Electronic Payroll Records: Transitional Period Ends on 31 December 2026

Since 1 January 2022, payroll records have, in principle, been required to be kept electronically. Until 31 December 2026, employers may apply to the pension insurance institution responsible for their payroll audits for an exemption from the electronic record-keeping requirement. With the end of the transitional period approaching, the treatment of documents requiring a handwritten signature is becoming increasingly important.

Which Payroll Documents Must Be Maintained Electronically?

The documents that must be maintained electronically are listed in Section 8 of the German Contributions Procedure Ordinance (Beitragsverfahrensverordnung, BVV).

Social Security Documentation and Official Decisions

• Documentation relating to nationality, residence permits, and work authorisations for employees from countries outside the European Economic Area (EEA) and Switzerland
• Certificates and decisions confirming exemption from, or non-applicability of, compulsory social insurance, for example for members of professional pension schemes. This also includes documentation used to assess whether short-term employment is carried out on a professional basis, as well as evidence that a retired employee is receiving a full statutory pension while continuing to work.
• Data from DEÜV notifications and notifications received from health insurance funds that affect the employer’s contribution calculations
• Decisions issued by collection agencies regarding insurance obligations and contribution amounts pursuant to Section 28h (2) of the German Social Code IV (SGB IV)
• Evidence of parenthood and children under the age of 25 for long-term care insurance purposes, where retrieval through the DaBPV digital procedure is not possible
• Assessment notices, amendment notices, and supplementary notices issued by the statutory accident insurance institutions

Documentation Relating to Marginal and Short-Term Employment

• Declarations by marginally employed individuals and retired employees receiving a full pension opting out of pension insurance exemption, as well as applications for exemption from mandatory pension insurance, including any revocations and documented receipt dates
• Declarations regarding additional short-term or marginal employment during the calendar year, together with the employee’s obligation to notify the employer of such employment
• Evidence of health insurance coverage for short-term employees

Employment and Contract-Related Documentation

• A copy of the written record of essential employment terms pursuant to Section 2 of the German Act on Proof of Employment Conditions (Nachweisgesetz)
• Applications for status determination under Section 7a SGB IV, including accompanying documentation, official decisions, expert opinions regarding employment status, and proof that any expert opinion has been provided to the contractor
• Enrolment certificates for working students
• Declarations waiving entitlement to salary or remuneration payments

Documentation Relating to Caregiver Leave and Family Caregiver Leave

• Certificates confirming interruptions of employment due to receipt of caregiver support benefits
• Declarations regarding the use of caregiver leave or family caregiver leave

Documentation Relating to Cross-Border Employment

• Posting certificates, including A1 certificates, and evidence of the legal provisions applicable to cross-border assignments
• For applications seeking an exception agreement for overseas assignments: the employee’s declaration confirming that the application of German social security legislation is in their interest

Additional Tax and Working Time Documentation

• Decisions by tax authorities confirming that tuition fees paid or reimbursed by the employer do not constitute taxable employment income
• Working time records maintained pursuant to Section 17(1) of the German Minimum Wage Act (MiLoG) and Section 19(1) of the German Posted Workers Act (AEntG)
• Crew lists, ship logs, vessel certificates, and Rhine navigation certificates

Since 1 July 2025, evidence relating to parenthood and children has generally been retrieved through the DaBPV digital procedure. Paper records may still be required for earlier periods or for situations not covered by the system, such as stepchildren or foster children.

Payroll Documents Requiring Signatures: Which Form Is Required?

The requirement to maintain payroll records electronically does not alter any statutory form requirements. Certain declarations and applications must still comply with the legally prescribed written form requirement, including:

• Applications for exemption from mandatory pension insurance pursuant to Section 6(1b) SGB VI, including documentation of the date received
• Declarations waiving salary or remuneration claims
• Declarations regarding caregiver leave pursuant to Section 3 of the German Caregiver Leave Act (PflegeZG)
• Declarations waiving insurance exemption pursuant to Section 5(4) sentence 2 or Section 230(9) sentence 2 SGB VI, including documentation of the date received

Requirements for Electronic Storage:

• Documents with a Qualified Electronic Signature
  Where employees submit declarations or applications using a qualified electronic signature, these documents must be retained in that form as part of the payroll records.
• Paper Documents
  Where no qualified electronic signature is used, the employer must obtain and retain the original paper document.
• Digitisation by the Employer
  If a paper original is converted into electronic form, the employer must apply an advanced electronic signature. If no such signature is applied, the original paper document must also be retained.

