On 1 January, the Fourth Bureaucracy Relief Act (Viertes Bürokratieentlastungsgesetz – “BEG IV”) came into effect. This legislation introduces significant changes to requirements around the form of contracts in Germany with the objective of simplifying certain administrative processes, among them the completion of employment contracts.
What is the status quo?
Until the end of last year, the “written form” was a standard requirement for employment contracts. In order to comply with the written form requirement as set out in Sec. 126 of the German Civil Code (Bürgerliches Gesetzbuch), the document must be signed with a “wet-ink” signature by the issuer or, in the case of a contract, by both parties on the same document. Although an employment contract can theoretically be concluded orally, the main contractual elements are required to be in written form by the Act on the Notification of Terms and Conditions of Employment (Nachweisgesetz) which provides for fines of up to EUR 2,000.00 per breach, so that is one piece of theory not worth exploring further.
What does “text form” mean?
BEG IV now aims to streamline administrative processes for employers, particularly by replacing the written form with a “text form” requirement (Section 126b of the Code) for certain matters. In contrast to written form, the text form requirement is satisfied by a legible declaration naming the declaring party made on a durable medium. The medium must enable the recipient to keep a record of and...
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