Handwritten signatures are a thing of the past – today, electronic signatures are increasingly being used to submit legal declarations. In this article, you will learn when you can use an electronic signature and what advantages it offers. I will also show you when you should never use an electronic signature.
- What types of electronic signatures are there?
- What does written form mean?
- How must an employment contract be concluded?
- Conclude an employment contract using a qualified electronic signature?
- Termination agreement and dismissal by electronic signature?
- Conclusion
1. What types of electronic signatures are there?
Electronic signatures exist with different characteristics and security levels.
The simple electronic signature
The simple electronic signature is easy to use and straightforward, but also offers the lowest level of security. It is not suitable as a replacement for a handwritten signature.
The simple electronic signature consists, for example, of inserting the sender’s name at the end of an email. Another form of simple electronic signature is inserting the signature into a document. Here it is common to use and insert an image or scan of the signature.
When an electronic signature is required in a contract, it usually refers to the simple electronic signature. It can be considered in court proceedings under free evaluation of evidence, but its validity is quite easy to challenge.
The advanced electronic signature
The advanced electronic signature already offers significantly enhanced security standards. Three characteristics distinguish the advanced electronic signature and make it more secure than the simple one:
- Changes to the document or data made only after the signature must be detectable.
- The signature must be clearly attributable to a specific person.
- The signatory must be able to prove that the signature was made by them and that the relevant security requirements were met.
The security standards primarily require the use of a one-time and secret key. Digital procedures are used that allow verification of the signature. Like the simple signature, the advanced electronic signature also fulfills the electronic form according to § 127 para. 3 BGB. However, its evidentiary value in court proceedings is significantly higher. It is usually transmitted via physical data carriers such as USB sticks or chips.
The qualified electronic signature
The qualified electronic signature represents the most secure variant. In addition to the described encryption procedure, a corresponding certificate from a certification service provider is required. This is possible either with a written application and presentation of an ID document or via the VideoID procedure. The certificate proves that the person possesses a signature key that matches their identity. The validity is usually 3-5 years and must then be renewed.
Below I will explain whether the qualified electronic signature is also suitable for signing an employment contract, a termination agreement, or a dismissal.
2. What does written form mean?
The law requires written form for many contracts and declarations. This generally means that the document must be printed out and signed by hand. The classic signature is of course possible, but notarially certified marks are also theoretically permissible.
However, in digital transactions it is nowadays quite cumbersome to provide the classic signature.
The qualified electronic signature can often replace the handwritten signature (126a BGB).
3. How must an employment contract be concluded?
As with most contracts, the principle of freedom of form also applies to employment contracts. It is therefore even possible to conclude an employment contract only verbally.
However, this is strongly discouraged. The employment contract usually contains many different provisions that can hardly all be agreed upon verbally with precision. In addition, a verbally concluded employment contract would not offer the necessary degree of legal certainty. In the event of a dispute with the employer, essential components of the contract could simply be disputed, and providing evidence would be very difficult.
You should conclude the employment contract at least using a simple electronic signature. Written or digital documents always offer the possibility of proving or disproving disputed points. The more reliably the document is signed, the greater its evidentiary value in court.
4. Conclude an employment contract using a qualified electronic signature?
The qualified electronic signature is in many cases a digital alternative to the handwritten signature that can save paper and effort. However, it (still?) has legal limitations. If you want to conclude employment contracts using an electronic signature, consider these aspects:
Evidence Act requires handwritten signature
The company must provide the employee with the central provisions of the employment contract in writing. This is required by the Evidence Act (NachwG). If this is not complied with, the employment relationship is still valid. In the past, the provisions of the NachwG were often ignored accordingly. Since August 1, 2022, violations constitute an administrative offense. If the employer does not comply with the requirements of the NachwG, a fine of up to 2,000 euros is threatened.
The employer must transmit the information required under the Evidence Act in written form. The German legislator does not even permit the qualified electronic signature. The information must be handed over on a document signed by hand. This can certainly be done in a separate document, while the employment contract is signed electronically separately. Companies that still want to sign their employment contracts electronically must then additionally hand over the information required by the Evidence Act on a signed piece of paper.
Fixed-term contract by electronic signature?
Many companies conclude fixed-term contracts. The agreement on the fixed term must actually be made in writing – that is, with a personal signature. However, most voices in legal literature assume that the qualified electronic signature is also permissible.
This approach is not entirely free of risks. The Federal Labor Court has not yet decided the question. If the form of the fixed term is not complied with, the employment contract remains valid but is deemed to have been concluded for an indefinite period.
Companies that want to manage the employment contract electronically in any case can theoretically also proceed as follows:
- They conclude the employment contract by electronic signature.
- The agreement on the fixed term is made separately on a document signed by hand.
Sign post-contractual non-compete clause electronically?
A post-contractual non-compete clause stipulates that the employee may not engage in business that competes with their former employer for a certain period after the end of the employment relationship. Such a post-contractual non-compete clause is only valid if it complies with written form, § 74 para. 1 HGB. In addition, an original of the agreement must be handed over to the employee.
Here too, most voices consider the qualified electronic signature to be permissible. However, there is also no decision by the Federal Labor Court on this question yet.
5. Termination agreement and dismissal by electronic signature?
Currently, it is not yet permissible to conclude a termination agreement using a qualified electronic signature. The same applies to dismissals. In both cases, the paper document must be signed by hand. Otherwise, the dismissal or termination agreement is invalid.
6. Conclusion
- The various forms of electronic signature are of great importance today in digital transactions and offer different security levels.
- Only the qualified electronic signature can often be used as a replacement for the handwritten signature. For this, a corresponding certificate must be acquired that verifies the user of the signature. This is now also possible online via the VideoID procedure.
- The conclusion of the employment contract is generally possible without formalities, but primarily for reasons of legal certainty, written form or electronic signature should generally be used.
- Certain agreements within the employment relationship are still only valid in written form. Companies must also hand over the information required under the Evidence Act with a handwritten signature.
- Dismissals and termination agreements by electronic signature are invalid.