Back to the future? Germany travels back in time while digitalization occurs elsewhere

Germany’s amended Verification Act catapult the country back into the Middle Ages

The latest amendments introduced by the German Federal Ministry for Labor (BMAS) to the “Nachweisgesetz“/NachweisG will transform Germany back into the age of hard copies and wet ink. The law to amend the act on notification of conditions governing an employment relationship came into effect on 01 August 2022 and will force all German employers to comply with new contract notification obligations. At a time when the rest of the world is promoting digitalization and innovation, Germany is going to fall back into archaic practices of the Middle Ages.

Immediate action is required

Existing employer obligations to provide notifications of essential conditions of employment will be extended, and in the event of violations, fines of up to EUR 2,000 per violation will be imposed. The amended NachweisG will apply to both new and existing employment relationships – hence, employers should review and adapt their existing sample employment contracts ASAP and be prepared when employees may raise claims of notification requests.

Employers are highly encouraged to review and amend existing sample employment contracts, draft sample notifications of the essential conditions of employment, and define internal procedures and processes for requests. Distinctions must be made between old employment contracts created prior to 01 August 2022 and new employment relationships to be entered into as of 01 August 2022.

• For employment relationships created prior to 01 August 2022, a written sample amendment or a template for a written sample notification of the essential conditions of employment must be prepared. This should meet the requirements of the amended NachweisG so that it can be handed over to the employee in a timely manner in case of a request by the employee.
• For employment relationships entered into on or after 01 August 2022, existing employment contracts must be reviewed for conformity with the amended NachweisG and necessary adaptations shall be made. Here, too, it is generally possible to hand over a sample notification of the essential conditions of employment when the employment contract is concluded. The NachweisG does not require all notifications to be made within the employment contract.

Extended notification obligations

In addition to existing conditions of employment currently specified in the NachweisG, the following essential conditions of employment must be incorporated in the future (the catalogue below only lists the top ten):

• In case of fixed-term employment relationships/befristete Arbeitsverträge, the end date of employment.
• The duration of the probationary period. In the case of fixed-term employment relationships, this must be in reasonable relation to the expected duration of the fixed term.
• The agreed rest breaks/Ruhepausen and, in the case of agreed shift work, the shift system, shift patterns, and requirements for shift changes.
• The possibility of requesting overtime/Überstunden and its conditions and remuneration.
• If agreed upon, the details of on-call work, Arbeit auf Abruf.
• The breakdown of remuneration, including overtime, surcharges, allowances, bonuses, and special payments, as well as any other components of remuneration and their due date.
• If agreed upon, the possibility of freedom to work remotely.
• The name and address of the pension provider if the employer grants the employee a company pension/betriebliche Altersversorgung through a pension provider.The procedure to be followed by the parties when terminating employment, including the written form requirement and the notice periods for terminating employment, as well as the period for filing an action for protection against dismissal/Kündigungsschutzklage.
• A reference to applicable collective bargaining agreements/Tarifverträge and work agreements/Betriebsvereinbarungen.

Strict form requirements

Horrific but true, the essential conditions of employment must continue to be handed over to the employee in written form (wet ink). Hence, employers will not be able to avoid a handwritten signature on paper and a handover of the document. Please note the German legislator does not allow the information to be provided in electronic form or signed digitally.

Tight notification periods

Please note that a distinction must be made between old employment contracts that were concluded prior to 01 August 2022, and new hires as of 01 August 2022.

• For employment contracts entered into prior to 01 August 2022, employers must provide the employee with the essential conditions of employment in writing within seven (7) days upon the employee’s request.
• For new hires starting employment as of or after 01 August 2022, written notification of the essential conditions of employment is required on the first day of employment.

Sanctions, penalties and fines

To make things worse and as noted upfront, the new NachweisG provides for sanctions in the event of violations by the employer, i.e., employers will face fines of up to EUR 2,000 per violation. There also may be risks of exclusion from participating in tenders of public authorities for violators.

The amount of time and the involved costs of compliance should not be underestimated by companies. Measures start with the revision of their contract management and in many cases with a complete review of their sample contract forms. HR departments will be faced with significant administrative burden.