Germany’s Growth Package Targets Job Security, Sick Leave Rules and High-Income Protections
07.07.2026 - 00:31:03 | boerse-global.de
A sweeping reform package unveiled by Germany’s coalition government aims to jump-start the economy and cut red tape, but several of its labour-market provisions are drawing sharp criticism from unions, doctors and opposition politicians. The proposals, still in the announcement phase, would reshape sick-leave obligations, expand fixed-term contracting, weaken dismissal safeguards for top earners, and introduce a “deemed approval” mechanism for permits.
Four-year contracts without cause draw public disapproval
One of the most contentious elements concerns temporary employment. The growth package would allow employers to hire new staff on fixed-term contracts without providing a specific reason for up to 48 months, running until the end of 2030. Up to six contract renewals would be permitted within that period. Current law already allows such contracts for up to two years, with some exemptions.
A YouGov survey conducted on 2 and 3 July 2026, covering roughly 6,200 respondents, found that 54% oppose the extension, while only 26% support it. Occupational health specialists warn that stretching fixed-term arrangements to four years could heighten psychological strain on workers, who already face uncertainty over their long-term prospects.
High earners lose statutory dismissal protection — in exchange for capped severance
For employees earning a gross annual salary above €177,450, the government proposes largely scrapping the statutory protection against unfair dismissal. Instead, employers would offer a capped severance payment: up to 12 months’ gross salary in most cases, and up to 18 months for workers aged 55 or older with at least 20 years of tenure.
Labour-law consultants have urged businesses to review existing contracts but caution against making immediate changes — the measures remain proposals, not law. The reform would effectively treat very high earners much like executives, who in Germany often negotiate individual termination terms outside the general protection framework.
Sick from day one: mandatory doctor’s visit returns
Another headline change targets the traditional “day four” rule for presenting a medical certificate. Under the plan, employees would be required to submit a doctor’s note from the first day of illness, reversing the current practice that only mandates one after three consecutive days of absence. The government also intends to abolish telephonic sick notes, which were allowed as a temporary pandemic measure and later made permanent.
Finance Minister Klingbeil described the move as a pragmatic effort to reduce absenteeism. Chancellor Merz linked the change to a broader goal of lowering sickness-related work absence. However, critics are vocal.
A sociologist from the University of Bamberg argues that stricter proof requirements and the elimination of remote certifications are unlikely to cut sick-leave rates and may instead promote presenteeism — employees dragging themselves into work when ill. The National Association of Statutory Health Insurance Physicians (KBV) estimates the policy would generate at least 30 million additional doctor visits each year. The CDU’s own labour-wing calls the rule unnecessary, and the Greens warn it could increase infection risks in workplaces while adding bureaucratic burdens.
Tax relief for middle incomes, a higher “rich tax” threshold
Accompanying the labour-law changes are fiscal adjustments. Incomes up to €60,000 would receive a tax relief of €600. At the same time, the so-called “wealthy tax” rate of 45% would kick in at €250,000 of annual income, rising to 47% above €280,000 — a recalibration of the existing top bracket. Severance payments would be granted specific tax incentives under the proposals.
Bureaucratic speed-up: silence equals consent after four months
To accelerate investment, the coalition is introducing a “deemed approval” rule. For certain permit applications, if the responsible authority fails to issue a decision within four months, the application will be automatically considered approved. The government also plans to ramp up funding for future-oriented technologies as part of the economic transformation.
None of these measures have been enacted yet. They are part of a larger reform package that the government hopes will ease business conditions, but opposition — from unions, medical professionals, and even within coalition parties — suggests the legislative path will be contested.
