In a recent landmark ruling, the Federal Labour Court (BAG) has clearly rejected blanket release clauses (judgment of 25 March 2026 – 5 AZR 108/25). Employers are therefore well advised to review their standard employment contract templates and revise them where necessary.
In practice, employment contracts frequently contain release clauses which entitle the employer, without any restrictive conditions, to release the employee from work (place the employee on garden leave) following termination until the expiry of the notice period. In the recent past, there has already been a growing trend in lower court case law to regard such unrestricted release clauses as invalid. We recently drew attention to this here. The Federal Labour Court has now confirmed this case law, thereby significantly restricting current practice – the giving of notice and ‘automatic’ immediate release from work.
According to the Federal Labour Court, blanket release clauses constitute an unreasonable disadvantage to the employee and are therefore invalid on the grounds of a breach of the law governing standard terms and conditions.
In the case underlying the Federal Labour Court ruling, the claimant had been working as a regional sales manager in the field sales force since 2022. The employee was provided with a company car for this purpose, which could also be used privately. The employer was to be able to reclaim this vehicle in the event of the employee’s release...
By John Kruzel WASHINGTON, May 18 (Reuters) - The U.S. Supreme Court declined on Monday to hear a challenge by drugmaker Eli Lilly to a Civil War-era whistleblower law that has recovered billions ...