Berlin Labor Court: Fixed-term employment contract with electronic signature not valid.

 Important formal requirements regarding eSignatures – Does the new EU directive offer progress?

Dr. Andreas Lang

Berlin Labor Court: Fixed-term employment contract with electronic signature not valid.

HR departments are becoming increasingly digitalized. However, which form of electronic signature is legally reliable often remains unclear. Employment contracts are one example. Failure to fulfill the formal requirements can expensive consequences as reflected by a ruling of the Berlin Labor Court (Ref.:36 Ca 15296/20). The EU directive on transparent and predictable working conditions could provide employers with greater clarity. German legislation must implement this directive by August 1.

In September, the Berlin Labor Court ruled that a fixed-term employment contract signed by both parties exclusively in electronic form is not effective. As a consequence, the employment contract is concluded as an open-ended contract pursuant to Section 16 Part-Time and Fixed-Term Employment Contracts Act (TzBfG).

A mechatronic technician took legal action. He had used a program with an electric signature to sign an employment contract instead of his own signature. The employer used the same procedure. However, the Berlin Labor Court judges ruled that the e-signature tool used failed to satisfy the written form requirement according to Section 14 (4) Part-Time and Fixed-Term Employment Contracts Act (TzBfG).

A qualified electronic signature requires certification

They did not conclusively answer whether employers and employees can even conclude fixed-term contracts electronically. Regardless of this, a qualified electronic signature is always required in accordance with Section 126 a of the German Civil Code (BGB), which was not the case here. The requirements for qualified electronic signatures are as follows:

The three types of digital signatures

The background is as follows: The eIDAS regulation differentiates between three types of electronic signature. However, § 126 of the German Civil Code (BGB) stipulates that only the qualified electronic signature and, therefore, the most secure variant, can replace the written form. The gradations are as follows:

  1. Simple electronic signature (Art. 3 No. 10 eIDAS Regulation): The electronic data is logically linked in such a way that the signatory is identifiable. A scanned signature is an example.
  2. Advanced electronic signature (Art. 3 No. 11 eIDAS Regulation)
    The requirements of Art. 26 eIDAS Regulation are fulfilled: The data allows the signatory to be clearly identified, and any subsequent changes to the data are identifiable.
  3. Qualified electronic signature (Art. 3 No. 12 eIDAS Regulation)
    In addition to the technical requirements of the advanced electronic signature, the signature is generated by means of a qualified electronic signature generation unit certified for this purpose.

As we have reported, every contract needs to be analyzed on a per-case basis:

  • Is an eSignature permissible in the specific case?
  • Which type of digital signature has to be used in each specific case with a view toward effectiveness and proof?

The paperless HR department: Does implementing EU law allow progress?

Whether a fixed-term contract can also be concluded in electronic form in accordance with Section 126a of the German Civil Code (BGB) has been subject to dispute up until now. Given that the Berlin labor court judges specifically left this question unanswered, the ruling fails to provide greater clarity. As a consequence of the evidential problems arising from Section 2 (1) of the Verification Act, many companies continue to document the key aspects of the employment relationship on paper. The EU Directive on Transparent and Predictable Working Conditions could provide a solution. German legislation must implement this directive by August 1. The directive stipulates that proof in electronic form is also possible under specific conditions: For example, if employees receive the important terms and conditions of their employment relationship via digital means, and this information is accessible, can be stored and printed out. However, HR departments presently need to wait for concrete national implementation.

Termination of the employment contract only in writing on paper

Apart from that, do not forget: Notices of termination, severance agreements and references all explicitly exclude the electronic form pursuant to Section 623 of the German Civil Code (BGB).

Digitalization in the HR department involves pitfalls regarding the electronic signature of employment contracts. One can only hope that German lawmakers will provide more clarity concerning fixed-term contracts by implementing the EU directive on transparent and predictable working conditions by August 1. HR managers need to monitor the legislative process. Until then, companies have to carefully check the formal requirements for employment contracts: Limited-term contracts require a qualified electronic signature using a tool certified by the Federal Network Agency. Terminations and Severance agreements are still only effective in paper form.