Contract management with freelancers: The qualities of the electronic signature
01 Apr 2020
Guest article by Stefan Thiede
Senior Legal Counsel at GULP Information Services GmbH
At that time, however, it quickly became clear that only a few companies in Germany could offer exactly the solution we had in mind. Primarily, these were solutions that enabled field service account managers* of insurance companies to sign contracts digitally on the employee tablet during an on-site appointment with the customer. That was not enough for our practice.
Only XiTrust met our requirement that our freelancers should be able to sign their project contracts digitally and electronically from anywhere in the world. So we decided to use XiTrust MOXIS, the electronic signature tablet.
Implementation from 2016
Starting in 2016, XiTrust MOXIS was then actively implemented in our systems. At the beginning, the process explicitly included the possibility to provide a qualified digital signature (QES). The only thing missing was the digital identity of the signatories. The necessary registration could be efficiently implemented by the XiTrust partner WebID Solutions GmbH using a video identification process. By mid-2019, 20 percent of all of our freelancers in the project had registered for this electronic signature – a rate that we were not yet satisfied with.
In order to significantly increase the number of freelancers who can sign digitally, we decided in September 2019 for the Munich office and in October 2019 for the Hamburg office to change the process from the qualified electronic signature (QES) for freelancers to the simple electronic signature, the standard electronic signature (SES). By December 2019, all GULP offices within Germany will have consistently converted the process to the SES. The success was not long in coming: In the meantime, 90 percent of our freelancers currently working on projects use the SES. That’s currently 3,000 experts!
The decision to switch from QES to SES had good reasons: From a legal point of view, a QES is not absolutely necessary for our informal freelancer project contracts, but is a matter of the parties’ freedom of disposition. An SES according to § 127 of the German Civil Code (BGB) is possible without Video-Ident-Procedure and meets the requirements of the personnel service industry, unless other forms of contract, such as a temporary employment agency, are chosen.
Different probative force
However, the differences in evidential value between the QES and the SES should be noted. If we want to demand services from the freelancer based on contractual agreements or assert other claims, such as rights for defects, compensation for damages or contractual penalties, we bear the burden of proof that the freelancer has committed himself to providing the corresponding services to us: In the event that the freelancer denies that the electronic document originated from him, GULP would have to prove that the electronic document was actually signed by the freelancer.
In contrast to the QES, an electronic document with an SES does not have the same probative force. An SES-tagged document provides only visual evidence that the declarations contained in it originate from the sender. However, the identity of the issuer is not documented. Visual evidence according to § 371 of the civil procedure
Here, one could possibly come to the conclusion that SES represents a risk in contractual matters. In our experience, the actual risk that a freelancer denies having digitally signed a contract and we are therefore unable to prove an effective conclusion of a contract is very low. This is because, on the one hand, the freelancer’s MOXIS account is password-protected and, on the other hand, the signature on the mobile phone must be confirmed with a TAN, QR code or fingerprint. Therefore, even without QES, the advantages clearly outweigh the disadvantages.
advantages of digital contract management
The introduction of a completely digital process with XiTrust MOXIS for all freelancer contracts results in the following concrete advantages for GULP:
1. relief of the contract management: reduction of personnel costs
The contract management in our five branches is enormously relieved in terms of time. There is no longer any need to print out and package contracts or track the return of mail. The time required for the classic contract processing with postal dispatch is approx. 10 minutes per contract, the time required when using MOXIS is only approx. 1.5 minutes per contract. This results in a saving of approx. 18 man-days (MT) per 1,000 contracts. At present, about 12,000 documents are processed annually, resulting in annual savings of about 216 MT, which corresponds to about 40,000 EUR.
2. relief of the legal department
The legal department, which is responsible for signing freelance contracts, will also be significantly relieved of time. Instead of a handwritten signature by two employees of the legal department according to the dual control principle, the signature by two legal employees is now carried out by means of QES by batch processing.
3. cost reduction for postage and consumables: environmental protection
The costs for postage, return postage and consumables (paper, toner, envelopes, eyelets) are completely eliminated, resulting in annual savings of around EUR 40,000. Resource conservation is also achieved from an environmental point of view, as the printing of several hundred thousand pages of paper per year can be dispensed with.
4. reduction of the process time
The duration of the process is shortened considerably and the contracts are signed in the shortest possible time. The classic dispatch by letter post takes at least one day within Germany to reach the recipient and another day back to the sender. The postal delivery times to reach recipients within Europe or in other parts of the world are even longer. An example would be the delivery time for Argentina, which takes about 8 to 12 working days per direction! Sundays, public holidays and the absence of the freelancer from the delivery location are not yet taken into account.
5. no media breaks: signing independent of place and time
Media breaks are prevented, the freelancer receives the contract within minutes anywhere in the world and can sign it electronically with MOXIS immediately. Especially if the freelancer is in a project and does not have the possibility to receive mail or print a contract, the electronic signing is of enormous advantage: For signing and sending it back to the sender, only a MOXIS account and an internet connection are required.
6. improvement of customer service
Customer service is improved. Due to the fast conclusion of contracts with the freelancer we are able to confirm customer contracts faster. In addition, cases in which a freelancer begins work without a valid contract due to the urgency and the urgent nature of a project are significantly minimized.
7. Maintaining business activities through decentralized signing
Since all documents can be signed independently of location and time and thus decentrally, the execution and administration of contracts can be maintained without any restrictions even in times of crisis. At present, almost all of our employees are in their home office due to the impact of the Sars-CoV-2 (“Corona virus”) outbreak, but can handle the contract processing just as well as if they were in the office on site. If the contract processing would still be done on printed paper, it would not be possible to process it via home office.
8. conclusion and outlook
Not least in the current difficult situation caused by the virus pandemic, we as GULP are glad that we decided at an early stage to digitalize our contract management and have already fully implemented this process towards freelancers. This means that we are now able to represent an enormous time advantage. All of the advantages listed above, both for our customers, the freelancers and our internal employees, speak for themselves. We hope that digitization will also continue in the direction of customer contracts and that in future it will be possible to completely dispense with contracts in paper form.