Fixed-term employment agreements in electronic form in Germany?

The Labour Court of Berlin ruled on 28 September 2021 that an electronic signature does not comply with the written form requirement of Section 126 of the German Civil Code (“BGB”), and that the certification of the signature by the competent Federal Network Agency (“Bundesnetzagentur”) is required for compliance with the electronic form of Section 126a BGB.

Labour Court of Berlin, judgement of 28 September 2021 - case 36 Ca 15296/20

The working environment has always been in a constant state of change. This is increasingly being sped up by the COVID-19 pandemic. In addition, there are more and more voices calling for the digitalisation of the working environment. Can the law keep pace with these new developments?

In the above-mentioned case, the employer attempted to meet these developments by using digitised employment contracts by electronically signing a fixed-term employment agreement. However, this became the employer's undoing, because this fixed-term employment agreement was invalid due to the lack of compliance with the written form requirement of Section 14 para. 4 of the Part-Time Work and Fixed-Term Employment Act (“TzBfG”). Thus, pursuant to Section 16 TzBfG, the fixed-term employment contract was treated as concluded for an indefinite period against the will of the employer.

In its judgement of 28 September 2021, the Labour Court of Berlin stated that an electronic signature does not comply with the written form requirement of Section 126 BGB and that the certification of the signature by the Bundesnetzagentur is required for compliance with the electronic form of Section 126a BGB.

No handwritten signature

In the present case, an employee was to be hired by the employer on a fixed-term basis. However, the parties did not sign the employment contract by hand, but by using an electronic signature.

In its decision, the Labour Court of Berlin dealt with compliance with the written form requirement, which is a condition for a valid fixed-term employment contract pursuant to Section 14 para. 4 TzBfG.

Written form, Section 126 BGB

The written form is regulated in Section 126 BGB. According to this, the deed must be signed in the person who is signing's own hand by means of a name signature; or a hand signature certified by a notary. In this case, however, the agreement on the fixed term employment was signed by the parties by means of an electronic signature and therefore not "by hand". The written form within the meaning of Section 126 BGB was therefore not complied with.

Electronic form, Section 126a BGB

Pursuant to Section 126 para. 3 BGB, it is possible to replace the written form with the electronic form, provided that this does not go against the existing law. However, this regulation should be treated with caution. For example, the electronic form is not permitted for notices of termination or termination agreements. It is true that the electronic signature is not excluded by law in the case of a fixed-term employment agreement. However, there is a certain risk, as the decision of the Labour Court of Berlin shows. 

The written form can only be replaced by electronic form if this electronic form is of a qualified nature. The electronic signature, regardless of its design and security, only acquires such a status through certification of the electronic signature by a public authority (cf. Art. 30 Regulation (EU) No. 910/2014 dated 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC). In Germany, this certification is carried out by the Bundesnetzagentur pursuant to Section 17 of the Trust Services Act (“VDG”). If this a certification has not taken place, a signature does not comply with the legal requirements of Section 126a BGB.

In the case here, the system used by the employer did not have such a certification. In this respect, the Labour Court of Berlin did not have to decide whether the replacement of the written form by the electronic form was legally valid in the case of a fixed-term employment agreement.

Practical tip

Failure to comply with mandatory statutory formal requirements can lead to undesired consequences – as the present case shows. Against the employer's will, the employment contract between the parties was concluded for an indefinite period. Thus, the consequences of the invalidity of the fixed-term employment agreement are very significant.

The Labour Court of Berlin left unanswered the question of whether a qualified electronic signature pursuant to Section 126a BGB is sufficient for a legally valid agreement of a fixed-term employment. For this reason, the electronic signing of a fixed-term employment agreement is not yet possible without risk. In order to avoid legal uncertainties, it is therefore advisable to sign fixed-term employment agreements in the traditional manner – by hand. Even if this is not in the spirit of digitalisation, it is the most legally secure way of complying with legal formal requirements.