An amendment to several German laws passed by the Bundestag on June 23, 2022, forces German employers to change the content of their employment contracts at short notice. There is a threat of heavy fines. Among others, the Verification Act, the Part-Time and Fixed-Term Employment Act, as well as the Temporary Employment Act and the Crafts Code are affected.

The new provisions of the Verification Act (NachwG) initially affect employment contracts that are newly agreed from 01.08.2022, but also old contracts if they are amended after 01.08.2022. Changes can occur here, for example, due to the adjustment of the minimum wage of €12.00 per hour, which will, after all, apply from 01.10.2022.

What are the most important changes?

As before, employers are still obliged to set out the main contractual conditions to their employees in a written employment contract. The amendment to the Evidence Act that has now been passed expands the required mandatory information quite considerably. For example, employment contracts from 01.08.2022 must also contain the following information:

  • Duration of the probationary period, if agreed;
  • Composition and the amount of remuneration, including overtime pay, bonuses, allowances, premiums and special payments, as well as other components of remuneration, each of which must be stated separately, and their due dates, as well as the method of payment;
  • the possibility of ordering overtime and its conditions;
  • general reference to applicable collective bargaining agreements, works agreements and service agreements
  • agreed rest breaks and rest periods as well as, in the case of agreed shift work, the shift system, shift rhythm and prerequisites for shift changes;
  • In the case of work on call (number of minimum hours to be paid, time frame, deadline in the event of a change in the position of the work);
  • any entitlement to training provided by the employer;
  • company pension plan: Minimum information on the pension provider;
  • information for the employee in the event of termination: procedure to be followed before the labor court, including information on the written form and the deadline to be observed;
  • Extended obligations to provide proof in the event of a stay abroad of more than 4 consecutive weeks.

Employees in future must also be informed at the first day of work. Previously, employers had 1 month to set down the most important contractual conditions in writing, calculated from the agreed start of the employment relationship. This period will be reduced to just seven days from 01.08.2022.

 

Be careful with the information requirements about the procedure to be followed before the labor court!

In the future, the employee will already have to be informed in his employment contract about the procedure to be followed before the labor court. This is intended to protect the respective employee from classic pitfalls, such as the three-week appeal period pursuant to Section 4 sentence 1 of the German Unfair Dismissals Act (KSchG).

 

Criticism of the amendment

As can be seen from the hearings held during the legislative process, many important associations and federations (e.g. the Employers' Association (BDA)) share our view that the legislator is clearly exceeding the limits of what is reasonable with these regulations.

Unfortunately, the legislator leaves it largely open which scope of instruction the employer has to provide in concrete terms. Neither the new wording of the law nor the accompanying explanatory memorandum provide any indication of this.

After the legislator decided against it despite appropriate demands e.g. on the part of the Bundesrat to give to the employers sample formulations to the hand, in the long run the courts will have to decide, which concrete information is necessary and/or sufficient. We also find this extremely unsatisfactory.

 

In future, probationary period agreements may not always cover 6 months

In the future, "If a probationary period is agreed for a fixed-term employment relationship, it must be in proportion to the expected duration of the fixed term and the nature of the activity."

The law also leaves open what is specifically meant by the newly introduced proportionality. However, it should be clear that in future the probationary period may no longer cover the entire duration of the fixed term. The further assessment is likely to be left to the individual case and will also ultimately have to be judged by the courts.

 

Special workload in the case of requests for a fixed term and unfilled positions

With regard to unfilled positions, in the future the employer must notify an employee whose employment relationship has lasted longer than six months and who has notified him or her in text form of the desire for an employment contract concluded for an indefinite period of time of a reasoned response in text form within one month of receipt of the notification. A blanket notification that there is no suitable position will no longer be sufficient in the future.

In addition, the Part-Time and Fixed-term Employment Act (TzBfG) will be tightened. In the future, employers will have to provide employees with a reasoned response in text form within one month of receipt of the notification, stating which jobs are to be filled in the company or business.

 

Fines loom

In the event of non-compliance, the new Verification Act (NachwG) also provides for a specially introduced paragraph on fines. Fines of up to €2,000.00 may be imposed. However, the imposition of fines is a matter of discretion. The authority may therefore and will presumably refrain from imposing fines, especially in the case of violations in the initial phase after 01.08.2022.

 

What else is changing?

In the future, supplementary information will also be required for training contracts, including the specific designation of the training location, the remuneration composition and the compensation for overtime. Here, too, violations can be punished with fines.

Under certain conditions, the Trade Regulation Act stipulates training obligations for employees, the costs of which are not apportionable.In addition, there will be minor amendments to the AÜG, AentG and GewO, which we will not describe here.

 

What can you do, what do you have to do?

Where there is no plaintiff, there is no judge. Nevertheless, employers would be well advised to completely revise their sample contracts, which are often used over and over again. In the medium term, it might also be advisable to adapt existing employment contracts in order to avoid fundamentally different employment contracts being used within one's own workforce.

As should be clear from the above, the new version of the contracts does usually not result in any changes to the content of the contractual obligations of both parties, but only in the fact that significantly more detailed information must be included directly in the text of the contract.

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