Action required for the formulation of standard employment contracts

Since 1 October 2016, the text form has been sufficient to observe employment law limitation periods.

Limitation periods in employment contracts are a suitable means for employers to fight off additional financial claims from employees. Examples of this are mentioned as claims for financial compensation of overtime work, which in practice are often not made until later – above all in circumstances of separation.

The period for the additional claim can be shortened in standard contracts to up to three months after maturity. For employers, this provides an effective means recognised by the case law of the labour courts to minimise risk, which creates fast and sustainable legal certainty.

From 1 October 2016, the rules of the game will change when agreeing employment law limitation periods. These will remain permissible, but may no longer be coupled with the requirement that the employee reacts in writing within the particular period mentioned. This applies equally for one- and two-level limitation periods. The reason for this is a change to the law of general terms and conditions, which is compulsory when formulating standard employment contracts. To date, it was impermissible to tie the effectiveness of notifications or statements of a consumer – employees are considered consumers in relation to employers – to a form stricter than the written form. The new rule states that the strictest form that can be demanded is the so-called text form.

The written form is present if the employee provides his statement with his handwritten signature. The text form, on the other hand, comprises all legible statements in which the employee’s person is mentioned and which are made on a permanent data carrier. In other words, in order to observe the text form, a simple e-mail or a fax, for example, will suffice.

Limitation periods in all employment contracts established after 1 October 2016 are therefore ineffective if they provide for claims being made in the written form. The employee is therefore provided with the entire statutory limitation period to make additional claims. There is, however, protection of legitimate expectation for all employment contracts that were concluded up to 30 September 2016. The protection can however lapse in the case of only marginal subsequent changes to the employment contract, e.g. through a change in the payment amount.

The employer should therefore change the formulation of the limitation periods in their standard employment contracts accordingly. Only employers who base their limitation periods on collective agreements can breathe a sigh of relief. The change in the law does not apply to these.