Federal Labor Court provides clarity: No obligation for employees to reimburse recruitment agency commission!

Employers often use recruitment agencies to recruit staff. A contractual clause that obliges employees to repay the agency commission in the event of premature termination is invalid. Find out more about the details and the ruling of the Federal Labor Court here.

The case in detail

Background to the judgment

In the underlying case of the Federal Labour Court (BAG, judgement of 20.6.2023, 1 AZR 265/22), an employment contract was concluded between the employer and the employee with effect from 1.5.2022 due to the placement of a personnel service provider. The employer paid the agency commission of € 4,461.50 to the agency. A further € 2,230.80 was due after the successful completion of the six-month probationary period. In order to cover these costs, the employer included a clause in the employment contract stating that the employee had to reimburse the placement commission paid if the employment relationship did not continue beyond June 30, 2022 and was terminated for reasons for which the plaintiff was responsible, among other things.

Termination and dispute

It came as it had to. The employee terminated the employment relationship during the probationary period. The employer invoked the above-mentioned clause and withheld a partial amount of € 809.21 net from the remuneration. The employee then sued for this amount, whereupon the employer filed a counterclaim for the remaining amount of the agency commission in the amount of € 3,652.39.

Ruling of the Federal Labor Court

The lower courts upheld the employee’s claim and dismissed the counterclaim. So did the BAG. The repayment clause agreed in the contract is invalid. It impairs the employee’s right to free choice of employment guaranteed by the German Basic Law. Furthermore, the employer must bear the financial expenses incurred for recruitment and may not transfer these to the employee.

Conclusion

What do we learn from this? Not every clause in the employment contract is effective.