG) made clear that a fixed term agreed in a court settlement is only valid if the court helped to shape what the settlement says. The decision confirms the BAG’s existing case law on fixed-term agreements in court settlements.

Facts

From September 2018, the claimant worked as a skilled worker at a nuclear power plant under a fixed-term employment contract. He brought a claim challenging the validity of that fixed term. At the conciliation hearing, the parties discussed a settlement but could not agree. They then continued negotiating through written submissions. In the end, they agreed that the employment relationship would end on 30 June 2023 under a further fixed term. Until then, the claimant would be released from work on full pay. The parties sent the settlement they had negotiated to the Labour Court as a joint proposal. By order of 27 October 2022, the court formally