The Arbeitsvertrag (employment contract) creates the employment relationship and sets the core obligations: work in exchange for pay. It can generally be concluded without any particular form, even orally. Regardless of the contract, the employer must record the essential working conditions under the Nachweisgesetz (Verification of Employment Conditions Act); since 1 January 2025 this can also be done electronically in text form (Textform). For certain points, such as a fixed term, strict written form still applies.
At a glance
- An Arbeitsvertrag is form-free and valid even orally; it arises from the agreement of work in exchange for pay
- Independently, the Nachweisgesetz requires recording the essential working conditions, since 1 January 2025 also electronically in text form (Textform)
- A fixed term (Befristung), by contrast, needs written form with a handwritten signature before work starts, otherwise the contract counts as permanent (see Befristung)
- Standard clauses are subject to fairness review (AGB-Kontrolle, §§ 305 ff. BGB); unclear or unreasonably disadvantageous clauses are void
- If a clause is void, the statutory rule replaces it and the rest of the contract stands
Clauses the BAG scrutinises most
- Overtime lump-sum (Überstundenabgeltung): a blanket clause with no recognisable cap is void; valid only with a clearly limited scope. See Überstundenklausel.
- Forfeiture clauses (Ausschlussfristen): at least three months per stage, no stricter than text form, with an express minimum-wage carve-out, otherwise void. See Ausschlussfrist.
- Repayment of training costs (Rückzahlung von Fortbildungskosten): valid only with a reasonable, tiered retention period; too long a commitment makes the clause void.
- Contractual penalty (Vertragsstrafe): valid only if the trigger and amount are transparent and reasonable.
- Post-contractual non-compete (nachvertragliches Wettbewerbsverbot): non-binding without compensation for the restraint (Karenzentschädigung, at least 50 percent of the last pay, § 74 HGB).
- Reassignment reservation (Versetzungsvorbehalt): may not unreasonably extend the statutory right to issue instructions (§ 106 GewO).
- Voluntary benefits (freiwillige Leistungen): can become a lasting entitlement even without a clause in the contract, for example through betriebliche Übung; this is steered with a discretionary reservation. See Freiwilligkeits- und Widerrufsvorbehalt.
FAQ
Is an oral employment contract valid in Germany?
Yes, it is form-free. The employer must still record the essential conditions under the Nachweisgesetz and hand them over.
What happens to a void clause?
It falls away and the rest of the contract remains valid. The statutory rule takes its place, which is often less favourable for the employer than a well-drafted clause.
What must the contract contain?
The essential working conditions: the parties, start date, place of work, role, pay and its components, working hours, holiday, notice periods, and a reference to any applicable collective agreements (Tarifverträge).
Can the employer later change the contract unilaterally?
Only within the right to issue instructions (Weisungsrecht, § 106 GewO). Broader changes require an agreement or a dismissal to change terms (Änderungskündigung).
Reviewed by: Legal Team, Leapsome · Last updated: August 2026
This article provides general information and is not a substitute for legal advice in individual cases.
