Pen and paper are no longer necessary to sign employment contracts. Nevertheless, there are often still uncertainties regarding the use of eSignatures. Are electronic signatures legally valid? What laws and formal requirements must employers and personnel service providers observe? And what about data security? We clarify all open questions.
The basics of eSignatures
The eIDAS Regulation defines three categories of electronic signatures: simple, advanced and qualified electronic signatures. However, only the qualified electronic signature (QES) has the same probative value as a handwritten signature. Contracts signed with a QES are legally valid throughout the EU.
What is the difference between a digital and an electronic signature?
An electronic signature is a broad term for any electronic process that indicates consent to an agreement or record. It does not always include clear proof of identity. In addition, the term “electronic signature” is used in a legal context – as in the eIDAS Regulation.
Digital signatures are usually defined as a subtype of electronic signature. They provide verified identity details of the signatory and guarantee the authenticity, integrity and forgery protection of the document. The QES has all of these properties and is therefore classified as both an electronic and digital signature.
Employment contracts at a glance
The correct use of eSignatures depends on the type of employment contract to be signed. First, a distinction can be made between open-ended and fixed-term contracts. The latter are divided into fixed-term contracts with a material reason (e.g. parental leave cover) and fixed-term contracts without a material reason. In Germany, however, fixed-term contracts without a material reason are only permitted under certain conditions and for up to two years.
In the area of temporary employment (also known as personnel leasing), contractual relationships are regulated separately. Here there is a triangular relationship, so to speak, between the lender, hirer, and temporary worker:
- The employee leasing agreement regulates the provision of workers for a fee between the lender (temp agency) and the hirer (company) as well as the specific working conditions.
- An employment contract is concluded between the lender and the temporary worker. The lender remains the employer of the temporary worker during the leasing phase.
- There is no direct employment relationship between the hirer and the temporary worker.
Employee leasing agreements and contracts of employment are necessary to create clarity for all parties involved and establish legal certainty. The legal framework is set out in the Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz – AÜG).
Digital signature for employment contracts: Legal requirements
Act on Proof of the Existence of an Employment Relationship (Nachweisgesetz)
In general, employment contracts are not subject to the written form requirement. However, there is a written verification requirement for essential contractual conditions. Since the amendment to the German “Act on Proof of the Existence of an Employment Relationship” (Nachweisgesetz), employers must provide employees with additional information in writing. Depending on the type of information, this must be done on the first working day, after seven days, or within one month. Electronic forms are not permitted. Therefore, if the employment contract is signed digitally, an additional document signed in writing must be submitted subsequently.
Requirements based on permanent/fixed-term contracts
- Permanent employment contract: Freedom of form applies here. The qualified electronic signature (QES) is therefore not mandatory but is nevertheless recommended due to its greater probative value.
- Fixed-term employment contract: The QES is mandatory here. Make sure that it is implemented correctly (both technically and legally), as an incorrectly signed fixed-term contract can be regarded as permanent.
Requirements according to the type of document
- The QES is always required for employee leasing agreements.
- Terminations of employment contracts are subject to the mandatory written form. The electronic form is excluded here by Section 623 BGB, i.e. an eSignature is explicitly not permitted. A written notice of termination must also be submitted if the employment contract is terminated before the employee starts work.
Opportunities and risks of the eSignature
The advantages of electronic signatures are obvious: they reduce the administrative workload in HR departments, save costs, enable faster onboarding, and promote environmental protection by reducing paper consumption. When used correctly, the QES offers legal compliance and probative value. HR service providers in particular benefit from:
- Savings of up to €50 per mission
- Accelerated contract conclusion: 90% of contracts are signed on the same day
- An increased staffing rate
Concerns about electronic signing usually relate to legal compliance and data security. This is because violations of legal requirements from employment law or the GDPR can result in high fines. If companies fail to comply with the obligation to provide evidence of the essential contractual conditions per the Act on Proof of the Existence of an Employment Relationship (Nachweisgesetz), fines of up to €2,000 and possibly even claims for damages are due.
To avoid these risks, you should be familiar with the legal requirements for the employment contracts you use and comply with them by using the correct eSignature standard – only the QES fulfills the written form requirement. You should also choose a software provider with high security standards to protect confidential information.
Obtain a digital signature: Which provider is the right one?
Electronic signatures are offered as a stand-alone solution or as part of more comprehensive software. For example, some HR tools offer the function to digitally sign the employment contract. The entire process – from creating the employment contract to sending, signing, and saving – is then mapped in one tool. This variant is very efficient, but more questionable in terms of data protection.
Pure eSigning solutions generally offer greater security. A provider such as Certifaction does not share contracts in the cloud and does not offer AI analysis, as this would allow access by third parties. So find out about data storage from your chosen provider. eIDAS compliance, certifications such as ISO 27001 and user-friendliness are other important decision criteria.
How the digital contract signing works
Upload the employment contract as a PDF in the tool and specify the desired signatories and settings. Certifaction also allows you to send multiple contracts to different signatories at the same time. HR managers and new employees receive an email in the desired order with a request to sign.
The document can be viewed and digitally signed via the link provided – depending on the signature type, confirmation of the e-mail address, telephone number or identification using an ID document is required first. Proof of identity for the QES is usually provided online via video or auto-ident. Only then does the trust service provider issue the qualified certificate for the signature. The initiator is notified as soon as all signatures are available.
Conclusion
The digital signature of employment contracts is both legally recognized in Germany and the EU and can be implemented quickly. You should get an overview of the legal requirements in advance. After all, not all signatures are the same – in some cases, only the QES is valid. Whether you are a temp agency, start-up, or multinational corporation: the electronic signature of employment contracts is relevant wherever companies want to take advantage of the benefits of digitalization.
Disclaimer: Legal requirements may change at any time. We do not guarantee the accuracy of the information provided.
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