Simplification of formal requirements in employment law through the Bureaucracy Relief Act IV

On 18 October 2024, the German Bundesrat approved the Fourth Bureaucracy Relief Act (Bürokratieentlastungsgesetz, "BEGIV"). The BEG IV aims to simplify work processes and thus relieve the economy of unnecessary bureaucracy. Once adjustments in the legislative process have been made, there will also be considerable simplifications of the formal requirements in employment law.

This article initially provides you with an overview of the formal requirements applicable under employment law and then reports on the simplifications provided by the BEG IV

1. General information on formal requirements in employment law

1.1 Formal requirements of the German Civil Code

Employment contracts are service contracts (cf. Section 611a of the German Civil Code [Bürgerliches Gesetzbuch, BGB]). Here, general civil law requirements initially have to be observed.

The BGB applies the principle of freedom of form according to which a legal transaction only requires a special form if this is expressly prescribed by law or agreed by contract. If this is not the case, the legal transaction in question can be carried out informally. The BGB contains the following formal requirements:

• If the written form isprescribed by statute, the document must be hand-signed by the issuer ("wet ink") in accordance with Section 126 (1) BGB. The most well-known form here is the written form requirement for notices of termination, cf. Section 623 BGB. If a contract must be in writing by statute, the signatures must be on the same document. Where there is no statutory form requirement, but the contracting parties agree on the written form, the statutory requirements apply via Section 127 BGB; Section 127 BGB also applies to electronic form and text form.
• Written form can be replaced by electronic form pursuant to Section 126 (3) BGB unless this is expressly excluded by statute (e.g. for the termination of employment relationships, see Section 623 half-sentence 2 BGB). In order to replace written form with electronic form, the person issuing the declaration must provide the document with a qualified electronic signature in accordance with Section 126a (1) BGB. In the case of a contract, each of the parties must sign an identical document with a qualified signature, whereby this can be done successively. The issuance of the qualified certificate is then the responsibility of so-called trust service providers. The tools used must fulfil the European requirements for electronic form in accordance with the so-called eIDAS Regulation.
• The least stringent requirements are placed upon text form in accordance with Section 126b (1) sentence 1 BGB. Text form is complied with if the person making the declaration is named and the declaration is stored on a durable data carrier. A simple e-mail is therefore also sufficient to fulfil the text form requirement.  

1.2 Special written form regulations in employment law

A large number of legal transactions require the written form pursuant to employment law. The most important of these include

• fixed-term agreements, Section 14 (4) of the German Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG),
• post-contractual non-competition clauses, Section 74 (1) of the German Commercial Code (Handelsgesetzbuch, HGB),
• shop agreements, Section 77 (2) sentence 1, (3) of the German Shop Constitution Act (Betriebsverfassungsgesetz, BetrVG).

1.3 Other formal requirements

Formal requirements that also are important to observe in day-to-day HR practice are those that may arise from collective bargaining agreements or shop agreements. For example, many collective agreements contain specific requirements to the effect that employment contracts and ancillary agreements may only be agreed "in writing".

1.4 Warning and evidentiary function of the written form

The reason behind the extensive scope of the written form requirement at present is the functions of the written form. Written form has a warning function and an evidentiary function. These are intended to warn the person signing again, prior to making a hasty declaration, that they are entering into an important legal transaction (warning function) as well as serving as evidence in legal transactions (evidentiary function).

One of the reasons why the political discourse surrounding a change in the written form requirement has taken so much time is because these functions of the written form are going to be relaxed for a large number of legal transactions and the question therefore arises as to what extent this could have an impact on legal transactions.

1.5 Operational communication via short messaging services

Outside of the legal formal requirements, managers in HR practice should note that although no special form is required for a number of declarations, their receipt and compliance with formal requirements must nevertheless be proven due to the associated legal consequences.

This is not guaranteed when using short messaging services. Consequently, these means of communication should only be used if permitted in individual cases on the basis of a collective agreement or shop agreement.

2. Simplification of formal requirements through the BEG IV

The BEG IV implements various simplifications of formal requirements for day-to-day HR practice. The most important changes include the following:

2.1 Proof of working conditions in modified text form

Following the legislator’s first enshrinement of the obligation to record the essential terms and conditions of employment in writing in the German Act on Proof of Working Conditions Governing an Employment Relationship (Nachweisgesetz, NachwG) in implementation of EU Directive 2019/1152 ("Working Conditions Directive") on 1 August 2022, the role is now being reversed: In future, according to Section 2 (1) sentence 2 NachwG (new version), the recording of the essential working conditions in text form will be sufficient if the record is transmitted electronically to the employees under the more detailed conditions set out in the law and they provide proof of receipt. The record must be transmitted individually to each employee. A general announcement is not sufficient.

