The Coalition Agreement 2025 between CDU/CSU and SPD introduces far-reaching changes in labor law. Companies should now prepare for new rules regarding the minimum wage, working hours, and pay transparency.
Legal Framework:
The coalition’s legal plans affect key laws such as the Working Time Act (ArbZG), the Pay Transparency Act (EntgTranspG), and the EU Working Time Directive. Additionally, they influence procurement law and social security liability provisions. For employers, this results in increased implementation efforts, but also new opportunities for strategic design.
Background:
The Coalition Agreement, dated April 9, 2025, includes labor law changes:
- Minimum Wage: A political goal of 15 euros by 2026, which the Minimum Wage Commission should set by aligning its decision with 60% of the gross median salary of full-time employees.
- Collective Bargaining: Public contracts will only be awarded to companies bound by collective agreements or those with similar regulations.
- Working Hours: Flexibility introduced by setting a weekly maximum working time in line with EU requirements while maintaining the previous limits (maximum average of 48 working hours per week, minimum of eleven hours’ daily rest , 24 hours’ weekly rest and work breaks), introduction of compulsory electronic time recording with exceptions for small businesses. Trust-based working hours should remain possible in accordance with the EU directive.
- Incentives for additional work and part-time work: through tax incentives.
- Occupational Health and Safety: Increased EU occupational health and safety for professional drivers, new subcontractor liability in the parcel delivery industry.
- Equal pay: agreement to set up a commission to develop proposals for implementing the EU Pay Transparency Directive by the end of 2025, and to achieve the goal of equal pay for equal work by 2030 (!).
- Co-Determination: Digitalization of works council work and elections, as well as digital access for trade unions to companies.
Key To-Dos for Companies:
- Review Compensation Structures: Make compensation systems fit for the future rules of the Remuneration Transparency Act and prepare for a nationwide minimum wage of 15 euros, even in low-wage sectors.
- Ensure Eligibility for Procurement: Companies seeking public contracts must check the application of the relevant collective agreements – but not necessarily joining the employers’ association.
- Rethink Working Time Models: The new weekly working hours offer opportunities for more flexibility, but secure time tracking is required.
What We Can Do for You
The labor-law implementation of the agreed political measures requires foresight and practicality. We support you in developing legally secure working time models and adjusting compensation systems – which in the future will not only be an issue for company compensation policy, but also for labor law.
Summary of the Key Facts:
- Minimum wage, pay transparency, and collective bargaining will be politically prioritized.
- HR departments should begin developing new processes and systems to comply with upcoming regulations.
- The coalition aims for structural changes that require companies to respond strategically.
