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This question is inspired by a question on Workplace Stack Exchange in which an employee of a German research institute was told by their boss's secretary:

Hey, we pay you one of the top salaries in our research group, but you live in a shared apartment in a remote district. It's obvious that if you spend 3-4 hours a day commuting and share a flat with a bunch of people, your performance at work is bound to be suboptimal, even though we have no specific complaints about your performance. Your work is critically important to our group, so we want to get the most from you and expect you to rent a comfortable apartment solely for yourself and close to work. That's why we pay you that much and your salary is supposed to cover this.

There are some other details in the secretary's message regarding dress code and eating together with colleagues, but for this question I want to focus only on the matter of how far away the employee lives and whether they live with other people or alone.

Given that there are admittedly no issues with the employee's performance, would it be legal for the employer to decline to renew the employee's fixed term contract solely because their commute is long and they live in a shared flat? Suppose for the sake of this question that the employer would definitely renew the contract if the employee acceded to the demand that they move closer and live alone, and the employer's demand is not related to the nature of the work (e.g. the employee is not required to get to the office quickly in case of emergency, and they do not take home sensitive information which would need to be kept from others in their household). If it would change the answer, assume that these demands would not be written into a renewal contract, rather they only form the basis of whether the employer chooses to offer a renewal.

The original question regards a German employer, and probably in the public sector, but information about other jurisdictions may be interesting too.

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  • In the USA, if your job requires a security clearance there could be issues living with foreign nationals. If your clearance is revoked you might be let go.
    – Jon Custer
    Commented Oct 10, 2022 at 15:51
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    There are too many variables and unfortunately everything potentially matters. You write we shall assume the contract will be renewed anyway. I think the easiest solution is probably: Does the signed follow-up renewal contract stipulate something like “The employee must live within x miles of workplace.”? “The employee must be the sole tenant of his/her residence.” Then we can answer whether such clauses are legally valid. Or are we really interested only in the question “Can an employee deny an applicant because of their place they live and how they live”?
    – Kai Burghardt
    Commented Oct 10, 2022 at 18:23
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    @KaiBurghardt In this case the contract doesn't specify such a thing and it seems unlikely that it would be added to a renewal contract, so let's suppose it isn't, and the terms of a new contract would be unchanged. Yes, the question is only whether the employer can deny an applicant because of those things, though the answer might depend on the fact that the applicant has already been employed in the same role and had no complaints about their performance (making it harder for the employer to argue that the requirements are based on real concerns about a prospective employee's performance).
    – kaya3
    Commented Oct 10, 2022 at 18:52
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    Regarding other variables, the employer's perspective is solely that they are making these demands because they think the employee would be even more productive, not out of any requirements connected to the nature of the work (such as a sysadmin having to be on-call, or an intelligence analyst needing security clearance).
    – kaya3
    Commented Oct 10, 2022 at 18:57
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    @PeterM Note that having "close relationships" with foreign nationals is something that a) can be reason to deny a security clearance (though the most important factor is the nationality of the foreign nation; if the foreign national is from the UK, Canada or Bermuda, or the Federated States of Micronesia, you're pretty okay. Conversely, if the foreign national is from China, Russia, Iran or North Korea, you might have more issues), and b) grounds to terminate security clearance. Security clearance is a privilege, not a right.
    – sharur
    Commented Oct 10, 2022 at 21:30

1 Answer 1

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Restatement of facts

  • Employee Kaya3 has been working for 22 months with employer E under a 2‑year fixed term employment contract.
  • E has informally hinted they would like to extend/renew the contract with Kaya3.
  • Yet there is no employment contract about the subsequent period yet.
  • E cites Kaya3’s distant place of residence and living conditions (a shared apartment) as the reasons for not concluding an employment contract. E fears Kaya3’s performance would suffer under these circumstances.
  • Kaya3 comes from a developing country and likes to save as much earnings as possible, i. e. prefers cheaper accommodation.
  • There is no public or internal job posting concerning the subsequent period.

Opinion Thoughts

  1. Contractual obligations
    There is no contract obligating the parties to conclude an employment contract. There is also no legal obligation to conclude a contract. This is an expression of freedom of contract. There are restrictions: For instance, the Universal Equal Treatment Act (AGG) forbids discrimination based on grounds of sex, ethnicity, age, among others. Yet violation of none the restrictions bear the consequence that a contract is concluded, as emphasized for instance in § 15 Ⅵ AGG.

