Labour and employment law in Germany

Introduction

German employment law is divided into two areas: individual employment law and collective employment law. Individual employment law concerns relations between the individual employee and the employer, while collective employment law regulates the collective representation and organisation of employees as well as the rights and obligations of employees’ representatives.

German employment law is not consolidated into a single labour code: the main sources are Federal legislation, case law, collective bargaining agreements, works council agreements and individual employment contracts.

Key Points

• Employees who are not from the EU/EEA require a residence title for the purpose of taking up employment.
• A statutory minimum wage of EUR 13.90 (2026) per hour currently applies to all employees in all sectors of business. Aside from the statutory minimum wage, there are special regulations and collective bargaining agreements within certain sectors.
• Overtime pay is not expressly regulated by law, but is subject to the employment agreement, collective bargaining agreements and works council agreements.
• Trade union representatives support employees and works councils, but do not have participation rights within a company.
• Due to the high level of protection against dismissal, it is reasonably common for employment to be terminated by a separation agreement.
• Severance payments are paid if a number of conditions are fulfilled.

Legal Framework

German labour and employment law is not consolidated into a single labour code. Separate laws for particular issues exist – e.g. the Federal Vacation Act, the Working Time Act or the Maternity Protection Act. The main sources of German employment law therefore are Federal legislation, collective bargaining agreements, works council agreements and individual employment contracts. Many labour and employment law matters are heavily influenced by case law so that judicial precedent is an important part of the legal framework. Numerous separate laws and case law generally make German employment law difficult to navigate. There have been discussions about introducing a uniform Labour Code. The project was however abandoned and an introduction in the short- or mid-term is very unlikely.

New Developments

Recording of Working Time

As a result of the well-known ECJ ruling (14 May 2019, C-55/18), the German Federal Labour Court (13 September 2022, 1 ABR 22/21) has decided that there is a mandatory obligation for employers in Germany to record all working hours (beginning and end of working time as well as rest periods), which arises from the general obligations employers have in terms of occupational health and safety. Currently, German statutory law only expressly requires employers to record working hours worked beyond eight hours per working day, as well as any work performed on Sundays or on public holidays. Hence, the Federal Labour Court ruling has caused legal uncertainty for employers. Amendments to the German Working Time Act (ArbZG) are currently still under discussion but can probably not be expected to be announced in the first half of 2026.

Equal Pay

The transposition of the EU Directive into German law generally is a really hot topic, however, so far not even a draft bill has been published. Germany will therefore not introduce a new law in this respect within the EU deadlines. We currently expect a new law for early 2027. Nevertheless, especially in light of works council co-determination rights and relevant delays due to consultation processes, it is strongly recommended to consider implementation measures on the basis of the EU Directive already at this stage.