Simplifications in the Evidence Act for company pension commitments and other benefits
Written form requirement to be partially waived
In the course of drafting the Bureaucracy Relief Act IV (BEG IV), significant changes were proposed to the Evidence Act with the aim of reducing the administrative burden on companies and modernizing communication with employees. These amendments relate in particular to the documentation and transmission of employment contract regulations and amendments thereto. This also includes company pension commitments and other benefits.
Current regulations of the Evidence Act
Section 2 NachwG of the current law on evidence stipulates that employment contracts and the main terms and conditions of employment must be recorded in writing, whereby electronic form is excluded. This means that all contractual terms and conditions and any amendments to them had to be signed by hand and submitted in person, otherwise fines of up to EUR 2,000 could be imposed. This regulation causes considerable administrative effort, which is not only cost-intensive, but also time-consuming and cumbersome for both parties. So far, the only exception to this has been in the context of deferred compensation in occupational pension schemes. This was announced by the BMAS in a letter dated 07.07.2022. Even if it is legally controversial in practice whether the letter is sufficient as legal legitimation, it is generally applied.
Planned innovations through BEG IV
Hurdles such as these are to be reduced in future. The principle of written form remains in place, Section 2 (1) NachwG new version, but text form, Section 126b BGB, is to be made possible under certain conditions.
Employers should be able to draft key contractual conditions in text form and transmit them electronically. This would allow employment contract provisions to be sent directly by email or via an internal company portal. It is imperative that the document can be accessed, saved and printed by the employee. In addition, the employer must have the employee confirm receipt of the minutes. Pursuant to Section 2 (1) sentence 5 NachwG (new version), employees can continue to request proof in writing, although this entitlement expires when the employment relationship ends. According to Section 3 NachwG (new version), changes to the contractual conditions can also be confirmed in text form. However, the regulations do not apply to certain sectors such as the construction and hospitality industry in accordance with Section 2a SchwarzArbG.
Application in the area of occupational pension schemes and other benefits
The amendment would reduce bureaucracy both in the area of occupational pension schemes and other benefits. Employers could record the supplementary agreements to the employment contract required for benefits, such as meal allowances, job bikes or childcare allowances, in text form and then transmit them electronically. As long as these supplementary agreements contain all the necessary information in accordance with Section 2 (5) NachwG (new version) and the employee’s consent can be verified electronically, the obligation to provide written documentation does not apply. The same applies in accordance with Section 3 (2) NachwG (new version) for amendments to supplementary agreements. Companies could communicate these agreements conveniently via their internet portals or apps, which further reduces the administrative burden and enables faster and more efficient interaction between employer and employee.
Practical example
A company introduces new benefits, such as a meal allowance for its employees. Before the planned changes to the law on evidence, such contract amendments had to be signed by hand and sent in paper form. With the new regulations, such changes can now be communicated in text form by email. Employees confirm receipt of the email and save the information digitally. If desired, they can request a written notification (§ 3 NachwG). This makes the administration of benefits more efficient and reduces the administrative burden.
Legislative process and current status
BEG IV is at the draft stage and the associations have submitted their comments. Committee consultations, readings in the Bundestag and approval by the Bundesrat are still pending in the legislative process. An exact date when the law will come into force has not yet been set.
Conclusion: Assessment of the planned amendment
The planned changes to the Verification Act through BEG IV are intended to reduce the administrative burden for companies and modernize communication with employees. However, there is criticism as the regulations are not fully applicable in specialized sectors such as the construction and hospitality industry. This could cause confusion and require additional adjustments. A uniform regulation would therefore be desirable.
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