German’s Fourth Bureaucracy Relief Act

BEG IV aims to replace the previously applicable “written form” with the “text form” in important areas of labour law. To clarify, in order to comply with the written form requirement under German law, the relevant document must be signed personally by the issuer with either a signature or (less relevant in practice) a notarised mark. The requirement for text form, on the other hand, is met if the person making the declaration submits a legible declaration in a persistent data medium that is suitable for reproducing the declaration unchanged (e.g. email or text message).

BEG IV reduces the formal requirements for the following labour law regulations:

Verification Act (NachwG)

In principle, employment contracts may be concluded under German law without observing any special form. An employment contract can therefore be concluded orally. Nevertheless, § 2 NachwG previously stipulated that employers must record the essential terms in writing. It was therefore advisable for employers to conclude employment contracts in writing to simultaneously comply with the verification requirement. 

This approach won't be necessary as often in the future. In the future, employers will generally be able to provide verification of the essential terms in text form, except when the employee requests the essential terms be verified in writing. 

Furthermore, in industry sectors particularly vulnerable to undeclared work (such as the cleaning, restaurant, haulage, and transport industries), written proof of essential working conditions will continue to be required.

Temporary Employment Act (AÜG)

After the amendment by the BEG IV, going forward, the AÜG allows contracts between a lender and a borrower for the temporary provision of employees to be concluded in text form.

Part-Time and Fixed-Term Employment Act (TzBfG)

§ 14, para. 4, TzBfG stipulates that to effectively limit the term of an employment contract, the limitation provision must be in writing. BEG IV now provides an exception to this principle, which is decisive for the law on fixed-term contracts. § 41, para. 2 Social Code VI (SGB VI) stipulates that an agreed time limit for the employment contract due to the employee reaching the standard retirement age no longer requires the written form – the text form is sufficient. 

BEG IV thus contains several provisions that reduce the administrative burden by reducing formal requirements. But beware – there are still provisions in German labour law that require the mandatory written form. 

An effective, fixed-term employment contract must still be in writing, except the above-mentioned case when the fixed-term goes into effect when the employee reaches standard retirement age. Also, the termination of an employment relationship must still be made in writing, whether by notice of termination or cancellation agreement. Employers in Germany must therefore carefully check which formal requirements they must observe in which circumstances.

---

Pascal Verma is an Attorney-at-Law specialising in labour law and partner of the law firm nbs partners in Hamburg. He specialises in providing labour law advice to employers, with a particular focus on small and medium-sized companies and corporate groups.

Charlotte Thiede is an Attorney-at-Law at nbs partners and she is focused on advising employers on all matters of labour law.