What does the new coalition government agreement have in store for employers?


The new German coalition government intends to make important changes ranging from further education, remote work and the minimum wage, to fixed-term contracts and co-determination.

Was bringt der Ampel-Koalitionsvertrag für Arbeitgeber?

Employers are unlikely to burst into tears of joy upon seeing the new government’s coalition agreement. However, the greatest fears regarding fixed-term contracts and temporary employment have not come to pass. We provide an overview of the plans related to labor law.

1. Further education:

Employers will probably welcome the new government’s recognition of the importance of continuing education as a means of addressing the digitization and decarbonization of the economy. The coalition government aims to better coordinate education and labor market policies, and also intends to implement extensive subsidization and funding options. A qualification allowance oriented on the short-time allowance is particularly noteworthy. The prerequisite for this is a company agreement. Furthermore, the government also plans to introduce a training program inspired by Austria’s approach. This will provide financial aid for employees obtaining a vocational qualification or reskilling. The prerequisite for this is an agreement between the employer and the employee. Simplified access to education opportunities and advisory services, as well as funding instruments is another issue. The acting (and probably also new) Federal Minister of Labor, Hubertus Heil, has already announced the following on Twitter: “We will transform Germany into a republic of continuing education”. It will be interesting to see what this actually means.

2. Working hours:

The coalition government will retain the eight-hour work day. However, the government also intends to create “experimental spaces” and, therefore, limited options for deviating from the current regulations regarding maximum daily working hours. For example, where collective agreements, or works agreements based on them, allow these alternatives.
The former Federal Minister of Labor, Andrea Nahles, planned but failed to implement similar measures.
According to the new government, flexible working time models, such as trust-based working hours, will remain an option. Consequently, the coalition government intends to establish a dialog with social partners to examine the required scope of the changes in response to the case law of the European Court of Justice on working time law.

3. Remote work:

Employees will be granted a “right to negotiate mobile work and remote work”. Employers may only object if remote work conflicts with company concerns.

4. Minimum wage:

The minimum wage will be increased from the current 9.60 euros to 12 euros per hour. This will be a one-time adjustment. The Minimum Wage Commission will then decide on any further increases in future. The higher hourly rate will also lead to an increase in the wages stipulated by collective bargaining agreements.

5. Mini jobs:

Alongside the higher minimum wage, the limit for mini-jobs will increase to 520 euros per month. The mini-job limit is oriented on a working time of ten hours per week. The monthly earnings limit for midi jobs is 1,600 euros. In future, mini jobs will also monitored more closely to determine whether employers comply with labor law.

6. Limited terms:

Fixed-term employment relationships remain permissible. However, restrictions will likely be imposed on unfounded fixed-term employment contracts. The maximum duration with one employer will be limited to six years in order to prevent successive fixed-term contracts. Exceptions will only be possible in rare cases. The federal government as an employer aims to lead by example, and successively decrease the number of unfounded fixed-term employment contracts.

7. Employee leasing and crowdworking:

The coalition has explicitly designated contracts for work and employee leasing as necessary instruments. The new government regards digital platforms as an enrichment for the working world. However, existing law needs be reviewed with a view toward “good and fair working conditions”, and the data basis improved in collaboration with the platform providers, employees, freelancers, and social partners. From a legal-historical stance, this perspective is rather interesting, given that at the end of the 1990s, the red-green coalition declared war on pseudo self-employment. In spite of massive opposition, a law to combat pseudo self-employment was forced through to prevent what it regarded as precarious employment relationships.

8. Co-determination in accordance with the Works Constitution Act and in the SE:

The coalition government would like to “further develop” co-determination (what else?!) – both analog and digital. In addition, a pilot project for online works council elections will be launched. Obviously, this targets the works council elections due in 2022. The legislator had not yet managed to achieve a solution with the Works Council Modernization Act and the electoral reform. It is important that companies familiarize themselves with the planned change to co-determination at European stock corporations (SE). In future, it will no longer be possible to “escape” from German co-determination or to “freeze” an existing level of co-determination by establishing an SE. Companies considering establishing an SE need to bear this in mind.

The new coalition government plans to make changes to labor law that employers need to consider. Action is currently needed with regard to the new regulations governing co-determination at European stock corporations if companies are considering establishing an SE. On the positive side, the new government appears to have recognized the signs of the times when it comes to working hours, fixed-term contracts, personnel leasing and crowdworking, and set out on a path towards greater flexibility. However, the details have yet to be determined. The plans for further education and lifelong learning are definitely a move in the right direction in response to digitization and the transformation toward a climate-neutral economy.