Introduction of Extensive Simplifications in Employment Law Through the Bureaucracy Reduction Act IV

From an employment law perspective, the purpose of downgrading strict written form requirements to text form is particularly noteworthy. The text form does not necessitate a handwritten signature, hence allowing declarations to be made via email or text message.

In the following, we outline the most significant changes introduced by BEG IV from an employment law perspective:

Verification Act

With the Verification Act of 2022, the legislature, in our opinion, opted to create rather than eliminate bureaucratic hurdles for companies. The formal requirements newly introduced at that time are now being partially mitigated by BEG IV. Essential employment terms and conditions, as well as changes to them no longer need to be handed over in written form but can now be drafted and transmitted in text form, which is a significant relief, particularly for international companies. The corresponding document must be downloadable and storable by the recipient and its receipt must be confirmed. However, the recipient may still request that the terms and conditions be provided in written form. These formal simplifications do not apply to companies operating in a sector particularly affected by undeclared work and illegal employment.

Age Limitations

Contractual age limitations in employment contracts will no longer require written form. This refers to clauses that stipulate that the employment relationship will automatically terminate when the individual reaches the statutory retirement age as defined by law. Whereas previously a handwritten signature from both parties was required, now text form is sufficient for age limitations. This formal simplification also applies to the extension of the agreed retirement age. This requires caution, as any regular fixed-term agreement still necessitates the written form of the limitation agreement. There is no planned change in this regard.

Parental Leave Application in Text Form

The bureaucratic burden is eased not only for employers, but also for employees. Henceforth, text form will suffice to apply for parental leave and part-time parental leave.

Employee Leasing Agreements

Changes introduced by BEG IV also affect the area of employee leasing. The mandatory written form requirement for employee leasing agreements between lending and borrowing companies is abolished, allowing such agreements to be concluded in text form.

Electronic Reference Letters

A novelty is introduced for reference letters. Previously, reference letters had to be issued in written form, with any electronic form excluded by law. Now, with the recipient’s consent, reference letters can be issued electronically. It remains to be seen whether the electronic form will be broadly accepted.Additionally, technical follow-up questions come up: it is common for final reference letters to bear the date of termination. Now, when reference letters are electronically signed, the time of the electronic signature is identifiable, revealing any discrepancy between the stated issue date and the signature date. Conclusions could be drawn from this, e.g. about a longer-lasting labor court dispute with the previous employer.

Conclusion

The reduction of bureaucracy in the employment context has only been achieved to a limited extent with BEG IV. We believe that further steps are urgently required. While the form and procedural simplifications represent a step in the right direction and are to be welcomed, they are not consistently implemented across all areas of employment law. Key areas still require adherence to traditional written form requirements, which can create new sources of error and confusion.

Photo: shutterstock / Lee Charlie