The “Act on Proof of the Existence of an Employment Relationship” (Nachweisgesetz – NachwG) requires employers to set out the essential contractual terms of the employment in writing to their employees. The German legislature has now passed an amendment to the Nachweisgesetz, which comes into force on August 1, 2022, and has the effect of transposing the EU Directive (2019/1152) on Transparent and Foreseeable Working Conditions (the Directive) into national law. Accordingly, employers will be required to provide employees with more comprehensive information than before, either as part of the employment contract or in separate documentation. Failure to comply with the new requirements, can lead to fines for the employers. In this post, we summarize the most important legal effect of the amendments.
Additional required disclosures
The previous mandatory disclosures under Section 2 of the Nachweisgesetz are expanded to include additional requirements, including:
- The procedure to be followed when terminating the employment relationship (including the deadline for bringing an action for protection against dismissal);
- If agreed, the possibility of free choice of the workplace;
- If a probationary period is provided for, the duration of the agreed probationary period;
- Where there is a fixed-term employment relationship, the end date of the fixed term;
- The agreed rest breaks and rest periods;
- In cases of agreed shift work, the shift system, the shift pattern and the conditions for shift changes;
- Where an employee may be “on-call”: The agreement with the employee that they will carry out work in accordance with the workload; the minimum number of hours for which they will receive remuneration; the time frame (reference days and hours) set for the performance of the work; and the period within which the employer must provide advance notice of the workplace for carrying out the work;
- The options for working overtime and the conditions that apply;
- The extent of the right to training provided by the employer;
- Where there is a company pension plan, the name and address of the external pension provider, if applicable.
Written form required
As before the information must be in written form, the transcript must be signed by the employer and handed over to the employee.
In contrast, transmission in electronic form, e.g. using electronic signatures (e.g. DocuSign), is expressly excluded. On this point, the German legislator has dispensed with the option of digitizing HR processes provided for in the Directive. This is likely to be particularly relevant for the practice of international companies, where digital contract execution has become common practice.
Timing for providing the information
In the case of new hires, the legislation provides for staggered deadlines for providing the information to the employee. On the date that the employee commences work, information relating to the name and address of the contracting parties, the amount of remuneration and the agreed working hours must be provided. Previously, the employer had up to one month after the agreed employment start date to do this. Seven days after the commencement of employment at the latest, further information must be provided, relating to the place of work or the details relating to overtime and its conditions. All other information must be provided no later than one month after the agreed start of the employment relationship.
In the event of a change to the essential terms of an existing employment contract, the employer must inform the employee in writing no later than the day on which the change takes effect.
Changes in the law or in collective agreements or company or service agreements still do not have to be notified in writing.
Employment contracts for employment relationships already existing on July 31, 2022 (“old contracts”) do not have to be amended. However, following a request by an existing employee, the employer must provide them with the majority of the information within seven days of the request. The other information (e.g. the reference to the time limit for bringing an action) must be provided within one month of receipt of the request at the latest.
Rules on fines
In the future, violations of the provisions of the Nachweisgesetz will constitute an administrative offense that can be punished with a fine of up to €2,000 per contractual condition. An employer is deemed to have committed an administrative offense if it fails to hand over the essential terms of the contract, or fails to do so in the prescribed manner or in good time.
Period for bringing actions for protection against dismissal
With regard to the new information required on the termination provisions, it should be noted that the three-week time limit for bringing an action for protection against dismissal will commence and, if necessary, expire even if there is no reference to this period in the employment contract. However, the employee may be entitled to claim damages if the employer failed to mention it in the employment contract.
Employers should review existing employment contract templates with a view to mentioning the essential terms of employment in order to avoid fines. Furthermore, employers should prepare themselves in order to be able to comply with an employee’s request in the case of old contracts and to fulfill the obligation to provide the information within the one-week period.