Implementation of the EU Working Conditions Directive - An overview of upcoming changes and challenges
For the protection of employers and employees, the Evidence Act regulates requirements that must be observed when drafting employment contracts. The Working Conditions Directive supplements and expands these requirements. The following article provides an overview of the changes planned in the course of transposing the directive into national law, which are to apply from August 1, 2022.
- Status quo in the law of evidence
- Significant planned changes in the detection law
- Significant changes outside the law of evidence
- The expected additional work for employers and the potential challenges
The purpose of the EU Directive on Transparent and Predictable Working Conditions (EU Directive 2019/1152) dated June 20, 2019 (the so-called "Working Conditions Directive") is to improve working conditions by promoting transparent and predictable employment while ensuring the adaptability of the labor market. The transposition into national law will result in particular in changes to the Evidence Act.
On April 8, 2022, the German government presented a draft law (20/1636) to implement the Working Conditions Directive.
Status quo in the German Evidence Act
The Evidence Act is an exception to the principle of the freedom of form of contracts and obliges employers to write down and sign the essential terms of an employment contract and to hand these minutes over to the employee within the first month of the employment relationship. The "essential terms" include the names and addresses of the parties to the contract, the date of commencement of the contract, information on the working hours and place of work, the description of the activity, the regulation of vacation entitlement and the agreed remuneration.
Although a breach of these obligations does not lead to the invalidity of an employment contract, it does impose a special burden of explanation and proof on the employer. In the event of a dispute, the employer must therefore explain and prove what was actually agreed between the contracting parties.
Significant planned changes in German Evidence Act
The Working Conditions Directive is accompanied by a set of additional conditions that are subject to the obligation to provide evidence and must therefore be recorded in writing. The Working Conditions Directive allows information in electronic form, e.g. by e-mail, to suffice. By contrast, the draft legislation presented to date in implementation of the directive continues to exclude proof in electronic form and adheres to the written form requirement.
The range of new verification and information requirements essentially comprises the following aspects:
- In the case of a company pension plan, the name and address of the pension provider must be disclosed. The obligation to provide evidence does not apply if the pension provider is obliged to provide information itself.
- Information must be provided on the termination procedure. The extent to which this should be done remains open. However, it is advisable to provide information at least about the requirement for written notice of termination, about the notice periods applicable to both parties to the contract and about the period for bringing an action for unfair dismissal, whereby failure to do so will not have any consequences for deadlines in any proceedings for unfair dismissal.
- The agreed working hours, rest breaks and rest periods as well as the agreed shift work and the information about the respective shift system should be recorded in writing.
- The possibility and conditions of ordering overtime shall be written down.
- Extensive duties to write down arise when sending employees abroad.
- If there are multiple possible work locations, all should be written down.
In the future, the obligation to provide evidence shall take place no later than one week after the start of work in the case of certain conditions. Any changes are to be notified in writing at the latest when they are introduced. This will significantly shorten the previous one-month period for employers.
Employers are obliged to provide employees with whom an employment relationship existed prior to August 1, 2022 with the transcript of the extended material conditions no later than on the seventh day after the request of the respective employee.
In the event of a breach of the obligation to provide evidence, the draft law departs from the previous lack of sanctions and provides for a fine of up to EUR 2,000.00.
Significant changes outside the German Evidence Act
In addition to the information requirements outlined previously, the Working Conditions Directive also provides for the following minimum requirements for working conditions:
- The Trade Regulation Act now imposes the costs of further training required for the performance of the activity on the employer; furthermore, further training is to be counted as working time.
- Fixed-term employment contracts shall provide for a specific end date in writing. Employees shall be given the opportunity to indicate in text form their desire for a change or for an unlimited employment contract. Employers must provide reasons for their decision if the employment relationship has lasted longer than six months.
- Probationary period agreements within the framework of fixed-term employment contracts shall be in reasonable proportion to the expected duration of the fixed term and the nature of the activity.
- Regulations on work on call must be written down in detail. The employee has a right to refuse to work outside the period agreed in writing.
- Temporary employees may indicate their wish to conclude an employment contract. The hirer is obliged to give reasons for this, provided that the temporary employment has existed for six months.
The expected additional work for employers and the potential challenges
In the future, employers will have to prepare for additional work with regard to new and existing employment contracts. While new contracts must be designed with the necessary minimum requirements, existing employees can request the employer to make a corresponding adjustment. The seven-day deadline for implementation may prove problematic if requests are received from several employees at the same time. As a result, it is advisable to already prepare appropriate model contracts that meet the expected minimum requirements so that any future challenge can already be countered.
At the current point of view, it can be assumed that the draft law of the Federal Government will not be significantly adjusted until its final adoption, as the implementation into national law has to be carried out by August 1, 2022. Taking into account the tight time frame for the implementation of the directive, there nevertheless remains hope for the implementation of the possibility of digitization opened up by the directive. It is desirable and timely that the extended notification obligations can also be fulfilled by electronic form, e.g. by e-mail.
The modified requirements for the disclosure of the remuneration policy and the remuneration systems in CRR II and in Sec. 16 of the Remuneration Ordinance for Institutions (Institutsvergütungsverordnung, “InstitutsVergV”)