From now on, working conditions must be defined in writing. The new law is considered a bureaucracy monster and affects the corporate world, but is also important for employees to know. An employment lawyer explains where opportunities and risks lie.
Statistically, every tenth employee in Germany has no employment contract. And the other 90 percent should not assume that everything is fine with their paper either. Since it is similar in other European countries, the EU saw a need for action. The Bundestag has now implemented the requirements in an amendment to the so-called Verification Act in national law. From August 1, every employee has the right to an amended contract or alternative documentation of working conditions that goes beyond the previous requirements. For new hires or if the job changes significantly, the obligation is automatic. dr Ulrich Sittard, partner at Freshfields Bruckhaus Deringer and labor law attorney, answers the most important questions.
Ulrich Sittard: The law requires the employer to provide written proof of the essential working conditions. He can do that in the employment contract. However, he can also make verbal agreements with the employee and then provide him with a document in which these conditions are listed. We call it proof document.
What are the key changes from the employee perspective?
Sittard: There are several points in the current legislative package. A point that is independent of the Proof Act is the probationary period. A certain degree of proportionality must now be maintained here. So, for example, if you are doing a pregnancy replacement for a limited period of nine months, a six-month probationary period is not proportionate for you. Employees can now insist that their probationary period is not too long. The guiding principle should be: How long does it take to realize whether he or she can do the job or not.
Companies are complaining about the new salary transparency due to the amended Verification Act. Why?
Sittard: To be honest, there has always been an obligation to be transparent about the composition of wages. In particular, the information on overtime pay and the type of payment is new. The problem is that violations of the law can now be fined for the first time and in practice it is now noticeable what a huge effort full payslips are.
In what way?
Sittard: The employer now has to provide detailed written evidence of what salary components exist and where their legal basis is – in a collective agreement, for example. This is particularly difficult for the employer because many pay components result from collective agreements and company agreements. Shift surcharges, weekend surcharges and so on. All of this needs to be pointed out. This requires companies to look through all the agreements and see which applies to whom. That is very laborious.
And it gets even more complex if we add the financially equivalent salary components: further training, company car, company pension scheme and so on.
Sittard: Exactly. All this must be in writing in the employment contract or in the verification document. A good example of the fact that it does not reflect reality when the Federal Ministry of Labor says that the effort for companies is low. The proof law is a bureaucratic monster, there is no other way to call it.
Do you have another example?
Sittard: Let’s take overtime. It must now be stated which conditions apply to this. But most of them will write in a sentence like: Your obligation consists of operational needs. That doesn’t help then.
For many employees, more bureaucracy also means that they have to be more careful?
Sittard: In my view, the intention of the European legislator is correct: employment contracts are often incomplete and outdated – this should get better. So the idea of creating more transparency was a good one. However, the method that was chosen in Germany for the implementation completely misses the time and this goal.
Sittard: In 2022, the German legislature actually wants all proof to be in written and paper form. This completely ignores the digital processes of modern companies and is simply hostile to digitization. A proper intranet site would have helped the employee more. The letters of verification are read about as precisely as the general terms and conditions of a savings bank or a smartphone manufacturer for a software update. That hardly contributes to transparency.
Is the new regulation a vote of no confidence in employers?
Sittard: Yes, but also towards the employee. The German legislator says that the normal employee does not properly perceive or understand a document that comes by e-mail. Whereas the written mail is read. I think that’s nonsense. Especially when the post arrives late, it is not perceived optimally. If the EU says digital is enough, then Germany could have done the same.
What should employees consider?
Sittard: Everyone should read the new document very carefully and check it: is there something in it that is not actually lived? If there is a difference, I would talk to the supervisor, the HR department or – if there is one – maybe the works council. Mistakes don’t have to be intentional.
Precisely because the HR departments have so little time for implementation.
Sittard: Absolutely: The law was passed in the Bundestag on June 23 and will come into force on August 1. In the middle of the holiday season, the changes could hardly be implemented. There will be no malicious intent behind most inaccuracies.
Around ten percent of permanently employed people in Germany have no employment contract at all. Is this an opportunity for them to insist on one?
Sittard: If you don’t have a written document about your job or you have a significantly outdated contract, you should definitely use the situation to clarify the working conditions.
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Should employees insist on changes when given new tasks?
Sittard: Yes, but there is no simple rule as to when this makes sense. If my employment contract no longer has anything to do with what I do or what I earn, then with the new law behind you, you should insist on providing more precision.
Is it always an advantage for employees to have everything recorded about their job?
Sittard: Often, but not always. Take, for example, a new agreement on flexible work locations or working hours. Many negotiate this with their manager through short official channels. Anyone who insists that this is reflected in writing in the verification document or employment contract may be doing themselves a disservice. Because many managers grant the request, but cannot do so in writing because they wake up sleeping dogs in the company.
Could the obligation to provide proof be useful for those who are made redundant and then want to negotiate a higher severance payment
Sittard: Indeed. Lawyers for terminated employees can try to pressure the company to get more for their clients.
What role does it play that we now have a labor market – keyword unemployment?
Sittard: A big one. The turning point that is often mentioned at the moment also applies to the job market and the human resources departments of companies, right down to concrete effects on the labor law in practice. We are looking for employees at all levels. There is no longer any structural inferiority among workers across the board. It would have been all the more important not to design the law in such a way that it ties up enormous capacities in the HR departments. We would have needed them much more to modernize working methods and training. Instead of a law that brings little. Also worth reading: