Bureaucracy Reduction Act IV – Digital Employment Contracts

Currently, the Evidence Act obliges employers to record the essential terms of an employment contract in writing. The traffic light coalition now wants to change this: Employers should no longer have to provide future employees with the terms of their employment contract in paper form with a signature. A passage to this effect is to be included in the draft of the Bureaucracy Relief Act. The agreement between the parliamentary groups stipulates that instead of the written form as defined in Section 126 BGB, the text form as defined in Section 126b BGB will in future be sufficient for contractual terms and conditions.

Whereas in the case of the written form, the relevant document must be signed in person by the issuer by means of a signature or a notarized signature, a legible, unsigned declaration on a durable medium is sufficient to comply with the text form.

Federal Attorney General Marco Buschmann outlined the future innovation himself as follows: “In future, a simple email will suffice for employment contracts; paper and postage will no longer be required.

According to the current legal situation, an employment contract can already be concluded by e-mail, as this is not subject to any special formal requirements. However, the current Evidence Act stipulates that the terms and conditions of employment must be set out in writing within certain deadlines after the employment contract has been concluded.

The new provisions of the Evidence Act are intended to enable proof of the essential contractual conditions in text form. The prerequisite is that the document is accessible to the employee, can be saved and printed and that the employer receives proof of transmission and receipt. The employer only has to provide written proof at the request of the employee. In general, the legislator has signaled that the written form will be replaced by the text form in many areas of the German Civil Code in the future.

However, in our view, the form simplification that has now been adopted does not go far enough. It only focuses on amending the provisions of the Evidence Act. In contrast, there are still strict written form requirements for employment contracts, for example if a fixed term is to be agreed. Here, Section 14 (4) of the German part-time and fixed-term employment act (TzBfG) stipulates that the written form (i.e. the exchange of handwritten signatures of both contracting parties on a document) must be observed. If this is not done, the fixed-term agreement is invalid and the employment relationship is permanent. A clause that is very popular in employment contracts, according to which the employment relationship is to end when the employee enters retirement, must still be agreed in writing under the current legal situation.

Conclusion: The formal simplifications for employment contracts as a result of the recently passed Bureaucracy Reduction Act IV are a step in the right direction – in our view, the strict written form is no longer appropriate. However, in its current form, the simplification for employment contracts falls short, as it only amends the provisions of the Evidence Act. Ultimately, this does not lead to any relief and creates additional sources of error, particularly for employers.

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