Germany: Labour Law Aspects in the New Coalition Agreement
Maximum weekly working time, electronic time recording and tax incentives for overtime – the new coalition agreement brings new impulses in terms of German labour law.
On 9 April 2025, the German political parties SPD and CDU/CSU agreed on a coalition agreement. On 146 pages, the coalition partners set out the relevant topics for the next legislative period. The section on ‘Labour and Social Affairs’ regulates the legislative initiatives to be expected in German labour law.
Minimum wage: The statutory minimum wage shall be based on both collective wage agreements and 60% of the gross median wage of full-time employees, with the political aim of reaching a minimum wage of EUR 15 gross per hour by the year 2026. However, the decision on the exact amount remains with the independent Minimum Wage Commission.
Introducing a federal collective bargaining law: Another goal of the coalition partners is to strengthen collective bargaining coverage. This shall be achieved through a federal collective bargaining law. Contracts at the federal level worth EUR 50,000 or more (or EUR 100,000 for start-ups with ‘innovative services’ in the first four years after their founding) are to be awarded only to companies that pay wages in line with collective agreements.
Weekly maximum working time: Instead of the current daily maximum working time stipulated in the German working time law, which is eight hours with the option of temporary extension to ten hours, the new government plans to introduce a weekly maximum working time. This would allow more flexible working time models, although statutory rest periods would still have to be observed.
Recording of working hours: The coalition plans to introduce mandatory electronic working time recording. However, a transition period shall be granted to small and medium-sized companies. Trust-based working hours shall remain possible ‘in accordance with the EU Working Time Directive’ without time recording.
Tax incentives for employees: Overtime pay above the full-time rate set in collective agreements shall be tax-free. For working hours not specified or agreed in collective agreements, a 40-hour week is to be the basis. In addition, bonuses paid by employers to encourage part-time workers to increase their working hours shall be tax privileged. Furthermore, working during retirement shall be made more attractive. For employees who have reached the statutory retirement age and continue to work voluntarily, salaries of up to EUR 2,000 per month shall be tax-free.
Immigration of skilled workers: For foreign skilled workers, the coalition partners are planning to create a ‘work and stay agency.’ This shall be a digital agency for skilled labour immigration with a central IT platform serving as a single point of contact for foreign skilled workers. Professional qualifications from abroad shall be recognised more quickly.
Co-determination and digitalization: Online works council elections and online works assemblies shall be established as equivalent alternatives to face-to-face formats. Online elections to the works council shall also be made possible in future. In addition, trade unions shall be granted digital access to companies.
Reducing bureaucracy: The coalition partners are also committed to reducing written form requirements, particularly in labour law (e.g., for fixed-term contracts).
The coalition agreement lists numerous initiatives in the area of labour law, as outlined above – from the realignment of working time legislation to digitalisation. It remains to be seen which measures contained in the coalition agreement can actually be financed and implemented during the four-year legislative period that just began and what impact they will have on the German labour market.