Simply storing unsigned declarations or applications that are subject to a written form requirement as PDFs or image files is insufficient.

Furthermore, paper originals must generally be retained until the payroll audit has been finally concluded or for the applicable statutory retention period pursuant to Section 9(5) BVV.

Going forward, payroll audits will increasingly focus on whether all required documentation is stored centrally and digitally, can be easily retrieved, and can be provided electronically without delay during an audit. Documents must be clearly identifiable, current, and attributable to both a specific individual and a specific period.

Employment Law Documents: Which Originals Must Be Retained?

The electronic maintenance of payroll records does not replace employment law form requirements. Certain contracts and declarations remain valid only if signed by hand. In the event of a dispute, employers often bear the burden of proving compliance with these formal requirements. Missing or unverifiable documentation can result in increased administrative effort, estimated social security contributions, and financial exposure. Breaches of record-keeping obligations may lead to fines of up to EUR 50,000.

Accordingly, the following documents should be retained in signed original form in addition to being stored electronically:

• Terminations and Settlement Agreements
  Dismissals and settlement agreements must be signed in paper form. Electronic form is legally excluded, even where a qualified electronic signature is used (Section 623 German Civil Code). This also applies where an employee agrees to leave employment early under a settlement or termination arrangement.
  • Fixed-Term Employment Contracts
    Fixed-term contracts must be agreed in writing (Section 14(4) Part-Time and Fixed-Term Employment Act). If the written form requirement is not met, the employment relationship is deemed indefinite. Importantly, the contract signed by both parties must reach the employee before employment begins. An exception applies to retirement-age provisions. Since 1 January 2025, where an otherwise indefinite employment contract automatically terminates upon reaching the statutory retirement age, text form (for example, email) is sufficient pursuant to Section 41(3) SGB VI. Where employment is extended beyond the statutory retirement age, employers are advised to continue using signed paper agreements until the legal position has been clarified.
• Written Statement of Employment Conditions
  Since 1 January 2025, employers may provide employees with the required information on essential employment conditions electronically. A signed paper document is required only if requested by the employee or where the employer operates in certain industries, such as construction, hospitality, or logistics.
• Post-Contractual Non-Compete Clauses
  Post-contractual non-compete agreements must be concluded in writing. Employees must also receive a copy signed by the employer (Section 74 German Commercial Code).
• Employment References
  Electronic employment references are permissible only with the employee’s consent and must carry a qualified electronic signature.

Payslips in a Digital Employee Portal

Payslips may be provided through a password-protected digital employee portal. The German Federal Labour Court has confirmed the permissibility of this approach.

Where a works council exists, it must be involved before the system is introduced.

Employees without personal internet access must be given the opportunity to view and print their documents at the workplace.

Checklist: Preparing for Mandatory Electronic Payroll Records from 2027

Employers should use the remaining time before the end of the transitional period to review their processes and documentation:

1. Inventory Review
   Which records are already available electronically and which remain in paper form?
    
2. Completeness Check
   Does the documentation meet the requirements of Section 8 BVV?
    
3. Digitisation Processes
   Are procedures for capture, storage, allocation, and updating clearly defined?
    
4. Signatures and Originals
   Are documents requiring signatures processed correctly, and are paper originals retained where necessary?
    
5. Employment Law Documentation
   Are all legally required original documents available?
    
6. Audit Readiness
   Can all documentation be provided electronically, completely, and at short notice during a payroll audit?
    
7. Review euBP Requirements Separately
   The electronically supported payroll audit (euBP) constitutes a separate obligation with its own transitional arrangements and exemption options.

End of the Transitional Period: Electronic Payroll Records from 2027

From 1 January 2027, payroll records covered by Section 8(2) BVV must generally be maintained electronically. Employers should therefore assess in good time whether their HR and payroll systems meet the applicable requirements and whether all documentation can be made available in full during a payroll audit.

Baker Tilly supports employers in implementing electronic payroll record management and advises on compliance with the applicable regulatory requirements. If you would like to assess the impact on your organisation and ensure that the necessary processes are established in good time, please contact us.