Monthly Dose of Germany: May 2024

Navigating the DORA contract compliance challenge

Reviewing and updating IT-related supplier contracts to match the numerous requirements formulated by DORA poses a tough challenge to financial entities, especially given the 17 January 2025 deadline. An efficient, systematic and digitally enabled review process is key to ensuring a DORA-compliant contract landscape.

On 27 December 2022, the European Parliament and the Council introduced Regulation (EU) 2022/2554, commonly known as the Digital Operational Resilience Act, or DORA. Its primary objective is to enhance the IT security of financial entities such as banks, insurance companies, and investment firms. Contract compliance, as part of ‘ICT Third-Party Risk Management’ is one of the five pillars of DORA.

Read more about:

• The Five Pillars of DORA
• ICT Third-Party Risk Management: The Contracting Challenge
• Deloitte Legal’s tech-enabled approach

Fast-Track Your CLM: The Power of a Pre-packaged Contractify Implementation

Setting up a contract lifecycle management (CLM) system can be a resource-intensive process. Choosing the right CLM software and configuring it to the organization’s exact requirements can tie up resources for months. But instead of building a home for your contracts brick by brick, there are also ready-made options to consider.

This article outlines the process and the benefits of a pre-packaged CLM implementation and introduces the user-friendly CLM solution Contractify, which is especially suited for small to medium enterprises.

'Foreign Subsidies Regulation' - 100 days notification obligation for concentrations

On 12 July 2023, the 'Foreign Subsidies Regulation'1 ("FSR" or "Regulation"), a new European control regime came into force. The Regulation empowers the European Commission ("Commission") to take action against foreign subsidies that distort the internal market.

A central element of the new regulation is the obligation to notify concentrations, which has been in force since 12 October 2023. This is in addition to concentration control and includes a standstill obligation subject to fines. Even before it came into force, the notification requirement had therefore caused great uncertainty among companies and investors. Not least due to the very broad definition of terms, in particular the concept of a contribution from a third country ("contribution").

In a short dossier the Commission provides an insight into the first 100 days of the obligation to notify. This article shows the results after 100 days and the conclusions that can be drawn from the Commission's initial experiences and clarifications.

Commercial Courts

The Future for International Commercial Disputes at German Courts?

Germany as place of jurisdiction is to become more popular as a forum for international commercial disputes. To this end, the German Federal Ministry of Justice is planning to introduce and expand commercial courts and commercial chambers at German courts.

This article explains, what commercail courts are and answers the following questions:

• What is the purpose of the introduction of commercial courts?
• What are the advantages and disadvantages of litigation before the Commercial Court for companies as parties to the proceedings?

Planned short-term amendment to the EdW Contribution Regulation - Draft bill of the Federal Ministry of Finance

At a glance:

• The Contribution Regulation of the Compensation Scheme of Securities Trading Companies (Entschädigungseinrichtung der Wertpapierhandelsunternehmen - EdW) is to be amended on the initiative of the Federal Ministry of Finance (BMF).
• The draft bill envisages halving the percentage contribution rates.
  However, the minimum and maximum annual contributions remain unchanged.
• The amendment is to come into force shortly and will already apply to the accounting year ending 30 September 2024.

Read more in this article 

Legal Prompting 101

The legal practice of using generative AI chatbots

Large language models (LLMs) offer a new form of technical support for different types of intellectual work - especially for the work of lawyers - in the form of artificial intelligence that can generate text in human language on command. By skillfully using the right commands, or prompts, lawyers can save time on numerous tasks in the context of legal work - that is the promise of this new technology.

This article explores the question of what makes good legal prompting, explain what Large Language Models (LLMs) are, discuss the known weaknesses of LLMs and provide examples for good legal prompting.

Pensioner employment and company pension schemes: Update 2024

This Client Alert provides an update on the material labour law implications arising from a practical perspective in the pensioner employment with regard to the company pension commitments made to the employee:

1. Starting point: Classification of the company pension commitment in terms of financing, specific benefits and implementation path; contractual partner in the pensioner-employment
2. Benefit case in the company pension commitment and pensioner employment: parallel receipt of remuneration and company pension benefits?
3. Possibility of vesting further entitlements during the pensioner's employment
4. Offsetting remuneration from the pensioner's employment against company pension benefits
5. Adjustment of company pension benefits during the implementation of the pensioner-employment

Employer of Record and Co. abroad - a way out of the shortage of skilled labour?

For some years now, German companies have shown increasing interest in a new employment model in which a personnel service provider acts as an "employer of record" (EoR). The EoR hires employees abroad and transfers the employer's right to issue professional instructions to the German client.

Intermediaries in Germany are often commissioned to find suitable EoRs abroad or to coordinate the deployment of various EoRs.

A closer look shows that it makes no significant difference in terms of the legal challenges whether the companies involved, i.e. the EoR and the client, belong to a group or whether the EoR acts as an external service provider, as is traditionally the case.

