In principle, it is up to the employer to decide the form in which an employment contract is to be concluded. Even the conclusion of a contract with a handshake can be effective as the conclusion of an employment contract.

However, the German Act on Evidence (NachwG) presents employers with a hurdle. According to the current legal situation, employers are obliged to set out the essential contractual terms of the employment relationship in writing. The prerequisite for fulfilling the obligations of the Evidence Act is therefore compliance with the written form pursuant to Section 126 (1) BGB, i.e. a handwritten signature of the evidence by the employer. In today’s digital and fast-paced working world with employees working from home or globally, this de facto written form requirement creates a bureaucratic burden for companies.

The aim of the Evidence Act is to inform the employee about essential elements of the contract

In principle, an employment contract can also be concluded without the essential elements of the contract, such as the amount of remuneration, being set out in writing. This results in gaps in information and transparency, which employees have sometimes had to accept. The primary aim of the Evidence Act is to create greater legal certainty in the employment relationship – especially for employees without a written employment contract. In the digital world of work, the idea of a digital employment contract, which could offer both transparency and flexibility, is also increasingly being discussed.

As is so often the case, the Verification Act has its origins in an EU directive. It was created as a result of the implementation of the now obsolete Verification Directive (Council Directive 91/533/EEC of October 14, 1991). The current version, on the other hand, is based on the requirements of the so-called Working Conditions Directive(Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union).

Initially, the NachwG was considered useless for enforcing the legal interests of employees, as violations could not be sanctioned. However, with the implementation of the Working Conditions Directive, certain violations were defined as administrative offenses punishable by fines. This gave the NachwG its intended power to enforce the interests of employees, and digital employment contracts could also fit into this concept in the future if the form of proof is made more flexible.

Key standards and the digital employment contract

§ Section 2 NachwG stipulates that proof must be provided in writing. Other forms, such as electronic form (Section 126a BGB), are currently excluded (Section 2 (1) sentence 3 NachwG) and do not meet the formal requirements, which leads to invalidity. This formal requirement currently makes it difficult to implement a fully digital employment contract, as companies and employees are forced to sign and retain physical documents.

The consequence of a breach of the written form requirement is an administrative offense subject to a fine. According to Section 4 (1) No. 1, No. 3 NachwG, anyone who fails to provide evidence in the prescribed manner, i.e. in violation of the legally prescribed written form, is committing an administrative offense.

Proof in text form should satisfy the requirement in future

“Reducing bureaucracy is the order of the day,” wrote Federal Minister of Justice Marco Buschmann on X (formerly Twitter) on March 21, 2024. In line with this motto, the traffic light coalition is planning to ease the burden on companies in the area of employment contracts and wants to promote the digitalization of the future world of work.

The German Bureaucracy Reduction Act IV (BEG IV) provides for the first steps to reduce bureaucracy and enables proof to be provided partly in electronic form (Section 126a BGB), i.e. using electronically qualified signatures (qeS). This development opens the door for the digital employment contract, in which contract components can be documented and sent by email or via digital platforms.

The planned amendments to the Evidence Act are intended to introduce the text form (Section 126b BGB) instead of the written form, whereby an employment contract would in future be sufficient as a digital declaration if it is available as a legible declaration on a durable medium and the person of the declaring employer is named. A digital employment contract of this kind could significantly increase flexibility for employees and employers and at the same time reduce the administrative burden.

Federal Minister of Justice Buschmann explained that proof could also be provided in text form in future, provided that the document is accessible, storable and printable for employees and the employer receives proof of transmission and receipt.

No exemption from the written form requirement without exception upon request

As with many principles, there are exceptions. The employer must continue to provide written proof if this is expressly requested by the employee. This exception is particularly relevant for sensitive areas of work in which the digital employment contract does not yet offer the same legal protection as a written document.

Another problem, both technically and legally, is proof of receipt. According to current case law, an email is deemed to have been received if the recipient has confirmed that it has been read. The absence of a notification of non-delivery alone is not sufficient for legally secure proof of delivery. If this proof becomes mandatory for digital employment contracts, companies may have to adapt their processes and IT infrastructure to meet these requirements.

Challenges and outlook for the digital employment contract

Even though the BEG IV brings many innovations for digitalization, challenges remain. For example, the law does not currently provide for any changes with regard to the termination of employment relationships, which are still subject to the written form requirement pursuant to Section 623 of the German Civil Code (BGB). A breach of this requirement would render the termination void and therefore ineffective.

Likewise, the time limit requirement pursuant to Section 14 (4) TzBfG must still be fulfilled in writing, which limits the use of digital employment contracts. The Federal Labor Court ruled that the automatic termination of an employment relationship upon reaching the standard retirement age is considered a fixed term that cannot be agreed by email.

Finally, the government draft of BEG IV is intended to allow employment references in electronic form in accordance with Section 109 GewO with the employee’s consent. However, it will still be necessary to obtain this consent in a verifiable manner, which is unlikely to reduce the bureaucratic burden.

The introduction of the text form in the NachwG is a significant step towards reducing bureaucracy and promoting digital processes. If digital employment contracts are actually possible in the future, employers and employees in Germany could benefit from a much more efficient organization of employment relationships. However, until the final legislation is passed, it remains to be seen how comprehensively the legal changes will really facilitate the transition to digital employment contracts.