Less paperwork due to reduction in bureaucracy is imminent

On March 13, 2024, the Federal Cabinet passed the Fourth Act to Reduce Bureaucracy for Citizens, Business and the Administration (BEG IV). This law aims to reduce unnecessary bureaucracy and affects various areas of law and life, including labor law and commercial law.

Last week (on June 19, 2024), the Federal Government also adopted the drafting aid presented by the Federal Minister of Justice, Dr. Marco Buschmann, to supplement the government draft for the BEG IV. The draft's increasing distance from the strict written form ("wet ink") is particularly welcome. By removing individual written form requirements and downgrading to text form, digitalization is also to be promoted in everyday legal practice.

Some changes are expected in labor law. The following should be emphasized in particular:

➡ Changes to the Employment Documentation Act: The previously regulated written form for evidence of contractual conditions is to be replaced by text form in future. This has only recently placed major obstacles in the way of the digital conclusion of an employment contract.

➡ Supplements to contracts and amendment contracts: In future, these can also be concluded in electronic form.

➡ Waiver of the written form requirement also for temporary employment contracts.

➡ In future, it should also be possible to sign employment references electronically in accordance with Section 630 BGB.

➡ Applications to reduce working hours (part-time) and their rejection/termination of parental leave entitlement: Here too, the written form requirement is to be replaced by text form.

Some changes to commercial law are also welcome:

➡ Discharge of listed companies: In future, it will no longer be necessary to publish the complete documentation on remuneration-related resolutions in the Federal Gazette when preparing for their Annual General Meeting. Instead, the documents can be made available on the company's website.

➡ Shortening of retention periods for accounting documents: In future, the retention period is to be reduced from ten to eight years. The VAT retention period for invoices is also to be adjusted accordingly.

PBC legal takeaway: The increasing move away from the written form and the enforcement of the text form will be able to relieve companies in some areas, including in employment law. The law is therefore very welcome. However, the legislative process is not yet complete. However, the entry into force of the Bureaucracy Relief Act is now largely regarded as certain.