Envisaged labour law changes in Germany

In Germany the Christian Democratic Union (CDU/CSU) and Social Democratic Party (SPD) decided on a consultation paper in order to negotiate a possible new grand coalition. Following approval by CDU/CSU, the SPD delegates have on 21 January 2018 also, albeit by a small margin, approved of entering into formal negotiations over the formation of the grand coalition.

It covers, amongst other themes, a number of areas of labor & employment law, and is indicative of legislative changes employers may wish to prepare for.

In Germany the Christian Democratic Union (CDU) and Social Democratic Party (SPD) have decided on a consultation paper in order to negotiate a possible new grand coalition. It covers, amongst other themes, a number of areas of labour and employment law, and is indicative of legislative changes employers may wish to prepare for.

Unsurprisingly, given that the social democrats are now likely to be involved, prior ideas to further liberalize the German employment law (for example, the Hessian regional government proposed to relax protection-against-dismissal rules to enhance the attractiveness of Frankfurt as a post-Brexit destination for banks) are off the table. Instead, the paper is characterized by further strengthening employees’ rights.

A key aspect of the envisaged changes is the reform of part-time and fixed-term employment. The parties are planning to introduce a right to limited part-time employment for employees, replacing the current law where (outside parental leave etc.) moving from full to part-time requires, by and large, the employer’s consent. The revision would only affect companies with more than 45 employees. For companies with 45 to 200 employees, there is a limit of feasibility whereby the employer is entitled to grant temporary part-time employment to only one out of 15 employees at a time. If this limit is exceeded, the employer can deny the request. The employer can further deny a request for limited part-time employment if the duration exceeds five years or is less than one year. An employee taking advantage of the limited part-time model does not have an entitlement to prolong or shorten the approved period of time or to return to full-time employment earlier. An employee has to work in full-time employment for at least one year before he/she can apply for limited part-time employment again.

The parties are also planning to strengthen the degree of coverage in sectoral arrangements in order to lower the numbers of undesirable employment situations and to conduct a new evaluation of the law on temporary employment.

Furthermore, it is being planned to reduce the contribution to unemployment insurance at a rate of 0.3% and to restore equal contribution to health insurance for employees and employers.

The paper also includes many potential changes to promote publicly funded training programs which are designed to reduce long-term unemployment and career advancement. Concerning persons who have been unemployed for three months, the Federal Labour Office should be obligated to create individual measures in order to improve their perspectives on the employment market.

It remains to be seen whether SPD can impose further employee friendly measures on CDU/CSU in the upcoming negotiations. This seems more likely than unlikely, given that the SPD leadership team will still have to convince its members and promised more labor law changes to do so, with CDU/CSU being under some pressure to make concessions in the interest of staying in power.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.