Easier formal requirements for corporations and employers in Germany

What is the aim of the law?

• Reducing bureaucracy for businesses and citizens
• Abolition of superfluous formal requirements 

Facilitations: employment

• The proof of essential contractual provision no longer has to be in strict written form ("wet ink signature"). 
• Instead, the text form is sufficient, provided it is transmitted electronically, the employee is able to retrieve the document and the employer requests proof of receipt. 
• This shall also apply for changes to the essential contractual conditions.
• A reference letter can be issued in electronic form if the employee agrees. 
• Employment contracts that provide for the end of the employment relationship upon reaching the standard retirement age are no longer classified as fixed-term contracts and therefore only require the text form.
• Within the framework of a temporary employment contract, the hirer and the lender can conclude contracts in text form and thus, for example, also by e-mail.
• Parental leave and part-time parental leave can be claimed in text form.
• The obligation for employers to display a complete printout of the German Working Time Act and the German Youth Employment Protection Act in German and in the current version is modified to the extent that it can also be made available electronically via the information and communication technology commonly used in the company (e.g. intranet), provided that all employees have free access to the information.

Facilitations: corporate

• Reduction of the formal requirements for circular resolutions in the GmbH: Even in the case of resolutions that are not unanimous in substance, a resolution can now be passed in text form if everyone has agreed to the casting of votes in text form.
• Many retention periods under tax and commercial law, particularly for accounting documents, have been reduced from 10 years to 8 years.
• Numerous corporate requests and notifications can now be made in text form instead of in writing. This applies, for example, to shareholding notifications in accordance with Sections 20 and 21 German Stock Corporation Act.
• In the case of listed stock corporations, there are simplifications for convening general meetings:

  • Previously, if the annual general meeting was to resolve on 

    • the approval of the remuneration system for the members of the Management Board, 
    • the remuneration of the Supervisory Board in accordance with Section 113 (3) German Stock Corporation Act or 
    • the remuneration report or if the remuneration report was to be submitted for discussion by the annual general meeting (small to medium-sized enterprises), 

    the full content of the documents relating to the respective resolution items had to be published in the convening notice.

  • In future, the remuneration documents are expressly no longer to be included in the convening notice but shall only be published on the website.
  • To that end, the complete documents relating to the resolutions mentioned before must also be made available on the company's website as soon as the annual general meeting has been convened.

When will the law come into force?

The law will enter into force in stages. The majority of the changes will come into force on 1 January 2025. 

Some changes, e.g. the changes relating to parental leave will not come into force until 1 May 2025. The changes to the convening of general meetings will apply for the first time to general meetings convened from 1 February 2025.

What should companies and employers do now?

• Companies and employers should check and amend their processes with regards to formal requirements and, if necessary, adjust retention periods accordingly. 
• Employers are able to switch to a "text only" form that will soon apply and check whether a different form requirement applies in individual cases (such as the "strict" written form for notices of termination and cancellation agreements). This may also result from the employment contracts themselves.
• Non-compliance can lead to fines, as well as trigger the invalidity of concluded contracts and legal declarations.
• Listed stock corporations can already benefit from the simplified convening procedures in the upcoming annual general meeting season.