Changes to German law on employment contracts

We would like to inform you about the amendments to the German Nachweisgesetz (Verification Act), adopted on 23 June 2022. The German government has hereby implemented Directive (EU) 2019/1152 on transparent and predictable working conditions in the European Union of 20 June 2019 (Working Conditions Directive). The new laws will come into force on 1 August 2022. As breaches of the Verification Act can result in fines of up to EUR2,000, you should amend your standard employment contracts in good time, in our view this will be necessary for every business. Below you will find the most important changes to the Verification Act:

• Even before the implementation of the Working Conditions Directive, under the Verification Act it was required to confirm the essential working conditions in wet-ink (e.g. by way of a handwritten signature). This remains the case, e-signatures are excluded, even though the Working Conditions Directive explicitly allows the electronic form. It is incomprehensible that the German legislator has not taken up this option in the digital age.
• For the first time, however, violations of certain provisions of the Verification Act are to be treated as administrative offences, each of which can be punished with a fine of up to EUR2,000. Thus, if a company confirms the essential working conditions of employees with a qualified electronic signature instead of in wet-ink, this can lead to a fine. We therefore strongly recommend that employment contracts are only drawn up in wet-ink (i.e. handwritten by both parties).
• In the case of newly established employment relationships as of 1 August 2022, the law provides for different timeframes for handing over the essential working conditions depending on the type of working conditions (from the first day of performance of work to no later than one month after the agreed commencement of the employment relationship). In practice, this will result in all terms and conditions of employment being handed over on the first day.
• The new regulations also apply to employment relationships that were established before the amendments to the Verification Act came into force – employees can demand from the employer that the essential terms and conditions of employment specified in the Verification Act be handed over within one week.
• The following working conditions must be included in future in addition to the conditions already mentioned in the Verification Act:
  • Procedure to be followed by the employer and the employee when terminating the employment relationship, at least the wet-ink requirement and the time limits for terminating the employment relationship as well as the time limit for bringing an action for protection against unfair dismissal;
  • Agreed rest breaks and rest periods and, in the case of agreed shift work, the shift system, shift rhythm and conditions for shift changes;
  • Any entitlement to training provided by the employer;
  • In principle: name and address of the pension provider of the occupational pension scheme, if such pension is provided;
  • A reference to the applicable collective bargaining agreements, works or service agreements;
  • End date for fixed-term employment relationships;
  • The option for employees to freely choose their respective place of work, if agreed;
  • Duration of the probationary period, if agreed;
  • Payment for overtime;
  • Due date for payment of wages and the form in which wages are paid;
  • Details of work on call, if agreed, and
  • The possibility of ordering overtime and its conditions.

• Furthermore, extended documentation requirements are introduced for situations in which employees work abroad for more than four consecutive weeks and/or the stay abroad falls within the scope of Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services.

There are also significant changes to the German Labor Leasing Act (Arbeitnehmerüberlassungsgesetz): in future, the lessee must provide the temp who has been leased out for at least six months and who has notified the lessee in text form of his wish to conclude an employment contract with a response in text form within one month of receipt of the notification. Comparable regulations are included in the Part-Time and Fixed-term Employment Act (TzBfG) for employees with fixed-term contracts. In addition, the TzBfG now provides that an agreed probationary period must be "in proportion to the expected duration of the fixed term and the nature of the work". The Vocational Training Act, the Trade Regulation Act, the Part-Time and Fixed-term Employment Act and other laws are also amended.

The amendments to the Verification Act will directly and immediately affect all companies operating in Germany. There will be a need for action everywhere – we certainly are not aware of any form employment contract that so far has contained provisions for filing an action for protection against dismissal. We will be happy to support you in adapting your employment contracts to these out-of-time changes.