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Global

Germany: Changes to Labour and Employment Law under the New Federal Government

By - - Employment Law

Following the election of the new Federal Chancellor and the establishment of the new government, guidelines for the legislative period have been outlined in the coalition agreement. Below are its key plans regarding employment law.  However, note that implementation timelines and specifics remain uncertain.

Outline of Changes

Minimum Wage Reform

  • Future increases to be based on 60% of the gross median wage.
  • Target minimum wage: €15/hour by 2026.
  • Marginal employment income threshold to rise accordingly.

Strengthening Collective Bargaining

  • New federal law to ensure public contracts (≥ €50,000) go to companies paying collectively agreed wages.
  • Startups with innovative services exempt for first four years.

Working Time Flexibility

  • Shift from daily to weekly maximum working time.
  • Potential for >10-hour workdays, maintaining 11-hour rest and break requirements.
  • Details on implementation still pending.

Tax-Free Overtime Bonuses

  • Only overtime supplements (not base pay) to be tax-free.
  • Applies only when overtime exceeds full-time hours (34 or 40 hours/week).
  • Limited benefit for part-time workers and sectors with low supplements.

Modernizing Co-Determination

  • Works council meetings and elections to be allowed online.

Working Time Recording

  • Electronic time tracking to be mandated.
  • Transitional rules for SMEs.
  • Trust-based working hours to remain.

Reducing Bureaucracy

  • Further removal of written form requirements in employment law.
  • Digital employment contracts to be expanded.
  • Hand-signed fixed-term contracts to be phased out.

Student Employment Flexibility

  • New rule to allow fixed-term re-employment of students during studies.
  • Aimed at improving career paths in science, though scope may be broader.

This is a high level general update only. Legal advice should be obtained on specific circumstances.
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