New Verification Act (Nachweisgesetz) from 1 August 2022 - NEED FOR ACTION FOR ALL EMPLOYERS | LUTZ

13.07.2022 | Employment Law

I. Implementation of the Working Conditions Directive

Due to the implementation of the European Union (EU) Directive on transparent and reliable working conditions (EU Directive 2019/1152 -), the German legislator has, among other things, also amended the Verification Act (NachwG), which enshrines the information and documentation obligations an employer must fulfil. As the implementation deadline set by the European Union (EU) for the new rules will expire on 31 July 2022, the new regulations will come into force quite quickly on 1 August.

II. Previous requirements of the Evidence Act

The verification Act already stipulated that the employer had to set down the most important contractual conditions in writing and hand them over to the employee. Until now, this was done within one month of the beginning of an employment relationship.

The following points had to be documented so far:

Name and address of the contracting parties
Date of commencement of the employment relationship
Duration of the employment relationship in case of a fixed term
Place of work
Name or description of type of work
Composition and amount of remuneration
Working time
Duration of annual work leave
Notice periods
General reference to collective agreements, works agreements and service agreements applicable to the employment relationship.

Until now, the Verification Act was often neglected in practice since there was no threat of sanctions.

III. Legal innovations

1. Additional requirements of the new verification law

From August, employers must also provide written information on the following points:

End date of the employment relationship in case of a fixed-term contract
If applicable, free choice of place of work by the employee
If applicable, the duration of the probationary period
The composition and amount of remuneration, including overtime pay, bonuses, allowances, premiums and special payments as well as other components of remuneration, each of which shall be stated separately, and their due date and method of payment
The agreed working time, agreed rest breaks and rest periods and, in case of agreed shift work, the shift system, shift rhythm and conditions for shift changes
If applicable, the possibility of ordering overtime and its conditions
Any entitlement to further training provided by the employer
If the employer promises the employee an occupational pension through a pension provider, the name and address of this entity; this obligation does not apply if the pension provider is obliged to supply this 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 deadlines for terminating the employment relationship, as well as the deadline for bringing an action for protection against dismissal.

Note: A failure to provide proper information has no influence on an employee’s claim for protection against dismissal. If the employee does not contest a dismissal within three weeks after notification, the dismissal is deemed effective (section 7 KSchG).

2. Strict written form

There is still a strict written form requirement (paper form with original signature) for proof of essential terms of the contract. The electronic form was explicitly rejected by the (German) legislator, although the EU Working Conditions Directive explicitly allows an electronic form.

Employers can therefore only continue to conclude employment contracts electronically (e.g. via DocuSign) if the essential terms of the contract are additionally fixed in writing, i.e. in paper form and with an original signature, and handed over to the employee. The advantage of concluding an employment contract electronically is thus nullified.

3. Time constraints

For new hires, the new requirements will apply from 1 August 2022. In contrast to previous regulation, the employee must already have a written record with information on the name and address of the contracting parties, the remuneration and its composition, and the working hours on the first day of work. Further information must be submitted within seven calendar days.

Employees hired before 1 August 2022 need only be informed in writing of their essential terms and conditions of employment upon request. Here, the employer is given a seven day period to respond. Information on leave, occupational pensions, compulsory training, dismissal procedures and applicable collective agreements must be provided within one month at the latest.

If the essential terms and conditions of employment in existing employment relationships change, the employer must inform the employee at the latest on the day of the change. Changes oflaw or in collective agreements or company or service agreements are exempt from this regulation and do not have to be disclosed in writing.

4. Sanctions: Fine for missing or incorrect information

For the first time, violations of certain provisions of the Evidence Act are treated as administrative offences, each punishable by a fine of up to 2,000 euros.

IV. PRACTICE TIP

Employers must promptly review their employment contracts and implement the new requirements. In addition to adapting (standard) employment contracts for new hires, employers must also be prepared for enquiries from existing employees.

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New Verification Act (Nachweisgesetz) from 1 August 2022 - NEED FOR ACTION FOR ALL EMPLOYERS

Andreas Kössel

With the implementation of the Working Conditions Directive, the right of proof for employers has been tightened and - due to the written form requirement - digitalization has been set back. Employers must adapt their employment contracts. If not, fines may be imposed.