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Do you want to quit your new job before starting work? When you, as an employee, are threatened with claims for damages

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Little legal knowledge can cost a lot of trouble, time, and money. Do you prefer to take things easy with your nerves and your wallet? Then our “Know Your Rights” column is just what you need. Here, the two lawyers Pascal Croset and Inno Merkel from the Berlin law firm Croset answer a question about employment law every two weeks. This text deals with the question of the conditions under which termination notice can be given before starting a new job.

Those who sign an employment contract usually do so with the intention of occupying the new position. And employers are unlikely to hire new employees unless there is a clear intent to employ them. And yet, there are always ends on one side or the other, even if the ink on the new paper is not completely dry. How can it be?

After all, the new job is so much closer to home, commuting times are cut in half. Or you fit much better than with the last employer for family reasons, you get more money for less work, co-workers are nicer… So there are as many good reasons to change jobs as there are good reasons to hire. New employees.

How and why it sometimes doesn’t work and what to do then, we will explain step by step here.

Why do you resign before starting work?

The following scenario: You have signed the employment contract and above all you have a good reason to be happy. But then this happens:

  • You explain to your current employer that you were looking for and found a new challenge, but your boss doesn’t want to let you go and responds with a counter offer, a raise or a promotion.

  • Or you applied for multiple positions at the same time and received an even better offer from another employer.

  • Or your private situation, your living conditions, have changed. After all, you can no longer start the new job in the other city because you met someone at the current workplace, for example.

There are other possible reasons, but in any case it should be clear that there are good reasons for not wanting to take a job after all. And since you have already signed the new employment contract, this is only possible with a notice of termination.

By the way, the same can also happen to the new employer. For example in these cases:

  • Suddenly, business is so bad and hiring freezes.

  • Or the planned work does not go as expected: the employee who really wanted to leave the company now stays after all.

  • Or the perfect candidate for this position has accepted in the meantime.

Many other reasons are also conceivable here, and here too it becomes clear: there will be more behind a dismissal before the first day of work, i.e. just organizational chaos or malicious intent.

Terminating an employment contract before it begins, is that possible?

An employment relationship can be terminated by both contracting parties, ie both the employer and the employee, before the first day of work. Since the duration of the employment relationship is less than six months, the legal protection against dismissal does not apply here (§ 1 KSchG). Therefore, the so-called “termination reasons” are not necessary. This allows for ordinary termination before work begins.

But you shouldn’t make it too easy either: simply “opting out” of the contract or revoking it by email is out of the question. If you want to separate, you must give actual and proper notice of termination. In practice, employees repeatedly choose a tactic that recruiters call “ghosting” or “no-shows”: they simply don’t show up. Theoretically, the employee is threatened with claims for damages, which we have already described in detail.

However, the risk of having to pay actual damages is limited: employment courts only award damages to employees if the employer can specifically quantify the damage suffered. Experience has shown that this is very rarely the case. Therefore, employers have developed two employment contract clauses to protect themselves at least somewhat from new hire no-shows: termination exclusion before starting work and contractual sanctions, also combined if desired.

What is the “exclusion of dismissal before the start of work” and the contractual sanction?

There are formulations in the employment contract that prohibit the contracting parties from giving notice of termination before the start of the employment contract. This ensures that a notice of termination can only be given on the first day the employment contract comes into effect (ie when you start work). Termination is therefore possible on the first business day at the earliest, in which case the notice period must always be observed.

Therefore, the employee must continue to work during the notice period, and the employer must pay him. This notice period is usually 14 days, since a trial period is usually agreed in employment contracts. But this is not mandatory.

In some cases there is no trial period. As a result, statutory notice periods apply (four weeks to the end of the month or the 15th of the month) or contractual notice periods, whichever are longer (advanced start-ups still often agree to a notice period three months). In this case, as an employee, he is obliged to assume the position, even if he has already decided not to do so.

At the same time, employment contracts usually contain what is known as a contractual sanction agreement. Thereafter, the employee agrees to pay a contractual penalty in case of delay or total failure to start work. However, according to the landmark judgment of the Federal Labor Court of August 19, 2010 (8 AZR 645/09), this contractual sanction cannot exceed the salary that would have been payable for the notice period. Specifically: If the parties had agreed on a trial period during which the notice period would have been 14 days, the contractual sanction may only amount to slightly less than half of a monthly gross salary. Otherwise, the agreement on the contractual penalty is ineffective.

However, as employment law attorneys, we experience time and time again that things work very differently in practice: the parties often end up signing a termination agreement. An example: Sonja signs an employment contract with ABC GmbH in March 2022 and is scheduled to start work on July 1, 2022. A trial period of six months, a monthly gross salary of EUR 5,000, a penalty contract of EUR 2,000 in case of default, no termination before the start of the contract. In late April 2022, Sonja unexpectedly received the dream job promise from him and informed ABC GmbH that he would like to “opt out” of the contract. The HR manager is first disappointed, then a little angry, and says that Sonja should pay the contract fine.

Sonja then contacts an employment law attorney, who informs the employer that Sonja will start work on July 1, 2022 and, at the same time, will serve a termination notice on July 15, 2022. She notes that the employer he’s certainly not interested in training Sonja for 15 days and then immediately letting her go. In addition, the employer would then have to pay remuneration for this time, about half of a month’s salary.

After all, then no contractual penalty would apply, because he would have terminated Sonja properly and on time. In the context of this scenario, which is completely disastrous for ABC GmbH, he proposes that ABC GmbH terminate the employment relationship with immediate effect by means of a termination agreement, but without paying a contractual penalty. All of this sounds absurd at first, but it has happened several times in our practice.

Particular Annoyance: Placement Fee for Headhunters

Of course, employers get particularly upset if they have previously paid an agency fee for a headhunter. Because placement fees for headhunters are generally paid when the employment contract is signed. Consequently, employers must also pay this rate if the worker never begins the employment relationship.

Employers then regularly ask if the agency fee, usually a five-digit sum, can be billed to the employee as compensation. However, this is not possible. If the employee resigns on time, he has not violated any obligation. This falls within the employer’s sphere of risk. The only option for employers here is to agree on placement fees in advance, so that, for example, one-third is paid when the contract is signed, one-third after six weeks of employment with the company and one-third after the trial period ends. passed. Of course, whether this can be applied on the market today is another question.

This article was last updated on March 18, 2022. It was released on March 17, 2022.

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