Bureaucracy Relief Act

What is the Bureaucracy Relief Act?

With the Bureaucracy Relief Act, legislators have been working since 2015 to reduce administrative hurdles. The aim is to make business processes more efficient and, in doing so, reduce costs. This is to be achieved by eliminating unnecessary bureaucracy. One important measure is the promotion of digital processes, which not only reduce fees but also speed up notifications, contracts and all documentation. Documents that previously had to be submitted in writing can now also be transmitted in text form. This enables the use of simple and advanced electronic signatures. The changes are intended to significantly reduce bureaucracy at all levels, particularly in commercial and tax law.

The innovations from BEG IV 

Since January 2025, the Bureaucracy Relief Act IV has brought about far-reaching reforms to reduce bureaucracy and promote digitalisation in the world of work. There are a number of changes here, particularly in the human resources department, which offer more scope for digital processes where electronic signatures can be used. The key innovations include:

• Proof Act: Working conditions can now be communicated in text form, which enables the fulfilment of proof obligations digitally. The document must be accessible, storable and printable. If the employer sends the documents, they must also send a request for proof of receipt. Practical tip: Set up automatic processes for this so that this essential part is not forgotten.

• Social Security Code VI (SGB VI): Age limits in employment contracts can now be agreed in text form. At the same time, other fixed-term employment contracts pursuant to Section 14 (4) TzBfG still require the written form.

• Federal Parental Allowance and Parental Leave Act (BEEG): Parental leave and part-time work applications during parental leave can be submitted by email.

• Temporary Employment Act (AÜG): Temporary employment contracts can be concluded in text form, for example by email or text message. Exceptions are industries with a high susceptibility to illegal employment (e.g. construction). The newly gained flexibility makes it easier for many companies to recruit new workers at short notice.

• Trade Regulation Act (GewO): With the employee's consent, employment references can be issued digitally with a qualified electronic signature (QES).

• Retention obligations: The statutory period for retaining tax documents has been reduced from ten to eight years, with a further reduction to seven years from 2026. This measure provides relief for smaller companies and the self-employed in particular.

More options for electronic signatures

The Bureaucracy Relief Act IV paves the way for increased use of electronic signatures in everyday business. Instead of the previously required written form, which had to be signed with a qualified electronic signature (QES), many contracts now only require text form, which is fulfilled by a simple electronic signature (EES). This makes the entire process more efficient and modern. This change makes digital document processing much easier for companies and supports the modern processing of contracts and agreements. This includes the following examples:

Employment contracts

Previously:

Employment contracts could be concluded without any special formal requirements. However, the German Employment Evidence Act (NachwG) previously stipulated that essential contractual terms must be presented to employees in writing. This meant that a continuous digital process was not possible, as at least the essential contractual terms had to be handed over on paper. Many companies therefore opted not to use electronic signatures, as the requirements made complete digitisation difficult.

Since January 2025:

The previous requirement for written form is being adapted as part of the changes to text form. From now on, employment contracts can be sent digitally and signed electronically without the need to submit additional paper documents. From now on, an email or electronic envelope containing the essential terms and conditions is sufficient after the employment contract has been signed. However, the employer is obliged to request the employee to confirm receipt of the contract documents. This change ensures that both parties receive and confirm the essential information in good time, leading to greater transparency. The digitisation of the entire process not only removes administrative hurdles, but also makes communication more efficient.

Contracts related to retirement age:

Employment contracts that end upon reaching retirement age were previously considered fixed-term and subject to the written form requirement. Many companies therefore used QES. Since January 2025, a simple or advanced electronic signature has been sufficient. This simplifies the administration of such contracts and promotes smooth digital processing.

Contracts for temporary work:

In future, text form will be sufficient for temporary employment agreements between lenders and borrowers, except in economic sectors and branches of industry specified in Section 2a (1) of the Act to Combat Illegal Employment. In these cases, the written form remains required. 

Rental agreements

The Bureaucracy Relief Act has also decided in favour of digitisation in commercial tenancy law. Previously, commercial rental agreements with a term of more than one year had to be concluded in writing or via QES in accordance with Sections 578 and 550 of the German Civil Code (BGB). If this was not complied with, the term of the agreement was deemed to be indefinite and could be terminated subject to the notice period.

The BGB has now been amended to replace the written form with the text form. With this innovation, real estate agencies can quickly and easily create, transmit and sign extensive documents digitally. Since communication often takes place via email, many companies can save time and process electronic contracts more quickly. This simplifies the entire process and makes it more flexible, resulting in a significant increase in efficiency, particularly in the real estate industry.

Conclusion: Less bureaucracy, more digitisation 

From written form to text form – the Bureaucracy Relief Act (BEG IV) is bringing momentum to the digitisation of previously inflexible paperwork. It facilitates the use of electronic signatures in many areas, especially simple electronic signatures (EES) and advanced electronic signatures (FES), by abolishing the written form requirement. Instead of ‘wet ink’, it is now e-signature: this applies, among other things, to employment and rental contracts, certificates and applications that can be processed digitally. The BEG IV thus not only contributes to reducing bureaucracy, but also promotes digitisation and sustainable working practices in the business world. The switch to digital signatures represents a fundamental change in the way contracts and documents are processed and handled, making the entire economic process more sustainable and environmentally friendly.

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