Dealing with the Verification Act (NachwG) – Effects on occupational benefits (occupational pension benefits | occupational health insurance | working-time savings accounts)
Changes in the Verification Act as of August 1, 2022
The new version of the Verification Act has been in force since August 1, 2022. It is based on the transposition of EU Directive 2019/1152 on transparent and predictable working conditions into German law.
Employers were already required to notify their employees in writing – i.e., signed in person by the employer – of the essential contractual terms of the concluded employment relationship. It is true that the EU Directive itself provides for the possibility of proof in electronic form as well. The German legislator has not taken this step toward digitization.
The following new regulations now apply to new employment relationships from August 1, 2022:
Composition and amount of remuneration
With regard to the occupational pension benefits (bAV), the composition and amount of remuneration must be detailed in writing (Section 2 (1) Sentence 2 No. 7 NachwG). According to the wording, information must also be provided on the type of payment, i.e. the content of the pension commitment made. This includes, for example, possible benefit cases, the amount of the benefit and the type of benefit, pension or lump sum.
The notification deadlines have been shortened; the written proof must now be available no later than the start of employment.
Salary exchange and employer subsidy
For salary exchange, the German Federal Ministry of Labor and Social Affairs (BMAS) informed the aba in its letter of July 7, 2022, that the Verification Act “does not apply to occupational pensions in the special form of salary exchange.” Even if this is not legally unassailable, we follow the argumentation that the employer has to disclose the remuneration, but not about what the remuneration is used for by the employees in the next step. The pragmatic view taken by BMAS leads to a reduction of bureaucracy in the general business of occupational pension schemes via salary exchange.
A statutory or voluntary subsidy granted by the employer for salary exchange is closely linked to salary exchange due to immediate statutory or immediate contractual vesting. The vesting periods of salary exchange and the employer subsidy are therefore identical. Even though the BMAS letter does not explicitly address employer subsidies, we understand the statements to mean that proof is also not required for subsidies granted by the employer (statutory or voluntary).
Employer-financed occupational pension benefits
In the context of Employer-financed occupational pension benefits, the employer must provide written proof. The BMAS letter does not apply here.
Recommendation for a pension scheme (VO) or collective bargain agreements (BV)
In the case of employer-financed pension schemes, a VO must be implemented or, in companies with a works council, a BV must be concluded if there is no individual contractual regulation.
As already communicated in the past, the recommendation to conclude a VO/BV also applies to salary exchange and co-funded schemes / matching system.
The following reasons support concluding a VO/BV:
- Transparent legal basis for pension provision in the company
- Legal security for employer and employees
- Minimization of risks due to employer’s duty to provide information
- Possibility of later changes to the VO/BV by replacing VO/BV
The simplest way to provide written proof is to use a VO that becomes part of the employment contract (reference in the employment contract plus attachment of the VO as an appendix). In case of collective regulations, in particular collective agreements, service agreements and collective bargain agreements, the Evidence Act permits simplification by means of a reference to the regulation in the employment contract without attaching it as an appendix.
For customers in the TPC portal, in the case of employer-financed provision, the written proof as shown above is mandatory through the VO/BV. In the case of salary exchange via the TPC portal, a personally signed salary exchange agreement is not required in accordance with the letter from the BMAS. We recommend concluding a VO/BV in these cases as well.
Customers without portal solution
For customers who do not use the TPC portal and who have previously signed the salary exchange agreements created by TPC, the previous, proven workflow can of course be retained. If other salary exchange agreements are used, it is important to ensure that they contain a reference to the pension commitment so that written information is also provided on the type of payment.
Obligation to notify if the occupational pension plan is implemented via a support fund
If the occupational pension plan is implemented via a provident fund, the employer is obliged to inform the employees of the name and address of the provident fund in writing.
Obligation to provide evidence in existing cases
In the case of employment relationships that already existed prior to August 1, 2022, employers are only required to provide written evidence at the request of the employee. This must be done within 7 days of the employee’s request. The notification obligations regarding the provident fund, on the other hand, can be fulfilled within one month of the request.
Sanctioning of violations
Violations of the Evidence Act have so far been without consequences. However, in the event of non-compliance with the obligation to provide evidence, sanctions can be imposed. However, as of now, fines can be imposed for non-compliance with the verification requirements, up to a maximum of EUR 2,000 per violation. It is still unclear how the authorities will specifically track and, if necessary, sanction violations and which authority will be responsible. It is possible that this will be an authority that reports to the BMAS and will therefore take the BMAS’s view into account.
Applicability to occupational health insurance (bKV) and working-time savings accounts (ZWK)
In our view, the verification requirements for the bAV apply accordingly to the bKV and ZWK. These are also remuneration components that fall under Section 2 (1) Sentence 3 No. 7 NachwG. For employer-financed schemes, the procedure is therefore the same as for employer-financed occupational pension schemes. In the case of employee-financed occupational pension schemes or the contribution of remuneration to the ZWK, we believe that the BMAS’s argumentation can be transferred as “use of remuneration”.
When implementing the EU Directive, the legislator did not use the option of electronic proof. As a result, employers will continue to be required to provide proof of the occupational pension benefits by means of written notification with a handwritten signature. The easiest way to fulfill the obligation to provide proof is to include the necessary information in the employment contract (in the case of VO as part of the employment contract with the corresponding annex or by reference to the collective agreement, the service agreement or the collective bargain agreements). In the case of salary exchange, we follow the pragmatic opinion of the BMAS that there is no obligation to provide evidence. In our view, this also applies to employer subsidies for salary exchange, insofar as they are immediately (legally or contractually) vested.
Your contact person(s) or the colleagues from our Sales Support at 06222 308-8212 will be happy to assist you with any questions you may have regarding the new Verification Act.
 baV, occupational pension benefit
 BMAS, Federal Ministry of Labor and Social Affairs
 aba, Working Group for Occupational Pensions