Changes to the Verification Act and age limits in employment contracts

On October 18, 2024, the Federal Council approved the “Fourth Act to Reduce Bureaucracy for Citizens, Business and the Administration”, which was passed by the Bundestag on September 26, 2024. This law brings with it significant changes that make formalities much easier, especially for employers.

Digital proof of key contractual conditions

One of the most significant changes concerns the possibility of transmitting key contractual terms and conditions digitally. In future, employers will be able to provide information about the key contractual terms of an employment relationship by email. Written proof in paper form, as previously required, is no longer necessary.

The regulations at a glance:

• Essential contractual terms and conditions can be documented and transmitted in electronic text form, for example by means of a “package insert”.
• Text form also includes e-mails; a qualified electronic signature is not required.
• This “instruction leaflet” must be accessible, storable and printable for the employee.

No written form for age limits in employment contracts

Another important change in the new law concerns age limits in employment contracts. In general, fixed-term employment contracts are subject to the strict written form requirement pursuant to Section 14 (4) TzBfG, which means that an employment contract - or strictly speaking - a fixed-term agreement must be signed by both parties in person and received in writing. Concluding a contract digitally, for example by email, was previously not sufficient and led to the invalidity of the fixed-term contract, resulting in the conclusion of an open-ended employment contract. 

However, the new law introduces an exception. In future, agreements that provide for the termination of the employment relationship upon reaching the standard retirement age may be valid in simple text form (e.g. by email). 

However, it should be noted that

• The relaxation of the formal requirement only applies to fixed-term agreements relating to reaching the standard retirement age.
• Fixed-term employment contracts relating to other points in time (such as early retirement) are still subject to the strict written form requirement of Section 14 (4) TzBfG.

Conclusion

The Federal Council's approval of the “Fourth Bureaucracy Relief Act” brings the long-awaited significant relief for employers. The possibility of transmitting key contractual conditions digitally and the relaxation of formal requirements for fixed-term contracts will reduce bureaucracy and increase flexibility. The law is expected to come into force on January 1, 2025.