Governing Parliamentary Groups agree on Digital Employment Contracts
Written By
Partner
Germany
As a partner and specialist lawyer for employment law in our Frankfurt office, I head our German Employment group and I am a member of our International HR Services groups.
Associate
Germany
I am an associate in the employment team based in Frankfurt, and I advise our international and domestic clients on all aspects of individual and collective employment law.
Reversal of Written Form Requirement for Employment Contracts: On March 21, 2024, the parliamentary groups of the “traffic light” coalition announced their intention to reverse the August 2022 amendment to the Evidence Act, which mandated that employment contracts must be in written form, e.g. signed with "wet ink". The proposed change, to be processed through the Bureaucracy Relief Act IV, would transition this requirement to text form, allowing for electronic means such as email and digital signatures.
Significant Practical Implications
The revised draft of the Bureaucracy Relief Act IV aims to permit the execution of employment contracts not only in written form, as stipulated by the Evidence Act, but also in text form (as per Section 126b of the German Civil Code), with a provision that they can be transmitted in "printable form". While the initial draft of the Bureaucracy Relief Act IV proposed the replacement of written form with electronically qualified signatures (QES) under Section 126a of the German Civil Code, this aspect is now subject to amendment.
In a communication addressed to the relevant associations, the German Minister of Justice Dr. Buschmann specifies that electronically signed employment contracts must be accessible for both employers and employees, and must also be storable and printable. Employers must provide evidence of transmission and receipt and, at the employee’s request, written confirmation. Furthermore, the electronic employment contract must include essential working conditions in compliance with the Evidence Act.
Exemptions are to be granted to sectors or industries listed in the Act to Combat Illegal Employment (§ 2a SchwarzArbG), such as the construction industry, building cleaning and the meat industry.
The written form requirement for employment contracts has proven to be a significant practical hurdle, particularly in an era where remote work is increasingly common, and decision-makers are dispersed globally. Eliminating this requirement would reduce the red tape considerably for companies, enabling them to digitally sign employment contracts without fear of penalties and facilitating smoother talent acquisition processes.
Written Requirement for Fixed-Term Contracts and Notices of Termination Remains
In its current form, the Bureaucracy Reduction Act IV does not include any amendments to the written form requirement in the Part-Time and Fixed-Term Employment Act (Section 14 TzBfG). This omission is noteworthy because, according to a ruling of the Federal Labor Court (BAG, judgment of October 25, 2017, 7 AZR 632/15), agreements providing for the termination of employment upon reaching retirement age constitute fixed-term employment relationships and therefore require compliance with the written form requirement pursuant to Section 14 IV TzBfG. Accordingly, employment contracts containing this clause, which is to be regarded as standard, would still theoretically have to be concluded in written form.
Additionally, the current draft of the Bureaucracy Reduction Act IV does not propose any adjustments to the written form requirement for notices of termination (Section 623 BGB), meaning that they remain subject to the written form requirement under Section 126 BGB.
Potential further changes may be incorporated during the subsequent legislative process, as suggested by Justice Minister Dr. Buschmann in a recent policy paper (Will notices of termination soon be possible via e-mail?).
It is crucial to emphasise that this legislation has not yet been finalised, and therefore the amendments are not yet in force. The fate of the proposed draft in its current form remains uncertain pending further legislative proceedings.
(The revised draft of the Bureaucracy Relief Act IV has not been officially released. Reference is made to previously issued press releases in the preceding section.)