  2. Quasi-contractual obligations
    Instead German labor law is completely focused on damages.

    1. culpa in contrahendo
      By starting business relations you are already entering a semi-contractual relationship, § 311 Ⅱ BGB. Here E and Kaya3 started talking about a future employment (= start of business relationship possibly culminating in conclusion of a contract). This “contract” imposes the duty to take account of each other’s interest, § 241 Ⅱ BGB. That means e. g. gaslighting someone, say, pretending you would like to conclude a contract even though there has never been such intent, is forbidden, because it is not in good faith, § 242 BGB. Breaching this duty could lead to a claim in damages, § 280 Ⅰ 1 BGB. However, in the present case there is not enough evidence that E was trying to “hurt” Kaya3. Quite the contrary, it is in the fixed-term contract’s nature to fulfill a temporary need. Furthermore, since Kaya3 still has 2 months to work, there is still time to conclude a follow-up contract. A damage – here lack of income – has not even occurred yet.

    2. unequal treatment c. i. c.
      E’s decisions to not (yet) hire Kaya3 could be veiled racial discrimination or xenophobia, illegal considerations as per §§ 7 Ⅰ, 6 Ⅰ 2, 1 Alt. 1 + 2 AGG. E says he was afraid of Kaya3’s work performance suffering when in fact he does not want to hire foreigners (here characterized by the circumstance that Kaya3 in fact prefers his current living situation which is quite normal in his country of origin). On the one hand E having already hired Kaya3 once indicates he does not discriminate based on such criteria. On the other hand it is possible that there was a change in HR’s personnel so a different recruiter (for which E is responsible) is in charge now. On the one hand Kaya3’s performance on the job never gave rise to consider firing him. On the other hand the fixed-term contract fulfilled a temporary need, thus a subsequent open-ended contract could have legitimately higher standards.

      Answering this will require complete details, but this kind of question is in fact very frequent in practice: Is it still a legitimate reason or already indirect discrimination?

  3. Tort obligations
    The regulations of the Universal Equal Treatment Act (AGG) could be considered guard statutes for §§ 823 Ⅰ, Ⅱ 1 BGB, yet the AGG is lex specialis to the general provisions of the BGB. In general, damages are those legal rights the damaged party would have without the damaging event, § 249 Ⅰ BGB. Thus you could say, “refusing to contract” was the damaging event; if we omit the “damaging event” there would have been an employment contract. However, as § 15 Ⅵ AGG emphasizes, conclusion of a contract cannot be damages. This is again a consequence of the freedom of contract which is an expression of the universal personal rights enshrined in the Basic Law, Art. 2 Ⅰ in conjunction with Art. 1 Ⅰ GG (partially applicable to a company, Art. 19 Ⅲ GG, even though a company doesn’t have a “personality”).

  4. Conclusion
    Kaya3 is not entitled to get an employment contract, nor does he have a claim for damages.

Answer

Just to answer your question: Yes, generally speaking an employer is allowed to discriminate based on where and how someone lives. An employment contract, § 611 BGB, has to be fulfilled in person. You cannot, say, send your brother to do the work which you are supposed to do (the employer will rightfully reject such performance). Thus the employer can have arbitrary standards when filling a vacancy, even criteria that do not seem related to the job. There are just the criteria like religion, beliefs, sex, ethnicity, and so on, which may not be taken into consideration. So, even though an employer’s question like “Have you visited a mosque before?” is neutral in nature, it creates exposure to litigation (potential indirect discrimination again).

It is also perfectly legal not to hire somebody, simply because they have already worked for the same employer (or predecessor) under a fixed-term contract and thus the next employment contract (if any) must be an open-ended contract (unless there is a good reason) [simplified summary of the TzBfG]. This practice has been repeatedly criticized by (left-leaning) labor unions and other parties.

Advice

  • Social insurance: Always inform the employment agency (3 months ahead) about looming unemployment even if the current employer says “we’ll extend your contract”. Otherwise you run the risk of a period of disqualification (Sperrzeit, § 159 Ⅰ 2 No. 9 SGB Ⅲ), because the employer might change his mind until you have concluded a contract.
  • Switching employers: Never terminate an open-end employment contract until you have signed the contract with the new employer. Otherwise, the new employer might retract his (informal) offer and then you’re out of work completely.
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