No company pension entitlement after changing employment?

9/24/2020 – If a fixed-term employment is immediately replaced by an open-ended employment relationship, the start of service is considered to be the start of employment within the meaning of the company pension scheme. The Federal Labor Court ruled that on September 22, 2020 (3 AZR 433/19).

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The decision was based on the action brought by a man whose fixed-term employment relationship was immediately replaced by an open-ended employment relationship.

Requirements according to the pension scheme met?

That would not have been a cause for litigation. However, there was disagreement on the question of whether the employee was entitled to a company pension scheme. This is because the employer’s company pension scheme stipulates that there is only an entitlement to a pension commitment if an employee has not yet reached the age of 55 at the start of the employment relationship.

The plaintiff had fulfilled this requirement with the start of the temporary employment, but not with that of the permanent employment. At this point he was over the age limit. His employer was therefore of the opinion that the employee was not entitled to a company pension.

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Judges at two instances saw a legitimate claim

Neither the Lower Saxony State Labor Court, which was dealt with the case in the lower instance, nor the Federal Labor Court appealed to by the employer in revision would agree with this legal opinion.

Both courts considered the employee’s claim for a company pension from his employer to be justified.

It depends on the beginning of the employment as such

In the opinion of the judges, in cases in which a fixed-term employment relationship is immediately followed by an open-ended one, the start of the employment as such and not that of the open-ended employment relationship is fundamental.

In the case of the plaintiff, this means that he has met the prerequisite for entitlement to a company pension from his employer as stated in the pension scheme.

The Federal Labor Court confirmed this on the same day in an essentially similar case. In that, the judges also rejected the defendant employer’s appeal as unfounded.

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