"Monthly Dose" Employment Law: 04/2024

The fourth 2024 edition of our Monthly Dose Employment Law on current case law explains the judgments

1. of the German Federal Labour Court (Bundesarbeitsgericht, BAG) dated 17 August 2023 (6 AZR 56/23) on the requirements for the “planned” operational change within the meaning of Section 125 (1) sentence 1 Insolvency Code (Insolvenzordnung, InsO) in a reconciliation of interests with a list of names to justify the presumptive effect of the urgent operational requirements of the termination,
2. of the BAG dated 13 December 2023 (5 AZR 137/23) on shaking the evidentiary value of certificates of incapacity for work after ordinary termination of the employment relationship by the employer,
3. of the BAG dated 14 December 2023 (6 AZR 157/22) and dated 1 February 2024 (2 AS 22/23 (A)) on the effectiveness of terminations in the event of incorrect or omitted notification of mass layoffs under Section 17 of the German Dismissal Protection Act (Kündigungsschutzgesetz, KSchG),
4. of the German Regional Labour Court (Landesarbeitsgericht, LAG) Hamm dated 24 August 2023 (15 Sa 1033/22) on continued payment of wages in the event of officially ordered of COVID 19-quarantine despite failure to vaccinate,
5. of the LAG Baden-Württemberg dated 11 January 2024 (3 Sa 4/23) on the permissibility of a unilateral conversion of previously granted annual special payments to early, monthly partial payments and their offsetting towards the statutory minimum wage,
6. of the German Regional Social Court (Landessozialgericht, LSG) Lower Saxony-Bremen dated 27 September 2023 (L 2 BA 59/22) on the effects of a minority shareholding by a third-party managing director in the parent company on the social security status of the subsidiary and
7. of the Court of Justice of the European Union (ECJ) dated 14 December 2023 (C-206/22) on the entitlement to the transfer of annual leave in the event of an officially ordered COVID 19-quarantine for periods before 16 September 2022.

Transaction News

We at Deloitte Legal Germany are constantly advising on numerous complex transactions and challenging projects.We would be delighted to explain our services portfolio to you and discuss with you how we at Deloitte Legal Germany can assist you with your projects, whether in the field of Corporate Reorganizations, M&A transactions, including carve-outs, general commercial, employment law, IT/IP or LMC/LMS. Just reach out to us!

In order for you to better understand how we have helped other clients, we would like to hereinafter showcase information on one project that our teams have recently advised on.

Deloitte Legal supports German ESPRIT companies in filing for self-administration proceedings

A Deloitte Legal team led by the Hamburg restructuring partner Frank Tschentscher filed for the opening of insolvency proceedings in self-administration for seven companies of the German ESPRIT Group. On the following day, provisional self-administration was ordered for the debtor companies, after the members of the (main) creditors' committees had unanimously voted in favour of this type of procedure following further explanations by Deloitte Legal at the constituent meetings.

Read more here!

People News

Deloitte Legal expands investment regulatory practice: Matthias Meinert joins Munich office as partner

With Matthias Meinert, Deloitte Legal has gained a new specialist for investment regulatory law in its Munich office. Matthias join Deloitte Legal's cross-location financial regulatory law team as a partner as of May 1.

Read more here!

Deloitte Legal Webcast Series

In our German language Deloitte Legal Update webcast series, we address current legal issues and developments that are important for corporate practice.

In our upcoming "Legal Update" webcast we will discuss:

Employment law and data protection in the successful implementation of IT systems: Best practice approaches

Wednesday, 05 June 2024 | 11:00 - 11:45 a.m.
Register here (Webcast in German language)

Advancing digitalization, mobile working and the ever-increasing exchange via digital platforms and tools require the continuous expansion of existing IT systems and the introduction of new ones.

Our experts Jan Rudolph, Anna Mafalda Bock and Pascal Terwedow will address the following topics during the webcast:

• Successful implementation of IT systems from the perspective of the implementation partner - practical experience, do's & don'ts
• Best practice in winning over employee representative bodies as supporters for the implementation of IT systems
• Ensuring data protection-compliant implementation of IT systems in companies, with a particular focus on data transfer within corporate groups.

You can download the presentations of our further recent webcasts here:

• Legal Update Webcast #10/2024 - Banking as a Service: Part of the future of financial services?: In our Deloitte Legal Update Webcast on May 22, 2024, Dr. Mathias Hanten and Andreas Reuß looked at the concept of “Banking as a Service” (“BaaS”). This involves not just a legal term, but a unique and peculiar legal relationship between licensed entities, service providers and end customers. BaaS is becoming increasingly important for both FinTech companies and established credit institutions. It appears to be less of a buzz word and more of a (r)evolution in the financial world. BaaS enables third-party providers to access the banking infrastructure via seamless API integration.
• Legal Update Webcast #09/2024 - Distressed M&A - The Fine Art of the Bespoke Deal: Session 2 Employment law structuring options (in German language): Our webcast series "Distressed M&A - The Fine Art of the Bespoke Deal", hosted by Deloitte Legal in cooperation with industry experts from Deloitte Financial Advisory and Deloitte Tax, examines the latest developments in connection with distressed M&A transactions from different perspectives. Although the insolvency of a company is a drastic event, the acquisition of a company out of insolvency can offer considerable opportunities. In the second session our experts Frank Tschentscher., Marcus C. Spangenberger, Dr Lars Hinrichs and Elisa Ultsch will introduce you to employment law structuring options in transactions in the insolvency environment.

In our Webcast Archive, you can find a list of previous webcasts and also download the corresponding presentations.

Should you be interested in topics discussed during one of our German language webcasts, do not hesitate to contact the respective presenters – they will be delighted to provide you with additional information in the English language.

EMEA Dbriefs Legal Webcast Series

The Dbriefs Legal webcast programme for Europe, the Middle East and Africa  help you gain insights on key legal trends and critical issues affecting your global business operations.

The upcoming "Dbriefs Legal" webcast will discuss:

Digital Nomads – A New Challenge
Thursday 6 June 2024, 12.00 BST/13.00 CET
(Webcast in English language)

Register here