Labor law consequences of the German Bureaucracy Relief Act IV for employers – big goals, small impact?
On October 18, 2024, the German Federal Council approved the draft for a Bureaucracy Relief Act IV (“BEG IV”). The BEG IV was published in the Federal Law Gazette on October 29, 2024 and will essentially come into force on January 1, 2025. Following adjustments in the legislative process, there will also be considerable simplifications to formal requirements in employment law.
As part of the BEG IV, the legislator wishes to make up for missed opportunities in the past and address the specific need for action with regard to bureaucracy reduction. The BEG IV aims to relieve economy by simplifying processes, thus promoting economic recovery. At the same time, the state is to become more capable of acting and more citizen-friendly.
Changes to labor law – these are the simplifications to formal requirements
The following changes affect the area of labor law:
Form requirements for employment contracts
Of particular relevance is the amendment to the Documentation Act (German law on the documentation of conditions governing an employment relationship), which provides for simplified form requirements for employment contracts. According to such amendment, proof of the essential working conditions can in future be provided in text form or by sending an employment contract in electronic form in accordance with Art. 126a BGB instead of the strict written form. From now on, we can therefore expect a significant simplification of personnel management and the advancement of digitalization.
However, there is an exception for industries subject to the special requirements under Art. 2a (1) of the German Act to Combat Clandestine Employment (such as the construction or catering industry). Here, the legislator still stipulates the stricter written form requirement for the protection of employees.
However, please note that fixed-term employment contracts are still subject to a strict written form requirement (Art. 14 (4) TzBfG (Part-Time and Fixed-Term Employment Act)).
In future, text form will only be sufficient for agreements on the limitation of the employment relationship up to the statutory retirement age. This exception to the written form requirement for fixed-term arrangements is now governed by the new Art. 41 (2) SGB VI (German Social Code).
Issuance of employment references
With regard to employment references, the employer now has the option of issuing references in text form and therefore electronically with the employee’s consent (Art. 109 (3) GewO (German Industrial Code)).
Applying for and announcing parental leave and caregiver leave
Adjustments are also planned with regard to parental leave and caregiver leave: For parents, applying for parental leave will be simplified by the possibility of asserting the claim in text form for children born from May 1, 2025.
The text form is also applicable to the employer’s consent to part-time work with another employer during parental leave.
Corresponding formal simplifications also apply to the announcement of the use of caregiver or family care leave (Art. 3 of the German Caregiver Leave Act).
Temporary employment
In the context of temporary employment, the text form will in future be sufficient for the transfer agreement between the lender and the hirer (Art. 12 (1) sentence 1 AÜG (German Law on Temporary Employment)).
Working hours and protection of young people at work
In addition, the new provisions of the Working Hours Act and the German Act on Protecting Young People at Work allow employers to fulfill existing notice obligations in electronic form if all employees are guaranteed free access to the information.
Formal simplifications make things easier for employers in day-to-day practice
Overall, the formal simplifications associated with the BEG IV are positive.
From an employer’s perspective, this applies in particular to the overdue relaxation of the written form requirement under the Documentation Act. For many employers, this will considerably simplify day-to-day practice and minimize the risk of fines.
It should be noted that there are still requirements for strict written form (partly replaceable by qualified electronic signature), for example, for notices of termination, termination agreements, fixed-term agreements, post-contractual non-competition clauses and credit balance agreements. These were not repealed by the BEG IV. It remains to be seen whether further changes – as announced by the former Federal Minister of Justice Marco Buschmann – will be made in 2025 due to the upcoming change of government.
No direct impact on existing contracts and agreements
Please note that the BEG IV has no direct effect on (existing) employment contracts, collective agreements and works agreements that have written form requirements. Any amendments must be agreed with the respective contractual partner.
Employers can review existing processes. However, they should also consider whether the effort is worthwhile or whether established processes should simply be continued.
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