Update on the digital employment contract: Bundestag adopts Fourth Bureaucracy Relief Act

On 26 September 2024, the Bundestag adopted the federal government’s draft for the Fourth Bureaucracy Relief Act. The German government’s draft provides for significant changes to the German Evidence Act.  Employers will in future also be able to provide key terms of their employment contracts as well as age limit agreements in text form, ie by email.

The main changes are as follows:

Digital employment contract

• The proof of the essential contractual conditions of the employment relationship can also be drawn up in text form and transmitted electronically. 
• The text form (Section 126b German Civil Code) also includes e-mails. An electronically qualified signature (Section 126a German Civil Code) is not required.
• The prerequisite is that the digital employment contract is accessible to the employee and can be saved and printed out.
• The employer must ask the employee to provide proof of receipt with the transmission.
• If employees expressly request written proof of their employment conditions, employers must send the information on paper.
• Any changes to the terms and conditions of employment may also be made in text form.
• The formal simplifications do not apply to employees who work in an economic sector or branch of industry that is particularly at risk of undeclared work and illegal employment (Section 2a (1) of the Illegal Employment Act). In this case, it remains mandatory to provide proof in paper form.

Age-limit agreements

Further changes concern agreements on the termination of the employment relationship upon reaching the statutory retirement age. To date, an agreement in an employment contract according to which the employment relationship ends upon reaching the standard retirement age in the statutory pension insurance scheme, must be in writing (Section 14 (4) of the Part-Time and Fixed-Term Employment Act). Employers will be allowed to make this agreement in text form in future. For other forms of fixed-term contracts the written form requirement remains in place.

Amendment to the Temporary Employment Act 

Furthermore, the proposed wording provides for an amendment to the Temporary Employment Act. According to this, the text form is to be sufficient for the transfer agreement between the lender and the hirer.

Further formal simplifications

Further formal simplifications include the issuing of an employer’s reference in electronic form with the employee’s consent (revised version of Section 109 (3) of the Trade Regulation Act), the enabling of the text form for written actions in the Youth Employment Protection Act and the electronic information option with regard to the posting requirement in the Working Hours Act (Section 16 (1)).

Conclusion and outlook

Next, the government draft will be forwarded to the Bundesrat for its opinion. After the government has responded, it will be forwarded to the parliament for discussion. The changes are to be welcomed. They represent enormous simplifications for employers and at the same time do not dispense with employee protection. It is to be hoped that the Evidence Act will come into force with the changes announced in the draft once the legislative process has been finalised.

Please see German version here.