Practical tip: Employers should note that the above principles do not apply to fixed-term employment contracts. These still require the written form in order to be valid in accordance with Section 14 (4) TzBfG.

At the request of the employee, they also have to be provided with written proof of the working conditions in future. In addition, the written form will continue to apply to the sectors listed in Section 2a of the German Act to Combat Undeclared Work and Unlawful Employment (Schwarzarbeitsbekämpfungsgesetz, SchwarzArbG).

2.2 Personnel leasing agreement between leasing agency and hiring firm

In addition, text form will also be sufficient in future for personnel leasing contracts between leasing agency and hiring firm in accordance with Section 12 (1) sentence 1 of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG) (new version). If all other requirements are met (in particular a valid licence to lease personnel), it will also be possible to conclude a personnel leasing contract by e-mail in future.

It is the express intention of the legislator that the temporary employment relationship between the personnel leasing agency and the temporary worker remains unaffected by the amendments (Bundestag printed paper (Bundestag Drucksache, BT-Drs.) 20/13015, p. 124). However, the provisions of the NachwG apply via the reference in Section 11 (1) AÜG. Accordingly, the modified text form requirement of the NachwG will apply to temporary employment contracts - as is also the case with standard employment contracts - in the future (see above).

Practical tip: Employers should ensure that temporary employment contracts contain the additional information specified in Section 11 (1) sentence 2 AÜG. At the employee's request, these must be handed over to the employee in paper form together with the essential working conditions in accordance with the NachwG.

2.3 Termination of employment relationship upon reaching standard retirement age

In future, text form will be sufficient for agreements limiting the term of an employment relationship to the standard retirement age. This exception to the written form requirement for fixed-term arrangements in accordance with Section 14 (4) TzBfG is now regulated by the newly created paragraph (2) in Section 41 of the Sixth Book of the German Social Code (Sozialgesetzbuch VI, SGB VI).

Practical tip: Corresponding provisions are often integrated into the employment contract. In these cases, the modified text form requirement of the NachwG must be observed.

The abolition of the written form requirement for age limit regulations in employment contracts is logical. The purpose of the written form requirement for fixed-term employment contracts is to make the employee aware that the employment relationship does not guarantee a permanent livelihood. This risk is eliminated once the standard retirement age is reached, as the end of the employment relationship is usually compensated for by the receipt of pension benefits.

2.4 Electronic job reference

In future, the employer's reference can be issued in electronic form with the employee's consent, Section 109 (3) of the German Industrial Code (Gewerbeordnung, GewO) (new version).

Practical tip: However, the job reference must be issued in written form if the qualified electronic signature would allow inadmissible conclusions to be drawn to the employee’s detriment due to the time stated thereon and its backdating is legally required (e.g. in the case of job reference corrections).

2.5 Modernisation of the Working Hours and Youth Employment Protection Act

In future, employers will also be able to fulfil their bulletin posting obligations under Section 16 of the German Working Hours Act (Arbeitszeitgesetz, ArbZG) and Section 47 of the German Youth Employment Protection Act (Jugendarbeitsschutzgesetz, JArbSchG) by publishing information electronically on the company intranet, provided that all employees have free access to this information.

2.6 Agreed written form

Of high practical relevance is the fact that the BEG IV has no direct effect on employment contracts, collective agreements and shop agreements that contain requirements for compliance with the written form. Any amendments must be agreed with the respective contractual partner.


3. Overview of important formal requirements in HR

Despite the fact that the BEG IV brings some welcome simplifications, many important regulations remain unchanged. The following table provides an overview of important formal requirements in HR:

Planned changes due to the BEG IV are highlighted in bold italics:

4. Conclusion

The simplification of the formal requirements can generally be welcomed. There are now only isolated requirements for the strict written form (e.g. notices of termination).  In many cases, written form has been replaced by electronic form and in some cases text form is sufficient. However, this in particular continues to be criticised, as the implementation of electronic form is not possible without costs.

Employers can now review and adapt their existing processes and documentation and implement suitable digital alternatives. The BEG IV is expected to come into force on 1 January 2025.

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