Germany: Bureaucracy Relief Act IV
Written By
Associate
Germany
As an associate in our International HR Services team in Düsseldorf, I advise our domestic and foreign clients in all areas of individual and collective employment law as well as social security law.
Is the digital employment contract finally on its way?
The Bureaucracy Relief Act IV (German: Bürokratieentlastungsgesetz IV, short form: 'BEG IV'), which is scheduled to take effect on 1 January 2025, will bring about several changes for companies in Germany. The German government has decided to reduce the administrative burden on companies and simplify processes. Specifically, the aim is to advance the digitisation of work-related processes. While the goals of the law are certainly positive, it still poses some challenges. In this newsletter, we would like to provide you with an overview of the planned changes and highlight the impacts they may have on your company.
What changes does the BEG IV bring with it?
The BEG IV is intended to reduce the burden on companies in Germany through various measures. The following chart compares the previously and the planned regulations of the BEG IV, which are intended to ensure more digitalisation in the employment relationship:
| Previous regulation | Planned regulation |
| Formal requirement of the employment contract (Section 2 Act on notification of conditions governing an employment Relationship, (”NachwG”) | |
| Written form (Section 126 German Civil Code (“BGB”) | Text form (Section 126b BGB) |
|
This means:
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This means:
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| The written form requirement remains in place for companies in the areas covered by Section 2a of the Act to Combat Illegal Employment (“SchwarzArbG”). This applies to:
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| Issuance of employment references | |
| No electronic issuing of employment references possible (Section 109 (3) Trade, Commerce and Industry Regulation Act (“GewO”) | Employment references can in future be issued in electronic form |
| Transfer agreement between borrower and lender in the Act Regulating the Commercial Leasing of Employees (“AÜG”) | |
| Contract between borrower and lender must be in writing (Section 126 BGB) | Contract between borrower and lender is in future possible in text form (Section 126b BGB) |
| Fixed-term employment contracts until the standard retirement age is reached | |
| Employment contracts that contain the provision that the employment relationship ends automatically when the employee reaches retirement age must be in writing (Section 126 BGB) |
In future, employment contracts with such a provision can also be concluded in text form (Section 126b BGB) Please note: For other fixed-term contracts under the Part-Time and Fixed-Term Employment Act (TzBfG), the written form requirement under Section 14 TzBfG applies. |
| Notice of the Working Hours (“ArbZG”) and Youth Health and Safety at Work Act (“JArbSchG”) | |
| The Employer must display or make accessible the provisions of the ArbZG and the JArbSchG and the collective agreements and works agreements based on them in the company. | It is sufficient to publicise the ArbZG and the JArbSchG in electronic form as is customary in the company, for example by making them available on the intranet |
| Form of applications in the Parental Allowance and Parental Leave Act (“BEEG”) | |
| Applications for parental leave, part-time parental leave and their rejection must be made in writing (Section 126 BGB) | In the future, applications for parental leave, part-time parental leave and their rejection will be possible in text form (Section 126b BGB) |
Will the BEG IV reduce the burden on companies?
Although the BEG IV is a step in the right direction, the question arises as to whether this law will actually help to reduce the burden on companies. In particular, the fact that many employment contracts contain (double) written form clauses, according to which changes to the employment contract and additional agreements must still be made in writing, should be viewed critically. This contractual provision cannot be changed unilaterally by the employer. Therefore, it requires a mutually agreed amendment to the contract between the employer and each individual employee, which must be signed by both parties to the employment contract. This results in a considerable amount of red tape and its success is questionable, as the employees are not obliged to sign this agreement. If the employer decides to waive the written form clause for all new contracts only, this will result in further bureaucratic effort. In this case, the employer must check for each agreement based on the employment contracts whether the contract amendment is possible in text form or whether the written form is still required.
Conclusion
In summary, it can be stated that although the BEG IV is a step in the right direction and promotes digitalisation in the employment relationship, it does not remove all bureaucratic hurdles. In particular, the fact that many employment contracts still contain written form clauses poses a challenge and requires a high level of bureaucratic effort. It remains to be seen whether the law will ultimately help to ease the burden on companies. Nevertheless, it is important that the German government takes the issue of bureaucracy reduction seriously and takes measures to support companies in Germany. It is to be hoped that further steps in this direction will follow.
