The German Bundestag has elected Friedrich Merz (Christian Democratic Union (CDU)) as federal chancellor. With the government now in place, it can begin its session. The Christian Democratic Union, Christian Social Union (CSU), and Social Democratic Party (SPD) have agreed key guidelines for the legislative period in the coalition agreement. This article details the coalition partners' most important plans on employment law.
The minimum wage is to be increased—as provided for in Section 1 (2) Act Regulating a General Minimum Wage (Mindestlohngesetz – MiLoG)—on the basis of proposals from a minimum wage commission. To date, the commission has made decisions on the level of the minimum wage based on an overall assessment and the development of collective agreements (Section 9 (2) MiLoG); in future, the commission will also base its decisions on 60% of the gross median wage. In this way, the coalition partners assume that a minimum wage of €15 per hour can be reached in 2026. If the minimum wage rises, the limit for marginal employment will also increase (Section 8 Social Security Code IV – Sozialgesetzgebuch IV).
The German government aims to strengthen the commitment to collective agreements through a federal law on collective bargaining. According to this law, public contracts awarded by the federal government should only be awarded to companies that adhere to collectively agreed wages. The law should generally apply to contracts with a volume of €50,000 or more. Exceptions are to apply to startups "with innovative services" in the first four years after foundation.
The coalition partners intend to allow a weekly instead of a daily maximum working time. Under current law, the working day of employees may not exceed eight hours (Section 3 sentence 1 Hours of Work Act (Arbeitszeitgesetz – ArbZG)). Working hours can be extended to up to 10 hours a day if an average of eight hours per working day is not exceeded in a comparative period of six calendar months or 24 weeks (Section 3 sentence 2 ArbZG). This means that working days of more than 10 hours are not permissible. However, the coalition agreement does not provide any details. This will particularly affect the question of the circumstances under which the contracting parties can agree longer working hours. The resting period of 11 hours between two working days will still have to be observed (Section 5 (1) ArbZG). The same applies to breaks. According to this, working times of more than 12 hours could be possible on individual days in future.
Supplements for overtime are to become tax-free. However, the broad effect of such a tax exemption is doubtful. Initially, not all overtime pay is to be made tax-free, but only overtime bonuses.
For example, say an employee earns €20 per hour. Each hour of overtime worked is remunerated; in addition to the hourly wage of €20, the employee receives a supplement of €5. If the employee has worked 10 hours of overtime in a month, they will receive €250 for the overtime—€200 wage, €50 supplement. According to the coalition agreement, only the supplement (€50) is to be tax-free, not the entire remuneration.
In many sectors, such overtime supplements are unusual or at least relatively low. In addition, the tax exemption only applies if the overtime exceeds full-time working hours, i.e., 34 hours in the collectively agreed sector, otherwise 40 hours. It is therefore questionable whether part-time employees will benefit from the planned regulation at all or only to a lower extent.
Workplace co-determination is to be "further developed." Works council meetings and works assemblies should also be able to be held online in future, and elections in the company should also be possible online.
Plans to record working hours were to be expected. The Federal Labor Court (Bundesarbeitsgericht – BAG) had ruled that employers are obliged to record employees' working hours (decision of September 13, 2022 – 1 ABR 22/21). Although this obligation is not enshrined in the Hours of Work Act, the Federal Labor Court derived this obligation from the employer's basic occupational health and safety obligations (Section 3 (2) no. 1 Occupational Safety and Health Act (Arbeitsschutzgesetz –ArbSchG)). The extent of this obligation is currently unclear. This concerns, for example, the question of the extent to which the recording of working hours can be transferred to the employees themselves, in what form, and at what interval the recording must take place and how the employer must check the documentation.
The coalition partners want to "regulate the obligation to record working time electronically in an unbureaucratic manner." Transitional periods are to apply for small and medium-sized companies. Trust-based working hours are to remain possible. Although these goals are to be welcomed in principle, the exact implementation remains unclear.
Written form requirements in employment law are to be abolished. The last federal government had already abolished several written form requirements under employment law with the Fourth Bureaucracy Reduction Act, e.g., in the Evidence Act (Nachweisgesetz – NachwG). Digital employment contracts are now already possible. Fixed-term employment contracts are still an exception; these are still subject to the written form requirement and must therefore be signed by hand (Section 14 (4) Act on Part-Time Work and Fixed-Term Employment Contracts – Teilzeit- und Befristungsgesetz – TzBfG). According to the coalition agreement, this requirement is also to be abolished.
Finally, the coalition agreement states: "We are creating a regulation in the Act on Part-Time and Fixed-Term Employment (TzBfG) that exempts employment relationships during a course of study from the ban on subsequent employment." The background to this is Section 14 (2) TzBfG. Employment relationships can be limited for a period of up to two years even if there is no objective reason (Section 14 (1) TzBfG) for this limitation. However, if an employee has already been employed by an employer without an objective reason, a further fixed term at a later date without an objective reason is no longer possible (Section 14 (2) sentence 2 TzBfG). The program sentence in the coalition agreement is titled "Career paths in science." However, it is not clear from the coalition agreement that the loosening of the ban on subsequent employment should only apply to academic positions.
It remains to be seen how, when, and with what exact content the coalition partners will implement the employment law plans. It also remains to be seen to what extent the federal government's plans can actually be implemented without further bureaucracy—this applies in particular to issues relating to working hours.
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