The coalition agreement is out – the guidelines for German labor law are set for the next four years

On Wednesday, November 24, 2021, the newly formed coalition of the Liberals, Greens and the Social Democrats, which will lead Germany during the next four years, presented its coalition agreement. In negotiations lasting a little over four weeks, the parties discussed the new direction for Germany.

In their election programs the parties already had many ideas concerning German labor law. With the coalition agreement, the new prospective government has now set the direction for the next four years and given us insight into its plans for labor law.

Fixed-term contracts and home working

Because home offices have become the working place for most employees during the pandemic, it was likely that the coalition would focus on that topic. However, they agreed that there would not be an enforceable right to work from home, but only a right to a discussion. Nevertheless, employers may only object to an employee's wish to work from home if this conflicts with operational interests. This means that a rejection may not be inappropriate or arbitrary. In addition, mobile work within the EU should be possible.

There will also be changes regarding fixed-term contracts. The coalition has agreed that fixed-term contracts with cause (i.e., the fixed term is based on a reason provided for by law, e.g. temporary replacement of an employee on long-term sick leave or parental leave) will be limited to a maximum of six years with the same employer. Currently, there is no maximum duration for a fixed-term employment contract with cause.

Contrary to what was feared after the election programs, however, there will be no ban on fixed-term contracts without cause. These will, therefore, continue to be permissible for a maximum period of two years.

Parental leave

Under the heading of "time with the family," the coalition has planned a number of innovations with regard to parental leave and parental allowance. From the labor law perspective, the most relevant aspect is that the special protection against dismissal for employees on parental leave will be extended by three months after the end of parental leave. Currently, the special protection against dismissal ends at the same time as the end of parental leave. The reason for this change is to secure the return to work after parental leave.

In addition, the coalition plans to introduce a two-week paid leave of absence for the partner after the birth of a child. However, it is not clear from the coalition agreement whether this will be a state benefit or financed by the employer.

Minimum wage

As was already expected on the basis of the election programs, the minimum wage will be set to EUR 12 gross/hour. At present, the minimum wage is EUR 9.60 gross/hour.

In addition, the minijob as well as the midijob limits will be raised. A minijob is marginal employment exempt from social security contributions, while a midijob is an employment relationship with a reduced contribution rate for social security. The limit for a minijob will be raised from EUR 450.00 gross/month to EUR 520.00 gross/month and the midijob limit will be raised to EUR 1,600 gross/month from the previous EUR 1,3000.00 gross/month.


The coalition has agreed on the implementation of the European Whistleblowing Directive, which is supposed to take place by December 17, 2021. It is planned that whistleblowers will not only be protected from legal consequences when reporting violations of EU law, but also from major violations of regulations or other significant misconduct, if the disclosure is in the public interest. In particular, it is expected that companies with 50 or more employees will have to establish their own whistleblowing systems to enable reporting.


Changes are also planned in the area of co-determination. This relates above all to digitalization, where the pandemic has shown that there is a need to catch up. According to the plans of the coalition, works councils should decide for themselves whether they want to work in analog or digital form. Digital works council elections are also to be tested in a pilot project. It would be a great improvement for employers, both in terms of time and finances, if digital works council elections were possible.

Overall, it seems that the Liberals had a defining influence in the coalition negotiations regarding labor law. However, the German labor law will very likely become more employee-friendly during the next four years, which is no surprise with the Social Democrats leading the new coalition. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.