An employment contract is much more than a mere formality. It provides clarity about what the employer and employee can rely on – from work, remuneration and working hours to vacation, notice periods and other important provisions. Anyone who carefully checks an employment contract or has it checked prevents misunderstandings later on and recognizes at an early stage whether important information is missing or unclear.
Why an employment contract is so important
An employment contract forms the legal basis of the employment relationship. Put simply, the employee undertakes to perform a certain amount of work; in return, the employer undertakes to pay the agreed remuneration. The German Civil Code describes the employment contract in Section 611a of the German Civil Code as a contract for work that is subject to instructions and determined by others in personal dependence.
For legal laypersons, it is crucial that the employment contract provides clarity. It answers the most important questions of everyday working life. Where do I work? What exactly is my job? How much do I earn? How many hours do I have to work? How much vacation am I entitled to? What notice period applies? The more precisely these points are regulated, the lower the risk of later disputes.
What is mandatory in an employment contract?
If you want to check an employment contract, you should first pay attention to the mandatory information under the Evidence Act. Employers must document the essential terms of the contract and make them available to the employee.
In particular, this includes the name and address of the contracting parties, the start of the employment relationship, the duration or end date in the case of a fixed term, the place of work, a brief job description, the composition and amount of remuneration, working hours, rest breaks, vacation, notice periods and references to applicable collective agreements, works agreements or service agreements.
Remuneration is particularly important. The employment contract should not only state the basic salary. Supplements, premiums, bonuses, special payments, overtime pay and the due date of payment should also be clearly regulated. Unclear formulations such as “voluntary special payment” or “discretionary bonus” can lead to disputes in individual cases, as employees are often unable to recognize whether this gives rise to a reliable entitlement.
The job description also deserves attention. It should be specific enough for the employee to know what tasks await them. At the same time, employers often formulate them somewhat more broadly so that they can deploy employees flexibly. This is not automatically problematic. However, it becomes critical if the job is described so vaguely that practically any task could be assigned.
Check the start, time limit and probationary period carefully
The start of the employment relationship must be clearly stated. Particular care must be taken with fixed-term employment contracts. According to Section 14 (4) TzBfG, fixed-term employment contracts must be in writing to be valid. This means: Particularly in the case of fixed-term employment contracts, it should be carefully checked before starting work whether the fixed term has been properly agreed.
The period of the probationary period should also be explicitly and clearly regulated in the employment contract. It is also important to know what notice period has been agreed during the probationary period. Many employees automatically assume that they can be dismissed “from one day to the next” at any time during the probationary period. This is not true. Deadlines also apply during the probationary period, unless the employment relationship is effectively terminated for cause in exceptional cases.
Place of work, home office and transfer clauses
The place of work is one of the key details in the employment contract. If it only states a specific location, this is usually easy for employees to understand. However, if the contract contains a relocation clause, the employer may be able to assign a different location. Such clauses should be formulated in an understandable and not limitless way.
When it comes to working from home, particular precision is important. A general sentence such as “Working from home is possible” is often not enough to clarify later questions. It makes sense to include provisions on whether the employee is entitled to work from home, how many days they are allowed to work from home, whether the employer can revoke the arrangement and who provides the work equipment.
Working hours, breaks, overtime and vacation
A good employment contract contains clear information on regular working hours. It should not only state the number of hours per week. Distribution, shift work, rest breaks and possible on-call work can also be relevant. According to the German Act on the Provision of Evidence, working hours, rest breaks and rest periods and, in the case of shift work, information on the shift system are among the essential terms of the contract.
Overtime is a particularly frequent source of disputes. It should therefore be stipulated whether overtime may be ordered, under what conditions and how it is paid or compensated by time off. Blanket formulations such as “Overtime is compensated with salary” are not always effective and should be checked carefully.
The vacation entitlement must also be clearly regulated. The contract should make it clear how many days of leave you are entitled to per year and whether these are statutory or additional contractual leave days. This is important because different rules can sometimes be agreed for statutory minimum leave and contractual additional leave.
Notice periods and termination procedure
An employment contract should also clearly state which notice periods apply. Statutory periods, longer contractual periods or collective bargaining agreements may be relevant. It is important for employees to know when a termination actually ends the employment relationship and what notice period they themselves must observe.
Since the reform of the Act on Evidence, information on the procedure to be followed in the event of termination is also part of the essential information, i.e. at least information on the written form requirement, the notice periods and the deadline for filing an action for unfair dismissal.
Do not overlook collective agreements and works agreements
Many employment contracts refer to collective agreements or works agreements. This can have a significant impact on salary, working hours, special payments, vacation or notice periods. A general reference to applicable collective agreements or works agreements may be sufficient, as case law also shows; however, employees should know which regulations are important for them in practice.
Anyone checking the employment contract should therefore not only read the text of the contract, but also ask whether collective agreements, works agreements, service agreements or internal guidelines apply. Particularly in larger companies, important rights are often not fully included in the employment contract itself.
Digital employment contract: What currently applies?
Until the end of 2024, the Evidence Act was heavily influenced by the written form. There have been simplifications since January 1, 2025: Under certain conditions, proof of essential working conditions can also be provided in text form and transmitted electronically if the document is accessible, can be saved and printed and the employer asks the employee to confirm receipt.
However, this does not mean that every digital solution is automatically sufficient. In certain sectors with a particular focus on combating undeclared work, this does not apply by way of exception. In addition, special care must be taken with fixed-term employment contracts, as the fixed-term agreement must still be in writing.
Typical errors in the employment contract
In practice, the same problems often arise when reviewing employment contracts. Some contracts contain incomplete information on remuneration, unclear bonus regulations, overly broad transfer clauses or blanket overtime regulations. Missing information on notice periods, vacation, working hours or collective agreements also occur.
It is important for employees that not every unclear or missing provision renders the entire employment contract invalid. However, a lack of proof can lead to problems of proof and trigger legal risks for employers. Violations of the law on proof can also become relevant as an administrative offense.
What you should consider before signing
An employment contract should never just be skimmed over. Anyone signing it should understand what obligations they are taking on and what rights they are entitled to. Particular attention should be paid to fixed-term contracts, probationary periods, place of work, overtime, variable remuneration, exclusion periods, secondary employment, non-competition clauses and repayment clauses.
Exclusion periods in particular are often underestimated. They can lead to claims lapsing if they are not asserted in good time. Repayment clauses, for example in the case of training costs, should also be checked carefully. For legal laypersons, the following applies: as soon as a clause can have significant economic consequences or is worded in an incomprehensible way, it is worth carrying out a legal check.
What counts in the end
A good employment contract is clear, complete and comprehensible. It should regulate the most important conditions of the employment relationship in such a way that both parties know where they stand. If you want to check an employment contract, you should pay particular attention to mandatory information in accordance with the Evidence Act, remuneration, working hours, vacations, notice periods, time limits, place of work and references to collective agreements or works agreements. The earlier ambiguities are identified, the better conflicts can be avoided later on.
