The new detection law

Since August 1, employers have had to include more minimum content in employment contracts than before. The following article explains what this means and what companies have to do. 

Content: 

  1. Changes to the Evidence Act: the most important information for employers
  2. The new minimum contents of employment contracts
  3. Tasks for employers 
  4. Written form: Germany as a disputed exception
  5. Legal consequences of violations
  6. Conclusion and outlook 

1. changes to the law on evidence: the most important information for employers

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:

  • Written form: 

Employment contracts must be provided to the employee in paper form and signed by hand. The electronic signature is not permitted. 

  • Violations as a misdemeanor: 

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

  • Delivery of the working conditions: 

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.  

  • Existing employment relationships: 

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.

2. the new minimum contents of employment contracts 

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: 

  • For fixed-term contracts: Date on which the employment relationship ends
  • Duration of the probationary period, if agreed 
  • possibility for the employee to freely choose the place of work, if this has been agreed upon
  • Remuneration for overtime, bonuses and special payments 
  • Form and due date of pay 
  • Agreed working hours and rest breaks and times, in case of agreed shift work the shift system and conditions for changes 
  • Possibility of ordering overtime, as well as its conditions, according to agreement
  • any entitlement to training provided by the employer
  • In the case of a company pension plan: name and address of the pension provider; this verification requirement does not apply if the pension provider is obliged to provide this information
  • if agreed, details of work on call
  • the procedure to be followed by the employer and the employee when terminating the employment relationship, at least the written form requirement and the deadlines for terminating the employment relationship as well as the deadline for filing an action for protection against dismissal
  • Reference to applicable collective bargaining agreements, works or service agreements
  • For foreign assignments lasting longer than four consecutive weeks, the following items must also be provided:
  • Country of operation
  • Planned duration of the operation
  • Currency of remuneration 
  • If applicable, agreed cash and non-cash benefits, travel and accommodation costs to be reimbursed, etc. 

ContractHero has a checklist for download provided.

How detailed the new regulations must be stated is not formulated in the legal text and is currently still unclear. 

3. tasks for employers 

With the new verification law in effect, there are corresponding recommended actions for employers. These are: 

1. adapt model employment contracts

For all future hires, employers should adapt their model employment contracts as soon as possible. A detailed checklist with all minimum contents is available for download here

2. standardized response letter for existing contracts

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. 

3. if necessary, issue powers of attorney to sign employment contracts.

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. 

4. if works council exists: amend works agreement

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

4. written form: Germany as a disputed exception

As mentioned above, employment contracts must still be printed out, signed and handed over to the employee in paper form. Sending an employment contract by e-mail is therefore impossible, even with a certified electronic signature

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. 

5. legal consequences in the event of violations 

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. 

6. conclusion and outlook 

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.

ContractHero has provided a downloadable checklist here.

How detailed the new regulations must be stated is not formulated in the legal text and is currently still unclear.

Sebastian Wengryn
CEO

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