Employment Contracts Conducted Electronically

LEGAL BACKGROUND

In this digital age, there is an increased reliance on the internet as a means of conducting business in a more efficient manner. In recent years, businesses have slowly started to move away from traditional methods of conducting business, to a more online based business. This allows for innovation and development in the business sector.

In the sphere of human resources, employment contracts can now be conducted electronically. Although online contracts are merely a small facet of digital business, they have a number of benefits and are becoming increasingly important. Such benefits include the ability to employ specialised individuals located in other countries. This is beneficial for both the employee and the employer as the employee will have more opportunities at hand, whilst the employer will have a better skilled staff. This method of contracting is also more cost effective and time efficient, and ultimately facilitates competition between businesses.

Electronic contracts are regulated under the E-Commerce Act (“the Act”) within which they are defined as ‘contracts concluded wholly or partly by electronic communications or wholly or partly in an electronic form’.

ELECTRONICAL CONTRACTS OF EMPLOYMENT

Under the Act, an electronic contract shall not be denied legal effect, validity or enforceability. The Act provides a list of contracts which cannot be formed electronically. However, employment contracts do not fall under this list. The most important element of an employment contract governed by the Act is the electronic signature.

If the electronic employment contract is governed by Maltese law, the following information must be included:

The date of commencement of employment

• The period of probation
• The normal rates of wages payable
• The overtime rates of wages payable
• The normal hours of work;
• The periodicity of wage payments;
• In the case of a fixed or definite contract of employment, the expected or agreed duration of the contract period;
• The paid holidays, and the vacation, sick or other leave to which the employee is entitled;
• The conditions under which fines may be imposed by the employer;
• The title, grade, nature or category of work for which the employee is employed;
• The notice periods to be observed by the employer and the employee should it be the case; and
• The collective agreement, if any, governing the employee’s conditions of work; and any other relevant or applicable condition of employment.

The fact that a contract of employment is conducted online does not change the requisites necessary for its validity.

ELECTRONICAL SIGNATURE

The main way in which electronic contracts differ to regular contracts is the manner in which they are signed. This is referred to as an electronic signature.

The European Union safeguards the mutual recognition of electronic signatures throughout Member States. Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market (“the Regulation”), ensures that electronic signatures are given equivalent legal effect as a handwritten signature. This Regulation has been implemented under Maltese Law in the above-mentioned Act.

An electronic signature is defined as being “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign”. The Regulation also makes mention of a higher level security signature referred to as the advanced electronic signature which is uniquely linked to the signatory, capable of identifying the signatory and is created by using electronic signature creation data that is under the sole control of the signatory. Any changes made to the data to which the advanced signature is attached is detectable. Malta Communications Authority maintains a list of accredited signature certification service providers.

CHOICE OF LAW AND JURISDICTION

Since online employment contracts are often of a cross-border nature, it is worth delving into the legalities surrounding the jurisdiction and choice of law clause which is usually included in the contract.

With regards to choice of law in an online employment contract, one must refer to the Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) (the “RR”). The RR leaves a wide ambit for the parties to decide the governing law of the contract. However, with specific reference to employment contracts, the RR affords more protection to the employee as the weaker party to the contract. In fact, although there is a freedom to decide the governing law of the contract, such choice of law cannot preclude the employee from benefitting from the protection afforded to him/her under the legislation of:

• the country from which the employee carries out his work or, failing that;
• the country where the place of business through which the employee was engaged is situated; or
• any other country to which the contract is more closely connected than the countries mentioned above

The Brussels I Regulation (recast) (EU) No 1215/2012 (the “BRR”) outlines provisions applicable to the issue of jurisdiction in employment contracts. In fact, the BRR does not afford much leeway for the parties in terms of choice of court. The only two instances in which parties may conclude a contract relating to choice of law, are the following:

• after the dispute has arisen; and
• if the agreements allow the employee to bring proceedings in courts other than those outlined in the Regulation.

In any other instance, an employee domiciled in a Member State may only be sued by the employer in the courts of such e Member State. On the other hand, if the employee sues the employer, proceedings can be brought in the following States:

• the place of domicile of the employer;
• the place where the employee habitually carries out his/her work, where, as clarified by the European Court of Justice (“ECJ”) this is the place where the employee spent the most time, had an office where his/her work was organized, and where the employee would return after each business trip abroad; or
• if the place of habitual work is not situated in any specific country, the place where the business which hired the employee is situated.

Where an employer is not domiciled in a Member State but has a “branch, agency or other establishment” in a Member State, then the employer will be deemed to be domiciled there.

CONCLUSIONS

Although the regulations on jurisdiction and choice of law protect the employee as the weaker party to the contract, there are no specific laws on electronic employment contracts. The promulgation of regulations specifically governing electronic contracts would help to clarify the situation and would enable parties to enter into electronic employment contracts with more ease and a greater “peace of mind”.