An email will soon suffice to prove the essential contractual terms. (Photo: © peshkov/123RF.com)
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21 October 2024
With the Bureaucracy Reduction Act IV, important changes to occupational pension schemes will come into effect in the new year. Read the details here.
The Federal Council approved the Bureaucracy Relief Act IV (BEG IV) on October 18, 2024. Important measures will come into force on January 1, 2025 , including several new regulations for the Proof of Employment Act (NachwG) and thus also for the administration of company pension schemes (bAV).
In the future, the following will apply: Employment contracts can now be concluded in text form in addition to the traditional written form , provided certain conditions are met. Previously, the German Employment Contract Law (NachwG) required written form for contractual terms relating to the employment relationship (see Section 126 of the German Civil Code (BGB )). Electronic form was therefore excluded. German law was thus previously narrower than the relevant EU Directive 2019/1152 on transparent and predictable working conditions in the European Union, which permits electronic form.
The requirement of written form, due to the necessity of a handwritten signature on paper, often leads to unnecessarily complicated processes. For employers, this can result in increased workload due to higher staffing levels and additional costs . This problem also extends to the area of company pension schemes: particularly with collective, employee-funded pension funds, the paper-based agreement of a salary conversion can tie up considerable resources.
Although the Federal Ministry of Labour and Social Affairs had previously stated that the Proof of Employment Act was " not applicable to company pensions in the specific form of salary conversion ," it remained to be seen whether the courts would have fully endorsed this opinion.
Operations management
Operations management
Operations management
With the Fourth Bureaucracy Relief Act, the legislature has now created both simplifications and legal certainty. The original draft of the planned amendments to the Employment Contract Documentation Act (NachwG) initially only stipulated that, in the future, the documentation of essential contractual terms of an employment contract should be possible in electronic form in accordance with Section 126b of the German Civil Code (BGB) – i.e., with a qualified electronic signature . This was to apply on the condition that the document in question is transmitted electronically in printable form as defined in Section 126b of the German Civil Code (BGB).
Due to numerous responses, including from the German Association for Occupational Pensions , further simplifications are now being introduced. It was proposed that proof of the essential terms of the contract be provided in written form in the future . The Federal Government has adopted these proposals in the legislative process.
According to the new regulation , written form will be permissible if
Only at the express request of the employees is the employer required to provide written proof .
However, exceptions remain : Internship contracts still require strict written form . Electronic form is also excluded for those sectors listed in the Act to Combat Undeclared Work (see list in the box below), and a handwritten signature on paper is required.
The law on temporary employment will in future be amended to stipulate that written form is sufficient for temporary employment contracts between providers and hirers , meaning that these can be concluded, for example, by email .
The Federal Parental Allowance and Parental Leave Act (BEEG) has also been amended regarding the written form requirement. For example, parental leave under Section 16 Paragraph 1 BEEG can now be applied for in text form . Similarly, applications for part-time work during parental leave under Section 15 BEEG will only require text form in the future, as will the employer's rejection of such applications. Text form will also be sufficient for applications for care leave and family care leave.
For many other areas of law, it will also suffice to use text form instead of written form in the future. In addition, the retention periods for accounting documents, such as bank statements and payroll records, under commercial and tax law will be reduced from ten to eight years . However, written form will remain mandatory for some legal acts , such as notices of termination or fixed-term contracts in employment law. In these cases, a handwritten signature is still required. Written form will also remain mandatory for providing evidence in certain economic sectors or branches as defined in Section 2a Paragraph 1 of the Act to Combat Undeclared Work.
Written form still required
Employers from the sectors that are Act to Combat Undeclared Employment are listed, have the proof unchanged in written form grant:
• Construction industry
• Restaurant and accommodation industry
• Passenger transport industry
• Freight forwarding, transport and related logistics businesses
• Showmen's trade
• Forestry companies
• Building cleaning industry
• Companies involved in the setup and dismantling of trade fairs and exhibitions
• Meat industry
• Prostitution industry
• Guard and security industry
The new regulation will come into force on January 1, 2025. It should be noted that the legal amendment applies exclusively to the Proof of Employment Act. Other legal provisions that still contain the requirement of written form (such as Section 6a of the Income Tax Act ) remain unaffected.
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