Since August 1, 2022, employers have had to specify more minimum content in employment contracts than before. The following article explains what content is involved and what tasks companies will face.
Content:
The Employment Documentation Act obliges employers to document the essential contractual terms of an employment relationship in writing and hand them out to their employees. It applies to all employees, including executives and interns, with the exception of temporary workers who are employed for less than one month. These contractual conditions must be stated on the first working day at the latest, and for some details within seven days at the latest.
The aim of the Evidence Act is to create legal certainty for both sides, increase transparency regarding working conditions and make it easier to provide evidence in the event of labor law disputes. Although the evidence itself is not legally binding, it serves to avoid misunderstandings and conflicts in the employment relationship and to provide employees with comprehensive information about their rights and obligations.
In principle, employment contracts can be concluded verbally. In this case, however, a separate document is required that sets out in writing the content prescribed by the Evidence Act. If a written employment contract containing this information is handed over, there is no requirement for an additional written record.
The minimum contents of an employment contract include, among other things
Special provisions, such as details on foreign assignments, further training or company pension schemes, must also be included if they have been agreed. These requirements guarantee a high level of transparency and ensure that employees are informed about all relevant working conditions.
As part of the new EU Directive on transparent and foreseeable working conditions, the Verification Act (NachwG) had to be amended accordingly in Germany. The German Nachweisgesetz regulates the information and documentation obligations that employers are obliged to fulfill. The new amendments to the Nachweisgesetz came into force on August 1, 2022 and affect new and existing employment relationships. The most important points are summarized below:
Employment contracts must be provided to the employee in paper form and signed by hand. Electronic signatures are not permitted.
Violations of the specification of minimum content will be handled as an administrative offense in the future. Should an employer provide a contract with an electronic signature instead of the written form, this can be punished with a fine of up to EUR 2,000.
Depending on the case, the law provides for a period from the first day to one month after the agreed start of the employment relationship. In practice, however, this means that all working conditions are handed over on the first working day at the latest.
The new amendments also apply to existing employment contracts. Employees can demand that the company provide the decisive changes within seven days in accordance with the new Evidence Act. Accordingly, a new employment contract does not have to be drawn up.
Up to now, the Evidence Act regulated the most important contractual conditions, such as the start of the employment relationship, the place of work, and much more. Up to now, a period of one month after the start of the employment relationship applied for the handover of the contract.
In the future, the minimum contents according to Section 2 (1) NachwG must additionally include the following mandatory items in every employment contract:
How detailed the new regulations must be stated is not formulated in the legal text and is currently still unclear.
With the new verification law in effect, there are corresponding recommended actions for employers. These are:
Employers should adapt their standard employment contracts as quickly as possible for all future recruitment.
For existing employment contracts, it is advisable to prepare a standardized response letter in order to be able to comply with the employee's right to information within seven days. A letter containing the minimum contents listed above is therefore sufficient. Alternatively, a new employment contract can be drawn up.
The thoroughly onerous written form requirement continues to contribute to additional bureaucratic work. In order to nevertheless be able to act quickly as a company, the employer should ideally provide the HR department with a power of attorney to sign employment contracts.
If there is a works council in the company, it may well make sense to extend the works agreement to include the working conditions (pension scheme, shift system, working hours, etc.). In this way, the new standard employment contracts can simply refer to the works agreement.
As mentioned above, employment contracts still have to be printed out on paper, signed and handed to the employee. Sending an employment contract by email is therefore not possible even with a certified electronic signature is ruled out.
Germany is thus the only country that does not make use of the EU Transparency Directive, under which employment contracts can be signed electronically.
But that's not all: failure to comply with the written form can be punished with fines and thus represents a significant burden, especially for smaller and medium-sized companies.
Thus, the legislator has justifiably come under criticism for taking a big step backwards in terms of digitization. A relaxation of the written form would have been desirable for all companies. Germany remains an exception in the European and international environment and is thus lagging even further behind in digitization.
But it is not only the existing written form that triggers criticism; some amendments are simply unclearly defined. For example, it is hardly possible to specify an end date for a purpose-related employment contract, for example due to illness.
As mentioned above, as of August 1, 2022, violations of the Evidence Act will be treated as administrative offenses, which may result in a fine of up to EUR 2,000. The extent to which the respective authorities will actually punish violations and whether the fine limit will be exhausted is uncertain.
Important: A lack of proof has no effect on the validity of the employment contract - it continues to be valid and enduring.
So far, all legal consequences cannot yet be fully assessed. For employers, it is important to know that even if there is no reference to the three-week period for bringing an action for protection against dismissal, Section 7 of the German Unfair Dismissal Act (KSchG ) applies and the dismissal is therefore legally effective from the outset despite the lack of a reference.
The new Verification Act presents employers with major organizational challenges in the area of human resources. Above all, the scope of the detailed minimum information is time-consuming and labor-intensive. Much is still unclear in the new Verification Act and will only be clarified by decisions of the labor court in the future. It can be assumed that all omissions will be at the expense of employers .
Disclaimer:
The contents of this article are for information purposes only. It is not legal advice and no liability is accepted for the contents.
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