What is at stake?
The Verification Act, which has been largely unknown until now, will inevitably be found on the desk of every German employer as a result of its amendment, which will come into force on 1 August 2022. As an EU member state, Germany is obliged to transpose Directive (EU) 2019 / 1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union into German law by 31 July 2022 at the latest. At the beginning of May this year, the German legislator presented a corresponding draft law – among other things, to amend the Verification Act, the Part-Time and Fixed-term Employment Act and the Temporary Employment Act, which is to come into force on 1 August 2022. Until now, non-compliance with the Verification Act hardly had any practical relevance, because even orally agreed employment contracts were not invalid due to a violation of the Verification Act. According to the draft law presented by the federal government, violations of the Verification Act now entail more far-reaching legal consequences and fines, which is why employers should definitely review and adapt their standard contracts.
What is the legislator aiming at with the amendment?
The new regulations serve to protect employees in a company and are intended to create even more transparency concerning applicable working conditions.
In future, employers must inform their employees when concluding a new employment contract about, among other things, details of remuneration, probationary periods, working hours, rest breaks, termination and the possibility of bringing an action for protection against dismissal. In addition, reasons must be given for temporary employment and fixed-term contracts. This obligation to provide information also applies to existing employment contracts if they are amended or if employees assert their legal right to information against the employer. The employer must fulfil this right to information transparently and in writing (!) within a period of 7 days. In case of non-compliance or incomplete information, fines of up to EUR 2,000.00 per individual case may be imposed.
What exactly must be considered when drawing up employment contracts starting 1 August 2022?
While remuneration could previously be stated as a lump sum, i.e. including all supplements such as bonuses, special payments and overtime, all remuneration components must be listed separately in the employment contract starting 1 August 2022.
Previously, only working hours had to be stated in the contract. Starting 1 August 2022, rest breaks, shift operation, shift system, shift rhythm and the applicable prerequisites for a shift change must also be recorded. It is unclear whether a general reference to existing company agreements is sufficient.
Contrary to previous practice, it must even be specified in writing under which precise conditions overtime is to be ordered.
Particularly challenging is the newly envisaged obligation of employers to inform their employees in the employment contract about the dismissal procedure and the possibility of bringing an action for unfair dismissal. In this context, questions arise with regard to the consultation obligations of works councils and representatives of severely disabled persons, changes in operations, mass dismissal notices, official approval procedures, etc.
In the future, however, employers will also have new obligations in connection with fixed-term contracts and temporary employment. After a transfer period of six months, the employer will prospectively have to respond to a correspondingly signalled interest of fixed-term employees or temporary workers. The employer will prospectively have to respond to a correspondingly signalled interest of fixed-term employees or temporary workers after a transfer period of six months giving the employer will have to give reasons as to employment relationship or the temporary employment relationship will not be converted into a permanent employment relationship of unlimited duration. This has to be done in text form within a period of one month.
What should be done now?
Employers are well advised to adapt their existing employment contract templates accordingly for the future and to keep a carefully prepared standard information letter for the election of the 7-day period, as fines of up to EUR 2,000.00 may be imposed in each individual case if the information is not provided on time or is incomplete.