Berlin Pushes Through Sweeping Labour Law Overhaul as Cabinet Approves 600 Million Euro Bureaucracy Relief
Published on 07/16/2026 at 05:54 | Redaktion boerse-global.de
Germany's federal government has approved a major bureaucratic relief package while simultaneously advancing far-reaching changes to labour law, including mandatory electronic time tracking, a shift to weekly rather than daily maximum working hours, and an extension of fixed-term contracts without a specific reason. The reforms have drawn praise from business groups seeking greater flexibility but sparked warnings from worker representatives who say protections are being eroded.
Under a draft amendment to the Working Hours Act (Arbeitszeitgesetz), employers will be required to record the start, end, and duration of daily working time electronically. This obligation extends to trust-based working time arrangements. Small businesses with up to ten employees are exempt, and collective agreements may permit non-electronic recording methods. Transition periods are staggered: one year for most companies, two years for businesses with fewer than 250 employees, and up to five years for micro-enterprises with fewer than 50 staff.
A central element of the reform package is the switch from a daily to a weekly maximum working hour limit. The government argues this will give companies more flexibility in organising work processes. Critics counter that it could lead to an increase in overtime and worsen employees’ work-life balance.
On travel time, a ruling by the European Court of Justice in October 2025 already clarified that employer-organised group trips from a base to a work site count fully as working time, especially when the employer sets the route and vehicle and workers cannot freely use the time. In such cases, the effective hourly wage including travel time must not fall below the statutory minimum wage, which has stood at €13.90 per hour since January 2026. A further increase to €14.60 is planned for January 2027.
Regarding negative hours (Minusstunden), current case law confirms that deductions are only permitted if the employee is responsible for the shortfall — for example, through unannounced lateness. If the employer fails to assign work, the employee’s wage claim remains intact. Similarly, employer-mandatory holiday shutdowns cannot be used to generate negative hours at the employee’s expense.
The government also plans to significantly expand the possibility of fixed-term contracts without a specific reason. Under the new rules, such contracts may last up to four years — double the current two-year limit — with up to six renewals. This provision is to be temporary, valid through the end of 2030.
Sick leave rules are set to tighten: employees may soon be required to provide a medical certificate from the first day of illness, effectively ending the option of a telephone sick note.
In the temporary staffing sector, wage floors will rise: from September 2026 to €15.33 per hour, and further to €15.87 in April 2027. At the same time, the deadline for filing discrimination claims will be extended from two to four months, strengthening legal protections for workers.
A recent ruling by the Hamm State Labour Court (Landesarbeitsgericht Hamm) underscores the importance of accurate time recording for employees as well. The court upheld an immediate dismissal of a worker who clocked in but then visited a café without recording the time as a break. The judges ruled that such time fraud justifies an immediate loss of trust, making a prior warning unnecessary.
In the digital sphere, works councils now have co-determination rights when artificial intelligence systems are used to monitor employees, highlighting the growing importance of data protection in an increasingly digital workplace.
On 15 July, the federal cabinet approved a separate relief package aimed at cutting annual bureaucratic costs for the economy by around €600 million. Measures include scrapping the green environmental badge for electric cars and eliminating regional truck-driving bans on holidays that are not nationally uniform. The largest share of savings — roughly €448 million — comes from digitalisation measures under the GeDIG law. However, business associations have called for deeper reforms, particularly a systematic reduction in reporting obligations and a reversal of the burden of proof for bureaucratic requirements.
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