E-signatures have become more and more popular over the last few years particularly with the advent of software such as DocuSign etc, also with the introduction of more remote and working from home situations there are some questions arising about how valid such signatures are.

In Short electronic signatures are legally binding if they satisfy certain requirements of the Contract and Commercial Law Act 2017.

Under the Act electronic signatures are defined as “a method used to identify a person and to indicate that person’s approval of that information.”

The act also provides that an electronic signature will only be binding if the other party consents to receiving the electronic signature, if it adequately identifies the signatory, if it adequately indicates the signatory’s approval and, finally, if it’s reliable.

For an electronic signature to be ‘reliable’, the means of creating the signature must be linked to and under the control of the signatory and no other person, and any alteration to the electronic signature must be detectable.

When it comes to employment contract offers and acceptance the issue of electronic signatures appear to have already been accepted by the employment court.

In this acceptance the Employment Court appears to state that where a document requires a signature, that requirement is met by an electronic signature if it adequately identifies the signatory’s approval of the contents and is as reliable as is appropriate in the circumstances.

The court also indicated that in some circumstances it may be necessary to provide additional confirmation of the reliability of the signature by paper-based copies.

Employers will need to consider whether any proposed electronic signature system is sufficient to meet the requirements of such identification and reliability.

Given the obvious confidentiality issues if an employer wanted to introduce an electronic signature system, it would need to ensure that the employment agreement could only be accessed by the employee concerned using a secure log on or sent to the employee’s private email for approval.

The system would need to reproduce an electronic form of the employees’ usual signature, so that the individual is sufficiently identifiable.”

An issue employers need to consider is the legitimacy of different software. Some employment software requires a user to sign up to the program before an electronic signature is created for them.

Such software is likely to be valid for employment agreements if it:

Creates an electronic signature for a new hire which is then used to indicate their approval/acceptance of the terms of the employment agreement.

It is reliable and secure because the employment agreement is provided in a unique email and makes the electronic signature and the document traceable and secure.

Does not require the new hire to immediately sign the document, it allows them to print the documents and have a reasonable opportunity to take legal advice.

Any other software systems that simply require employees to tick a box accepting the conditions are unlikely to amount to a “signature” required under the Employment Relations Act.

This information is not a substitute for legal advice, we recommend that if you identify problems in the areas listed you consult with someone before acting on any material you have read.