Often, international companies are surprised that under German law certain employment law documents need to be wet-ink signed (handwritten) in order to be enforceable. Failure to comply with this requirement may have significant consequences – a dismissal notice, for example, which has not been wet-ink signed is invalid and does not terminate an employment relationship. Other examples for documents which require wet-ink signatures to be enforceable are fixed term employment contracts and / or post-contractual non-competition agreements.
Technically, the same applies to regular employment contracts as well. Under the German Verification Act (Nachweisgesetz), the employer is obligated to provide the employee with a wet-ink signed document that includes the main terms of employment. Although some legal commentaries take the view that non-compliance with this requirement may expose companies to damage claims, there is no evidence that this has ever become relevant. In practice, there is no remedy if companies do not provide a wet-ink signed document with the main terms of employment. Lots of companies, in particular international companies, have implemented processes where regular employment contracts are signed electronically only.
It seems like these companies are in for a big surprise: A draft bill has been published (https://dserver.bundestag.de/btd/20/016/2001636.pdf) that aims at implementing EU Directive EU/2019/1152 . The most significant change is that the draft bill now stipulates that failure to comply with the obligation to provide a wet-ink signed document with the main terms of employment constitutes an administrative offence, punishable with fines of up to EUR 2,000 per case. Based on the current draft, this would not apply retroactively.
This seems bizarre in times where everyone tries to avoid using paper and goes virtual instead. However, it is, of course, a significant change to the current law and will require companies to review and, quite possibly, change their processes. Since there will likely be audits, companies will need to store the wet-ink signed documents in order to be able to prove to the authorities that they have complied with their obligation. This will be difficult for companies who only have satellite offices in Germany.
In addition to the introduction of fines, the draft provides that employers in Germany will – if the bill passes the legislative procedures – have to hand employees the main conditions of the employment (contracting party, salary and working time) in writing (electronic form does not suffice!) on the first day of employment the latest; a written document including the following conditions needs to be handed to employees within seven days from commencement of employment: Start Date, limited term (if any), Place of Work, type of activities, probationary period. A complete employment contract including all relevant information has to be handed to the employee in writing within one month from commencement of employment the latest.
It is not clear if and when this new law will come into effect. EU Directive EU/2019/1152 needs to be implemented by 31 July 2022, but it would not be the first time that Germany does not implement EU Directives in time.