Why Excessively Long Notice Periods in Employment Contracts Backfire

Business owners who want to retain skilled staff over the long term sometimes resort to drastic measures. At first glance, a notice period of several years in the employment contract seems to be a clever safeguard against sudden staffing gaps. However, the courts draw a clear line here. In its landmark judgment of 19 January 2016 (case no. 3 Sa 406/15), the Saxony Higher Labour Court (Sächsisches Landesarbeitsgericht) ruled against a haulage company that had sought to bind an employee for three years by way of a supplementary agreement. The Federal Labour Court (Bundesarbeitsgericht, judgment of 26 October 2017 – 6 AZR 158/16) upheld the lower court's decision and dismissed the claimant's appeal on points of law.

The judges considered such an excessive length to be an unreasonable disadvantage for the employee. In the court's view, a substantial extension beyond the statutory notice periods unreasonably disadvantages the employee if it restricts their professional mobility to an extent that can no longer be justified by the employer's legitimate interests. A commitment lasting several years severely curtails flexibility, as hardly any new employer is prepared to wait that long to fill a position. The practical consequence is clear: if the contractual clause is invalid because of its excessive length, the short statutory basic notice period of four weeks automatically applies again to resignation by the employee.

Instead, rely on legally sound notice periods of no more than six months and actively strengthen employee retention through a positive corporate culture, attractive career prospects and market-rate incentives.