Central Written Form Requirements in Labor Law - Reasons and Alternatives
Particularly in the age of digitalization, there is an urgent need - not only, but also in employment law - to make communication more digital and to accelerate or simplify processes. In practice, however, this development continues to be held back by various statutory form requirements.
What does "written form" mean and why does the legislator not allow electronic form/signature to suffice in some places?
The legislator understands "written form" to mean the signing of a document by means of a handwritten signature of the issuer, Section 126 (1) of the German Civil Code (BGB). In principle, the written form can be replaced by an electronic signature. However, if the electronic form is excluded by law, the written form must be used.
Far-reaching consequences in the event of non-compliance with the form requirements
If the legally prescribed form requirement is not complied with, the legal transaction is void, Section 125 of the German Civil Code (BGB). Because of this drastic consequence, caution is therefore required in employment law practice and the required form must always be observed. This applies equally to both employers and employees.
What are the central written form requirements in employment law?
A central written form requirement at the beginning of the employment relationship is the written confirmation of the essential contents of the employment contract in accordance with the Verification Act and the agreement of a fixed term with the employee in accordance with Section 14 (4) TzBfG. In the context of the termination of the employment relationship, the written form in accordance with Section 623 of the German Civil Code must be observed when giving (ordinary or extraordinary) notice of termination. In these cases, the legislator has explicitly excluded the replacement of the written form by the electronic form.
Why does the legislator want written form?
According to the legislator's intention, written form requirements are initially in the parties’ interests as they provide more clarity concerning the far-reaching consequences of the legal transaction and work to prevent a hasty decision (warning and information function). The exclusion of electronic form is justified by the lower warning function compared to the written form. However, the fact that only the strict written form in the sense of a handwritten signature is supposed to provide clarity and prevent hasty declarations hardly seems up to date. It is based on an outdated conception of communication channels that no longer corresponds to everyday employment law.
Nowadays, most components of employment contracts, such as internal guidelines, rules of conduct or target agreements, are transmitted digitally. In this respect, it is undisputed that both the content and the consequences are sufficiently noted by the parties. The legislator has taken this idea into account, in collective law, through the Works Council Modernization Act by creating the possibility, in accordance with Section 77 (2) sentence 3 BetrVG, permitting conclusion of works agreements in electronic form as well. In view of the increasingly flexible possibilities of being able to work from almost any location and at any time, thus optimizing not only time but also financial resources, the written form requirement in individual employment law seems like an "outdated dinosaur".
Moreover, written form requirements make it practically impossible for employers to maintain a digital personnel file in everyday working life. Documents that require written form must still exist and be kept in paper form. The argument that these documents must serve as evidence in any subsequent proceedings before the labor courts and that the evidentiary function is therefore preserved by the written form is not convincing, since the electronic form can also be used as evidence in the proceedings in the form of a visual inspection. Furthermore, it is often unclear for employers in practice which form must be observed. This could be counteracted and greater legal certainty ensured if it were possible to sign all documents using an e-signature.
The electronic signature as an alternative (?)
Signing documents using an electronic signature appears to be a reliable alternative to the outdated handwritten signature. It meets the need for clarity and the prevention of hasty decisions, and thus the purpose of written form requirements, just as well as a handwritten signature.
Furthermore, signing by means of an e-signature is a process comparable to signing by hand, which warns the signatory that he or she is about to make a declaration whose content is binding. An e-signature also enables the identity of the signatory to be established beyond doubt, so that both the warning function and the identity function of the formal requirement are achieved by compliance with the electronic form. The electronic signature is therefore capable of replacing a manual signature in legal transactions and is well suited to meeting the requirements of digitized workflows.
The fact that the legislator still excludes electronic form for certain legal transactions no longer seems appropriate. In daily practice, this is primarily an obstacle to digitization processes and puts the brakes on companies' efforts and needs for accelerated and simplified processes. In our opinion, this interest outweighs the interest in preserving the functions associated with the written form requirement. This is because the legislator's objective can be achieved by electronic form just as well as by written form.
Against this background, the development of the recently published draft statute (DS 20/1636), which is intended to implement EU Directive EU/2019/1152, is incomprehensible. The draft is primarily intended to further develop the law on documentation of working conditions (NachwG). If the parties to an employment contract do not comply with the written form with regard to the most important working conditions, this is to be treated as an administrative offense and can be punished with a fine of up to EUR 2,000 per case.
In the short term, it is advisable for employers to make the best possible use of the optimization options available to them to simplify and accelerate processes. For example, it is still common for employment contracts to contain a so-called "double written form clause". This stipulates that amendments and additions to the employment contract are only valid if they are made in writing and signed by both parties to the contract in the original. Such clauses make legal transactions more difficult than is already required by law. In this respect, as already explained elsewhere, it seems sensible to refrain from including such clauses in employment contracts. We will be happy to advise you on the best possible course of action for your company.
Blog post by Kim Kleinert, Maria Rutmann (research assistant at the Hamburg site) and Charlotte Herrmann (trainee lawyer at the Berlin site).