New German Government's Plans for Labor and Employment Laws

On February 7, 2018, Germany's two ruling parties, the Christian Democratic Union (CDU) and the Social Democratic Party (SPD), agreed on a joint government and a 177-page coalition agreement. The employment-specific provisions of the coalition agreement proved to be "deal breakers" and could only be agreed upon after numerous negotiations lasting late into the night.

The latest coalition agreement will usher in numerous changes to employment legislation that are expected to be implemented over the next four years. Since some of these changes are extensive, employers should promptly start preparing for them.

Planned Changes in Connection with Fixed-Term Employment

The most sweeping changes will probably be made to fixed-term employment. Until now, it was possible to hire employees for a fixed-term, two-year period (§ 14 (2) Part­Time and Fixed-Term Employment Act, TzBfG) without reasons, or generally for an unlimited duration with reasons (§ 14 (1) TzBfG). Both options for limiting the duration of employment will be significantly restricted.

For employers with more than 75 employees, fixed-term employment will only be permissible for up to 2.5% of their workforce. If this maximum is exceeded, any additional employees hired on a fixed-term basis without reasons will be deemed to be employed on an open-ended basis. Moreover, fixed-term employment without a material reason will be permitted for up to 18 months, not two years. Furthermore, in the future it will be possible to extend the contract only once during this period, rather than three times.

In addition, so-called "successive fixed-term employment" will no longer be an option. These are cases in which an employee is repeatedly employed on a fixed-term basis for a different reason—e.g., to fill in for successive employees on parental leave. Successive fixed-term employment will be limited to a maximum of five years. There will be an exception for fixed-term employment for material reasons pursuant to § 14 (1) no. 4 TzBfG owing to the nature of the employment relationship (such as for artists or professional athletes). This maximum duration of five years will also include previous periods of employment with the employer as a temporary employee. Re-employment on a fixed-term basis will be possible only after a three-year waiting period.

Additionally, there will be a right to work part-time, for a limited period of one to five years, to enable parents of small children to temporarily work part-time even after their parental leave expires without having to fear being unable to return to full-time work. However, this right will only exist in companies with more than 45 employees.

Strengthening Rights of the Works Council

Under the coalition agreement, the rights of the works council will be strengthened. The works council will receive a right of initiative in relation to training, according to which employers and works councils must discuss in-company training measures. In other words, the works council has a right to request an agreement regarding training if the employer does not initiate such an agreement. There will be no obligation to reach an agreement, however.

In addition, the establishment and election of works councils will be made easier. The simplified election procedure (§ 14a of the voting regulations under the Work Constitution Act, WO-BetrVG) will become compulsory for companies with 5 to 100 employees entitled to vote. Companies with 101 to 200 employees entitled to vote will have the option to choose between the simplified and the general election procedure.

Other Planned Changes

Finally, "on-call work" (§ 12 TzBfG) will be limited. Under an on-call work contract, employees are obligated to work only to the extent the employer requests their services. In this context, 20 hours per week will be considered "agreed" in each case; deviations following the employer's "request" may only exceed this limit by 20%, or fall short of it by 25%.

The coalition agreement plans to (slightly) extend the rights of employers in one specific area: employers will be permitted by collective agreement to waive the working-time limits defined in the Working Hours Act (Arbeitszeitgesetz, ArbZG) to a greater extent than previously possible. Especially as a result of digitisation, working time is already handled flexibly in many employment relationships. Fewer employment relationships adhere to the classic "9-to-5" pattern, and an increasing number of employees have flexible working hours (trust-based working time, telework, etc.). Often, employees in particular are interested in such flexibility. Given the increase in technology and the desire for workplace flexibility, an employee's maximum working hours (§ 3 ArbZG: regularly eight, in exceptional cases ten hours per day) may be modified by a collective agreement.

More details about these plans will be published once the first draft laws are available. Nevertheless, employers should already start preparing for the expected changes and, in particular, should seek alternatives to fixed-term employment without material reasons. Approaches might, for example, include the creation of material reasons or the increased use of temporary workers.

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.