Under the draft bill on implementing the EU Working Conditions Directive, companies are set to become subject to new obligations with regard to the proof and transparency of essential working conditions.

To implement the EU Directive (EU) 2019/1152 (Working Conditions Directive), the German parliament (Bundestag) passed a corresponding draft bill on 24 June 2022, which is expected to come into force on 1 August 2022. This bill provides for significant changes, particularly in the Act on Evidence of Conditions Governing an Employment Relationship (Nachweisgesetz, NachwG).

Until now, the NachwG led a quiet existence: Employers agreed on the essential working conditions in the employment contract and therefore did not have to provide separate evidence of them. Violations were largely unpunished. This will change in the future:

Extension of the obligations to provide evidence under the NachwG

In the future, in addition to the previous Section 2 NachwG, employers will be required to provide their employees with evidence of, among others, the following essential working conditions:

• if agreed, the duration of the probationary period (Probezeit, as already exists indirectly under current law),
• details of the agreed working time (Arbeitszeit), in particular on agreed rest breaks and rest periods,
• whether the employer can require the performance of overtime (Überstunden) and the conditions attached to it,
• the remuneration and method of calculation of any payment of overtime,
• the required written form (Schriftform) of a notice of termination, and
• the procedure (in particular the time limit (Klageerhebungsfrist)) for bringing an action for protection against dismissal (Kündigungsschutzklage) after the employer has given notice.

Of particular importance is the necessary reference to the time limit for bringing an action for unfair dismissal. Although under the draft bill this time limit should also apply in the absence of a written term, it is questionable whether this complies with the requirements of the Working Conditions Directive. A written term stipulating the time limit to employees should therefore definitely be provided.

These changes apply to all employment relationships, in particular also including working student contracts (Werkstudentenverträge), contracts for marginally employed employees and for temporary help (vorübergehende Aushilfen), even if they are only hired for a maximum of one month.

Written employment contract to avoid fines

Employers can and should continue to implement these requirements by including them in the employment contract, thereby avoiding the need to provide separate written evidence (which could be somewhat impractical). The strict requirements for a written form of employment contract will continue to apply; electronic form is not sufficient – although the Working Conditions Directive would explicitly allow this, the draft bill does not. Unlike before, there is no longer a month’s time limit for providing necessary evidence: Instead, the essential working conditions must be provided partly at the commencement of work, partly on the seventh calendar day and only partly after one month at the latest.

There will also be a new challenge for employment relationships existing before 1 August 2022: Following a request by the employee for evidence not previously provided, the employer must provide it within just seven days from receipt of such request.

In the case of violations – and this is new –, fines of up to EUR 2,000 can be imposed, applying per violation and per employee. Non-compliance with these new requirements will thus be sanctioned more severely in the future, which means that the NachwG, which up until now was often neglected in practice, will become much more relevant. Whether state authorities, such as the state Office for Occupational Safety and Health, or federal authorities, such as the authorities of the customs administration or the Federal Employment Agency (Bundesagentur für Arbeit), will be responsible for this, is currently still under discussion.

Changes in other laws

In addition to the NachwG, there are also plans to amend other laws, including the Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG), the Posted Workers Act (Arbeitnehmerentsendegesetz, AEntG), as well as the Handicrafts Code (Handwerksordnung, HandwO) and the Commercial Code (Gewerbeordnung, GewO).

Changes are also planned in the Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG), which will invite uncertainties in the drafting of contracts: In future, the probationary period to be agreed upon for fixed-term employment relationships needs to be “in proportion to the expected duration of the fixed-term and the type of activity”. The draft bill does not explain what this should mean in practice. It is also currently unclear whether, in the case of a disproportionately long probationary period, the statutory notice periods or any longer contractual notice periods should apply from the beginning of the employment.

Recommendations for action

Companies are recommended to adapt their employment contract templates now, as the requirements of the Working Conditions Directive must be implemented by 1 August 2022. In this way, violations of the NachwG, which according to the will of the German legislator will constitute an administrative offence (Ordnungswidrigkeit) in future, can be avoided.

The changes affect in particular all employment relationships that are established from the draft bill entering into force – in all likelihood from 1 August 2022.

For old contracts, employees will be able to demand further evidence of their essential working conditions, which must then be provided within a short period of time (as of now: seven days). Employers should prepare for this by arranging for appropriate templates. For employment contracts which have already been agreed but which only begin on or after the date the draft bill comes into force, companies are advised to comply with the new requirements (shortly) before the start of employment in order to avoid the risk of administrative offences.

For the time being, it remains to be seen how the German legislator will ultimately implement the Working Conditions Directive in detail. At present, it can be expected that the essential working conditions will have to be evidenced in writing (electronic form is not sufficient); companies should be able to provide proof of this in the event of a dispute, e.g. by means of a receipt.

The extent to which a company will need to amend its templates will depend on the individual employment contract templates used. The purpose of the Working Conditions Directive is to make employees even more aware of their essential working conditions. Consequently, increased attention on the part of employees is to be expected. Companies should, among other things, amend their employment contract templates in a professional and accurate manner in order to avoid conflicts with employees from the outset.

To read the German version of this article please click here.