New law in Germany - Check & adapt employment contract now!

New Rules for Employment Contracts in Germany resulting from EU Directive

Author: Christian Westermann, certified specialist for german labour law and company law in Hamburg

More or less unnoticed by the public, a change in the german law will come into force on 01.08.2022, which may require a review and possibly also changes to existing employment contracts in Germany.

New EU directive changes german labour law provisions

The change in law goes back to the so-called Working Conditions Directive of the EU from 2019, which the german legislator must transpose into national law by this date. The changes are mainly to be found in section 2 of the German Evidence Act (Nachweisgesetz), as well as in some other laws.

The German Evidence Act (Nachweisgesetz) stipulates that the essential terms and conditions of an employment relationship in Germany must be set out in writing and handed over to the employee. In principle, the obligations under the Evidence Act are also fulfilled if there is a written employment contract and it already contains all the information required by the Evidence Act for the employee.

Previous mandatory information under the German Evidence Act

The German Evidence Act, which is valid until 31 July 2022, obliges employers in Germany to provide an employee with written evidence of the following contents of the employment contract no later than one month after the beginning of the employment relationship:

• Name and address of the contracting parties,
• the date of commencement of the employment relationship,
• the foreseeable duration of the employment relationship in the case of fixed-term employment relationships
• the place of work
• a brief characterisation or description of the work to be performed by the employee
• the composition and amount of remuneration, including supplements, allowances, bonuses and special payments as well as other components of remuneration and their due dates
• the agreed working hours
• the duration of the annual holiday,
• the periods of notice for termination of the employment relationship,
• a general reference to collective agreements, works agreements or service agreements applicable to the employment relationship.

Comparison of new mandatory disclosures in Germany after reform

The mandatory disclosures under the new German Evidence Act will be more extensive and they must also be fulfilled more quickly, namely within seven days of the commencement of the employment relationship. According to the new legal situation in Germany, the following additional information must be provided:

• the end date in the case of fixed-term employment relationships,
• the possibility for the employee to freely choose the place of work, if this exists,
• the duration of the probationary period, if agreed
• the composition and amount of remuneration, including remuneration for overtime, bonuses, allowances, premiums and special payments as well as other components of remuneration, each of which must be stated separately, and their due date as well as the method of payment,
• the agreed working hours, agreed rest breaks and rest periods and, in the case of agreed shift work, the shift system, shift rhythm and conditions for shift changes,
• in the case of on-call work, in addition to the agreement that the employee must perform his work in accordance with the workload, the number of hours to be paid as a minimum, the time frame fixed for the performance of the work and the period within which the employer must give advance notice of the location of the working time,
• if agreed, the possibility of ordering overtime and the conditions thereof
• any entitlement to training provided by the employer,
• if the employer promises the employee an occupational pension through a pension provider, the name and address of that pension provider, although this obligation to provide evidence does not apply if the pension provider is obliged to provide such information,
• the procedure to be followed by the employer and the employee when terminating the employment relationship, at least the written form requirement and the time limits for terminating the employment relationship as well as the time limit for bringing an action for unfair dismissal.

New contracts from 1 August 2022 vs. old contracts in Germany

The new provisions from the Working Conditions Directive do not generally affect old german contracts that already existed before 1 August 2022. They only apply to old contracts in Germany if an employee expressly requests to be informed about the new information included in the German Evidence Act or if old contracts are to be amended. Thus, employers do not necessarily have to take action on their own initiative with regard to such old contracts.

However, missing, incomplete or incorrect information that would have to be provided under the German Evidence Act can be sanctioned with a fine of up to EUR 2,000.00.

Critical: reference to action for protection against dismissal in Germany

An interesting new provision in this regard is the employer's future obligation to inform the employee of the statutory time limits in Germany for bringing an action against unfair dismissal. The German Evidence Act allows for a general reference to the statutory provisions of the German Dismissal Protection Act.

However, this reference could also lead german employees to the misconception that a dismissal could always be challenged with a chance of success - even if there is no protection against dismissal at all. It is therefore possible that this reference will only provoke unpromising actions for protection against dismissal in Germany.

However, the new German Evidence Act explicitly clarifies that Section 7 of the German Dismissal Protection Act (KSchG) (which regulates the validity of the dismissal - irrespective of the substantive legal situation - if the three-week time limit for filing an action is missed) also applies if the statutory time limit was not pointed out as required.

Conclusion: Employers in Germany must take action - employees may.

In any case, german employers should check whether their existing employment contracts contain all obligatory information or whether adjustments and additions may be necessary due to the change in the law. This is the only way to avoid fines, which are to be enforced by random checks by the authorities.

German employees, on the other hand, can also take the initiative and ask for their employment contracts to be adapted to the new content.