Bad Faith Failure to Seek Alternative Employment – Federal Labor Court Strengthens Employer's Position

While a wrongful termination action is pending, the terminated employee is required to seek reasonable alternative employment. By sending the employee appropriate job openings, the employer can expand the employee's obligation to make reasonable efforts to find new employment, reducing potential claims for compensation based on the employer's failure to accept services from the plaintiff.

According to a decision of the Federal Labor Court (BAG) (judgment of February 7, 2024 – 5 AZR 177/23), an employee has failed to make a good-faith effort to find alternative employment within the meaning of § 11 no. 2 of the German Wrongful Termination Act (Kündigungsschutzgesetz) if, despite knowledge of all objective circumstances, the employee intentionally fails to take action during the period of the employer's failure to accept services and either fails to accept or purposefully prevents finding reasonable alternative employment.

In the case decided by the Federal Labor Court, the plaintiff, who had been terminated by the employer, told the employment agency that he did not wish to receive any information about job openings from the agency and that, should he nonetheless be forced to apply for new jobs, he would reject any job offers during job interviews and advise prospective new employers of the ongoing wrongful termination action. In the time that followed, the plaintiff did, in fact, receive no information about job openings from the employment agency and only worked as a substitute a few times.

The Federal Labor Court held that the plaintiff's conduct amounted to bad faith failure to seek alternative employment.

In the view of the Federal Labor Court, an employee has an obligation under social security law to proactively cooperate on avoiding or ending unemployment. This also has an effect on the employee's obligations under employment law. The court also noted that alternative employment was not unreasonable simply due to lower pay.

The Federal Labor Court found that the plaintiff had sought to prevent from the very outset that his job application would be considered beyond the first round. Advising a prospective employer of an ongoing legal action with a former employer even before the first interview and without being asked to do so, the court ruled, was not the conduct of a person who was actually looking for employment.

The Federal Labor Court also strengthened the position of the employer by finding that the employee's failure to consider suitable job openings amounted to bad faith:

"This also means, however, that the employer may send the employee suitable job openings, e.g., jobs advertised in newspapers or on private job portals, to prompt the employee to actively review and consider alternative employment options."

"The employee is required – to a reasonable extent – to consider and apply for such [advertised job openings]. The employee is required to explain and state what actions to that effect he has taken."

If an employee then fails to explain what efforts, if any, he has made, the court may reduce any claims for compensation based on the employer's failure to accept services from the plaintiff, if the court has concluded that reasonable alternative employment was available to the plaintiff.