Germany Plans to Scrap Job Protection for High Earners From 2027
Published on 07/22/2026 at 06:44 | Redaktion boerse-global.de
A sweeping overhaul of Germany’s labor market, approved by the federal government in early July, will strip dismissal protection from top earners, extend fixed-term contracts, and tighten sick-leave rules. The package, still a political declaration rather than a finalized law, targets greater flexibility in executive roles while raising taxes on the wealthy.
Starting January 1, 2027, employees earning roughly €177,500 or more in gross annual salary will lose their current protection against dismissal. The move is designed to make high-paid leadership positions more adaptable. Yet critics note that the same year will see a wealth-tax hike: incomes of €250,000 will be taxed at 45 percent, and those above €280,000 at 47 percent. To offset some of the burden, the basic tax-free allowance will rise to €12,900 by 2028, and monthly child benefit will increase to €272.
Fixed-term contracts without a specific reason will also become more flexible. The maximum duration will double from two to four years, and the number of permissible extensions will jump from three to six.
Sick-leave rules are set to become stricter. Employees will be required to present a doctor’s note from the first day of illness, replacing the current rule that kicks in only after four days. Phone-based sick notes, already rare at 0.8 to 1.2 percent of all certifications in 2025, will be abolished. Video consultations, however, will remain valid. The Social Democratic Party (SPD) has tied this tightening to a guarantee that patients can get timely appointments with specialists.
A new “job-to-job trial” aims to boost mobility. Workers can test a role at a new employer for up to four weeks—or six in exceptional cases—without resigning from their current job. The application must be filed by the existing employer with the Federal Employment Agency. Dismissal protection at the original workplace remains intact throughout the trial period.
Health data from DAK-Gesundheit for the first half of 2026 shows a slight improvement in absenteeism. Average sick days fell to 9.6, down from 9.9 in the same period last year, with a sickness rate of 5.3 percent. For the first time, mental health conditions became the leading cause of work absences, accounting for 184 days off per 100 insured employees. Respiratory illnesses, by contrast, dropped 21 percent.
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Two recent rulings by the Federal Labor Court (BAG) add further nuance. On June 18, judges strengthened parental-leave protections: special dismissal safeguards are renewed before each requested leave period, even when multiple periods are applied for in a single document. On June 25, the court sided with employers in mass-layoff cases, ruling that minor errors in notifications to the labor agency—such as slightly overstating the number of planned dismissals—do not automatically invalidate the terminations.
The reforms come amid growing discontent among high earners. A survey of households with net monthly incomes of at least €6,000 found that 54 percent actively sought jobs abroad last year. Top reasons included better quality of life, higher pay, and lower taxes. The most popular destinations were the United States, the United Kingdom, and Switzerland.
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