League clause in employment contracts - Relegation is not a legitimate reason for setting a time limit
Under certain circumstances, it is possible to provide employment agreements with a set time limit. In this respect, the labour court (Arbeitsgericht, ArbG) of Solingen recently had to decide how this rule needs to be applied in professional sport. The subject-matter of the proceedings was an agreement that provided for automatic termination in the event of relegation from the league.
In its judgement of 30.10.2024 (case reference: 4 Ca 729/24), the ArbG Solingen ruled on a handball club that had agreed a so-called league clause in the employment agreement with an assistant coach. According to this clause, in the event of a relegation the agreement would be terminated. During the 2023/2024 season, the club was still playing in the 1st national handball league; subsequently, it was relegated to the 2nd national handball league.
The ArbG Solingen ruled in favour of the assistant coach and explained that the league clause was ineffective. Consequently, there was no legitimate reason for setting a time limit so that the employment relationship had to continue. Under Section 14(1) of the Part-Time Work and Fixed-Term Contracts Act (Teilzeit- und Befristungsgesetz, TzBfG), a time limit on objective grounds is only allowed where recognised objective reasons exist - these were not present in this case. The club admittedly argued that the assistant coach had himself asked for the league clause to be included and that this constituted an objective reason pursuant to Section 14(1) no. 6 TzBfG. However, the court did not accept this argument because it did not consider that the clause was actually in the interests of the coach.
