Germany: New German government presents coalition agreement: What’s in it from the employment law perspective?

Minimum wage increases to 12 Euros

As expected, the Social Democrats have succeeded with one of their central concerns: The statutory minimum wage will be increased from currently 9.60 Euros to 12 Euros per working hour. This goes well beyond the already planned increase to 10.45 Euros by July 2022. If the increase to 12 Euros is not implemented by the end of the year, the minimum wage will initially increase to 9.82 Euros as of 1 January 2022 according to the increases already approved.

More flexibility for working hours and place of work

The need to reform the statutory regulations regarding working hours and place of work is particularly urgent in practice. At first glance, however, the planned “progress” seems rather moderate. The new government sticks to the standard of the eight-hour working day, which is already an integral part of the current German Working Time Act. More flexible working time models are to be tested in 2022 within the framework of collective agreements only. Since the pressure to adapt the strict Working Time Act primarily comes from industries not covered by collective agreements, this cautious flexibilisation is unlikely to satisfy practitioners. However, it could at least be a first step in the direction of greater flexibility and indirectly strengthens the collective bargaining system.

In addition, the implementation of the famous ECJ ruling on the recording of working hours from May 2019 is still pending. The coalition agreement remains cautious in this regard: The need for adjustment is to be examined. Flexible working time models (e.g. trust-based working time) are to remain possible, even taking into account the ECJ case law. These statements are rather vacuous. However, we still expect an amendment of the Working Time Act and a general obligation to record working hours to be implemented in the foreseeable future.

After the Mobile Work Act was not passed by the last government, the statutory provisions on mobile work and working from home are to be fundamentally revised. With regard to working from home, employees shall be entitled to discuss this with their employer. Employers shall only be able to object the employee’s request “if operational reasons oppose”. It remains to be seen how high the hurdles for employers will be set here.

Increase of mini- and midi-job limits

The so-called mini- and midi-jobs (low-income jobs with tax and social security benefits) are to be strengthened, primarily by increasing the earning limits. The limit for midi-jobs, where employees benefit from reduced social security contributions, will be increased to 1,600 Euros gross per month. With the increase of the minimum wage, the mini-job limit is to be increased to a monthly earning of 520 Euros gross.

Fixed-term employment without objective reason remains

The original plan to completely abolish fixed-term employment without objective reasons is not part of the coalition agreement. Only repeated fixed-term contracts are to be avoided by limiting fixed-terms employment contracts with the same employer to six years, even if the fixed terms are justified by an objective reason. For fixed-term contracts without objective reasons, there is already a statutory maximum duration of two years in place. Therefore, the practical impact of the planned changes in fixed-term employment law is likely to remain rather low, which is good news for employers.

Strengthening of co-determination and the collective bargaining system

In the future, works councils may for themselves whether to work in analog or digital form. This follows up on a temporary regulation introduced during the pandemic, which made virtual works meetings and works council elections possible. Online works council elections are to be tested first. Trade unions are to be given digital as well as analog access rights to companies. The (high) German level of co-determination shall be maintained. If employers hinder or influence works council activities, this shall be a criminal offence the authorities have to pursue even if no criminal charges are actively filed. The abusive avoidance of co-determination is to be prevented. This particularly applies to the growth of SE companies, where currently the level of co-determination existing at the time of the SE conversion remains unchanged despite the increase of employee numbers (so-called freezing effect).

What else?

In addition to all of the items mentioned above, the coalition agreement also provides for a strengthening of apprenticeships and occupational training. Among other things, an “apprenticeship guarantee” and “part-time training” are mentioned. Furthermore, procedures for determining social security status are to be improved and accelerated. Adjustment of the Employee Leasing Act is to be examined and occupational health and safety provisions are also to be adapted. The specific practical impact of these plans is not yet clear.

Key Action Points for Human Resources and In-house Counsel 

• As expected, German employment law tends to become (even) more employee-friendly under the leadership of the Social Democrats, with trade unions in particular being strengthened. However, most changes remain undefined, so any concrete implementation will have to wait.
• The Ministry of Labour will continue to be led by the previous minister, who has already presented numerous drafts of new or adapted laws in the past. It is, therefore, possible that some drafts (Mobile Work Act, Whistleblower Protection Act and amendment of the Working Time Act) will be followed up soon.