On January 1, 2025, the Fourth Bureaucracy Relief Act (BEG IV) came into effect in Germany, marking a significant milestone in the country’s efforts to modernize and streamline administrative processes. The new legislation introduces a shift from “written form” to “text form” for specific business-related documents, including employment contracts, making it easier for employers to comply with legal requirements.
A Departure from Tradition
Until the end of 2024, Germany mandated the “written form” for employment contracts under Section 126 of the German Civil Code (Bürgerliches Gesetzbuch). This meant contracts had to be signed with “wet-ink” signatures by both parties. While oral agreements were technically permissible, they required key contractual elements to be documented in writing, with non-compliance risking fines of up to €2,000. With BEG IV, the “text form” now allows legible declarations made on durable mediums, such as email or scanned documents, to fulfill legal obligations in many cases.
Implications for Employment Law
The reforms under BEG IV impact several key areas:
• Employment Contracts: Employers can now use text form for most employment contracts, eliminating the need for physical signatures. However, written form is still required for certain time-limited contracts under the Part-Time and Limited Term Employment Act.
• Parental Leave Requests: Requests for parental leave, previously requiring a signed written application, can now be submitted via text form, such as an email.
• Job References: With employee consent, employers can issue job references in electronic form, bypassing the need for physical signatures. However, electronic references must bear a secure digital signature, such as through DocuSign, which may limit accessibility for some employers.
Exceptions and Continuing Requirements
While BEG IV promotes modernization, certain tasks still require the written form. These include:
• Notices of termination
• Termination agreements
• Post-contractual non-competition clauses
• Fixed-term contracts
Additionally, sectors prone to illegal employment, such as catering and private security, are excluded from these reforms to maintain strict oversight.
What Businesses Need to Do
Companies must now evaluate their internal processes and identify where text, electronic, or written forms are applicable. Clear guidelines will be essential to ensure compliance with the new rules.
• Written Form: Requires wet-ink signatures.
• Electronic Form: Requires a secure digital signature.
• Text Form: Requires a legible declaration on a durable medium, such as email or PDF.
The reforms provide businesses with an opportunity to modernize their administrative systems while retaining the flexibility to adhere to stricter pre-2025 processes if preferred.
As Germany continues to embrace digital transformation, BEG IV is a step forward in reducing bureaucracy and enhancing efficiency, signaling a positive move for businesses operating in the country.
