Digital change and globalisation know no borders. The desire to send contracts or other agreements worldwide in a matter of seconds and, above all, to sign them is continuing to grow. The use of digital signatures seems to be a simple solution to this problem.
Using digital signatures requires at least a certain amount of care, however, especially when it comes to establishing and carrying out employment relationships. In some cases, the law stipulates the written form, which may only be replaced in part by what is referred to as qualified electronic signatures. In some cases, the electronic form is even entirely excluded.
Types of electronic signature
Generally, there are three types of digital signature:
– (simple) electronic signature
– advanced electronic signature
– qualified electronic signature
Each of these three signatures is linked to different requirements that correspond to different security levels. The requirements placed on the respective signature arise from the European eIDAS Regulation, which due to its character as a Regulation, is directly applicable in Germany without transposition by the legislator.
According to the legal definition, (simple) electronic signatures are data in electronic form which are attached to or logically associated with other data in electronic form and which are used by the signatory to sign (Article 3(10) eIDAS Regulation). This may even be the case, for example, for an e-mail signature or a scanned signature.
The requirements for advanced electronic signatures are already significantly higher. This signature must be uniquely linked to the signatory and be capable of identifying the signatory (Articles 3(11), 26 eIDAS Regulation). It must also be ensured that any subsequent changes are detectable.
The qualified electronic signature (Articles 3(12), (15), (23) eIDAS Regulation) must meet all the characteristics of an advanced signature. In addition, it must be created by a qualified electronic signature creation device and based on a qualified certificate for electronic signatures. Qualified certificates can only be issued by trust service providers which identify the applicant by suitable criteria. In addition, they can only be issued to natural persons, not to legal entities such as a German limited liability company or public limited company. A list of German trust service providers is available on the website of the Federal Network Agency.
Where the law stipulates the written form, thus the handwritten signature, it may, if at all, be replaced by the qualified electronic signature because only the qualified electronic signature meets the requirements of the electronic form in accordance with Section 126a Civil Code. The electronic form is the only legally permissible alternative to the written form, unless stipulated otherwise by the statutory provisions.
Effects on practical use in employment contracts
In principle, employment agreements and amendment agreements may be concluded without adherence to a specific form, including the parties’ freedom to decide how they want to sign (electronically). This makes it conceivable, for example, to conclude employment contracts using advanced electronic signatures.
In Employment Law overall, however, there are a large number of declarations and agreements for which the legislator has provided for written form. Some key examples include:
– rejection of an application for part-time work
– post-contractual non-compete obligations
– contracts between the supplier and the hirer in the case of temporary workers
It is the prevailing opinion that these declarations and agreements may only be signed effectively and digitally by means of qualified electronic signatures in addition to handwritten signatures. If the respective declaration or agreement fails to comply with the necessary form, it will be null and void.
In addition, in some cases the replacement of the written form by the electronic form is even entirely excluded. The most important examples include:
– notices of termination
– cancellation agreements
– information according to the Documentation of Material Employment Conditions Act
In these cases, handwritten signatures are mandatory and may not even be replaced by qualified electronic signatures. According to the statutory provisions (Section 2(1) sentence 1 Documentation of Material Employment Conditions Act), employers are obligated to set down the material contractual terms in writing, sign the appropriate records and hand them over to employees no later than one month after the agreed commencement of the employment relationship. If this does not happen, employees are entitled to receive the documentation at a later time and, if applicable, to compensation for damages. The likelihood for these claims to be asserted and the consequences resulting from an infringement will be limited, however, particularly in ongoing employment relationships.
For termination or cancellation agreements, breaches of form entail a much more serious effect. If these agreements are only signed electronically, they will be ineffective in terms of form and thus null and void. This will initially lead to the continued existence of the employment relationship, including the claim for remuneration. In the case of extraordinary dismissals, this may even lead to the twoweek period stipulated for extraordinary termination elapsing. Not only will the employment relationship then continue to apply, but the extraordinary termination for this breach of duty may not even be issued retroactively.
Special case of fixed terms
Finally, there is a special case associated with fixed-term employment relationships. Effective time limits require compliance with the written form (Section 126 Civil Code). Whether qualified electronic signatures are permissible in these cases is controversial in literature and has not yet been decided by the Federal Labour Court. Although there are convincing arguments in favour of the applicability of electronic form, considerable legal uncertainty remains for corporate practice until the Federal Labour Court has issued an appropriate decision.
The legal consequence of fixed-term employment contracts concluded without formal compliance would be for the provisions on the fixed term to be null and void, but not the entire contract. This would lead to an unlimited employment relationship with the respective employee. For safety’s sake, cautious employers will therefore refrain from using electronic signatures for fixed-term contracts.
Practical application cases are, on the one hand, the classic cases of fixed-term employment, such as the replacement of employees on parental leave or the limiting of fixed-term contracts not based on objective reasons for a period of up to two years. Frequently, however, supposedly unlimited employment contracts also contain a clause according to which the employment relationship is to end automatically when the employee reaches the standard pension age. According to a recent Federal Labour Court decision, this is also considered a fixed term of the employment contract which must meet formal requirements. Although it is currently not foreseeable whether this individual decision will develop into settled jurisdiction, cautious employers will adhere to the classic written form. The risk of using electronic signatures becomes apparent when the agreed age limit is reached only after many years and then a dispute arises as to whether a time limit exists and, if so, whether the required form has been complied with.
Electronic signatures have become an indispensable part of everyday business and found their way into the work of HR departments. Electronic signatures represent a practicable alternative to paper-based signatures, in particular for entirely form-free agreements. In the case of agreements that are subject to a formal requirement, however, it must be meticulously ensured that the correct type of signature is adhered to. This applies in particular to notices of dismissal and cancellation agreements, which are always subject to the written form. For fixed-term contracts, the use of the electronic signature requires a certain willingness of employers to take risks. Cautious employers will continue to use the tried and tested handwritten signatures for fixed-term contracts.
Published in Newsletter Confectionery Industry Special – 2020 edition.