We wanted to let you know that effective 1 August 2022 the German Act on the Notification of Conditions Governing the Employment Relationship (Nachweisgesetz - NachwG) will be updated. The new law passed the legislative process only a few days ago. It still needs to be executed by the Federal President and published, but this will likely happen by end of July at the latest.
The new rules create additional documentation and notification obligations for employers. The list of terms and conditions of employment that employers have to provide information on to their employees is now longer than before. Typically, not all the items are covered in standard employment agreements.
Employees who start on or after 1 August 2022 essentially have to be provided with the necessary written (wet-ink signed) documentation on day one of their employment. Existing employees with a start date prior to 1 August 2022 have to be provided with the written documentation only upon request. However, the employer has to respond within seven days after receiving the request. Many employers are concerned that they will receive a significant number of requests right on 1 August 2022, so they want to be prepared.
The update to the NachwG introduces a regulatory fine of up to EUR 2,000 per violation. Violations can include that documentation is either not provided at all, not provided on time, not provided in full or not provided in the prescribed manner.
Rather than updating standard employment contracts, our current recommendation to clients is to prepare a separate letter that can be provided to employees in addition to the employment agreement. This avoids that employment agreements become a lot lengthier. It also avoids that the information to be provided is considered part of the agreement and so cannot be easily changed or updated later.
Information to be covered includes the following:
- The notification of the composition of remuneration shall also include remuneration for overtime, bonuses, premiums and special payments as well as other components, including their due date and the method of payment. All individual components must then be stated separately.
- New is the notification of the existence and duration of a probationary period.
- The notification on working time must now include separately the regular working time, the agreed upon breaks and rest periods and, in the case of shift work, the shift system, the shift rhythm and all requirements for any shift changes.
- Separate from the details on remuneration, the general possibility of ordering overtime, including the conditions for ordering it.
- New is the notification on the procedure to be followed regarding dismissals, which must at least include the written form requirement for termination notices as well as the notice periods and the deadline by which an employee can file an unfair dismissal lawsuit.
- In connection with company pension commitments, employers must provide information on any external pension providers used, including name and address.
Please let us know if you need any assistance with reviewing the company’s standard employment agreements for Germany and the preparation of a separate letter that sets out the various terms and conditions.