On 23.06.2022, the German Parliament (Bundestag) passed in 2nd and 3rd reading amendments to the law on notification of conditions governing an employment relationship (‘Nachweisgesetz’, ‘NachwG’), which has existed for many years but has received little attention, and which already came into force on 01.08.2022. Under the new NachwG, employers must provide their employees with far more information and submit it in writing than before. There are deadlines to be observed and a breach of the obligation to provide notification may be enforced in each individual case with a fine of up to EUR 2,000.
In Germany, the NachwG currently already regulates extensive information obligations. Section 2 of the present NachwG stipulates, among other things, that the date of commencement of the employment relationship, its foreseeable duration in the case of fixed-term contracts, the place of work or (if the employee is not to work at only one particular place of work) a reference to the fact that the employee may be employed at different places, a brief description of the activity, the composition or the amount of the remuneration, the agreed working hours, the duration of the holiday, the notice periods, and a general reference to applicable collective agreements or works agreements must be stated. These contractual conditions are usually – but not necessarily – included in a written employment contract. If this is not the case, companies used to have to put down the essential contractual conditions in writing no later than one month after the start of the employment relationship, sign the document and issue it to the employee.
On the one hand, the NachwG aims to clarify the terms of the contract and to protect those employees who do not have a written employment contract in particular. On the other hand, transparency is to be created in smaller companies along with atypical employment relationships, and illegal employment is to be prevented. However, the NachwG also aims to avoid disputes over working conditions. Until now, a violation of the NachwG remained without sanction.
The new NachwG requires that in the case of new hires since 01.08.2022, the employer must already provide the employee with a written record on the first day of work containing the essential information on the employment relationship contained in section 2 NachwG (name and address of the contracting parties, remuneration, working hours). Section 2 (1) sentence 3 NachwG grants a seven-day grace period for information on further mandatory contents or details of the employment conditions (in particular the beginning of the employment relationship, information on a fixed term, place of work, job description and overtime) and sets a final information period of one month for all remaining information.
For companies, this means – since a time-based division of the evidence is highly impractical and leads to even more effort – that the complete evidence of the contractual terms and conditions should be handed over to the employee on the first day of work for every new hire since 01.08.2022.
And this is new in the NachwG, which has been in force since 01.08.2022:
- In the case of fixed-term employment, the end date of employment must be stated.
- The composition and amount of remuneration must be explained. This also includes the designation of supplements, allowances, bonuses, or special payments. The due date for payment must now also be stated.
- The agreed working time must be stated. This also applies to breaks and rest periods. Any shift work, the shift system, the shift rhythm and the conditions for changing shifts must be stated.
- The possibility of ordering overtime, the conditions under which it may be ordered and how it will be remunerated must be stated.
- The duration of the probationary period must be stated if such a period has been agreed.
- It is now necessary to agree on a place of work and to state whether this can be freely chosen.
- The exact regulation of part-time employment is required, i.e. the indication of the weekly working time and its distribution over the weekdays.
- In the case of on-call work, the conditions of use thereof must be stated.
- Specific information in the event of termination of the employment relationship: This includes which procedure must be followed by both parties in the event of termination, i.e. a written form. Notice periods must be specified. In addition, the employee must be informed that he or she can bring an action for protection against dismissal by observing certain deadlines.
- Obligations or the possibility of further training must be specified.
- In the case of intended postings of employees abroad, information must be provided on the agreement on the country or countries in which the work is to be performed, the duration of the work and the cash or non-cash benefits associated with the stay abroad. Posting allowances and travel, board and lodging expenses to be reimbursed must also be specified, as well as information on the return and under what conditions the return will take place.
- In the case of occupational pensions, the conditions and the insurance provider must be specified.
- If collective agreements and company agreements apply, these must be specifically stated.
The applicability of the NachwG is governed by the concept of employee under EU law. Thus, in addition to traditional employees, third-party managers and civil servants are also covered by the Directive and the new NachwG. Contrary to the previous regulation, the new NachwG also applies to temporary workers hired for a maximum of one month.
If employers violate their information obligations or fail to comply with them in due time, the new NachwG stipulates a fine of up to EUR 2,000 per employment contract and employee. It is therefore advisable to adapt all employment contracts and samples as soon as possible in order to be up to date for new hires. It is also of particular importance that the NachwG prescribes the written form of section 126 of the German Civil Code (BGB). Although the European Working Conditions Directive on which the amendment of the NachwG is based also expressly provides for the electronic form of information in Art. 3, the German legislator is the only European legislator not to have made use of this option. This means that employment contracts concluded electronically do not comply with the form of the NachwG. This also pertains to digital signatures. Hence, the traditional paper form must be used. Employment contracts must be printed out and signed by the contracting parties. It must also be ensured that an original copy is given to the employees.
Employees hired before 01.08.2022 only need to be informed in writing – not electronically – about their essential working conditions if they request the employer to do so. Then, however, a period of seven days applies. Information on leave, occupational pension schemes, compulsory training, dismissal procedures and applicable collective agreements must be provided within one month at the latest. In order to relieve the personnel departments, it should also be reviewed whether, if necessary according to specific groups of employees, such information letters can be prepared in advance so as to have them ready when needed.
If the essential terms and conditions of employment in existing employment relationships change, the employer must have informed the employee at the latest on the day of the change. Changes in the law or in collective agreements or company or service agreements still do not have to be communicated in writing.
Since the threat or imposition of fines, which may also be deliberate, can become an almost incalculable economic risk, we strongly recommend that the new regulations be observed and implemented. Of course, we will be happy to assist you in this.