Are electronic signatures valid under German labor law?

The use of electronic signatures when concluding contracts is in line with the trend towards simplifying processes through digitalization. However, employers have to be very careful about which of the signature options is used in which circumstances.

Whether and in which cases an electronic signature is legally effective is disputed in labor law commentary in some important areas; there is no ruling on this by the Federal Labor Court, nor are there any decisions by the regional labor courts.

General position for electronic signatures 

In general, the conclusion of an employment contract, does not need a “wet signature”. 

But according to section 126 of the German Civil Code (BGB), a written form requirement is only met if a document has been signed by the issuer in person by means of a signature or by means of a notarial certified hand signature. Pursuant to section 126 (3), this strict written form may be replaced by electronic form unless the law provides otherwise. 

Electronic form in turn requires, pursuant to section 126a (1) BGB, that the declaration be provided with a qualified electronic signature (QES). However, this requires certification of the system used for the signature by the Federal Network Agency, pursuant to Article 30 of the EU Regulation of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market (eIDAS regulation). 

The eIDAS regulation recognises the simple, the advanced and the qualified electronic signature. Only the latter can comply with the written form requirement of section 126 (in conjunction with section 126a) of the German Civil Code: in practice, this is often more difficult to establish for the employee than to receive a simple wet signature.

Complexity around fixed-term contracts

There is a growing opinion that a statutory written form requirement within the meaning of sections 126 (3) and 126a of the German Civil Code can also be complied with in the written form requirement concerning fixed-term employment contracts (Section 14 (4) TzBfG ) by means of a declaration by QES. However, this remains controversial with regard to the question of formally effective fixed-term  contracts.

Wet ink still required in some cases

The termination of an employment relationship by notice of termination or termination agreement cannot be legally effective in electronic form - not even by means of a QES. Section 623 of the BGB still prescribes the classic written form requirement: that is, these documents must bear the original signature of the declarant.

With regard to post-contractual non-competition clauses pursuant to section 74 (1) HGB , it is predominantly held that only the strict written form of section 126 BGB is sufficient for an effective competition agreement.

Finally, it should be noted that the electronic form is also excluded when issuing an employer's job reference (section 109 (3) Trade, Commerce and Industry Regulation Act).

Osborne Clarke comment

Employers are advised to look very carefully in each case to ensure that any proposed simplification through adopting digitalized procedures is effective. It is worthwhile not to act hastily and to check carefully whether, and if so in which form, electronic signatures can be used in labor law.