Germany’s Labour Law Shake-Up: 48-Month Fixed-Term Contracts, Mandatory Electronic Clocking, and EU Ruling on Travel Time

The federal government has agreed on what officials describe as the most sweeping overhaul of Germany’s labour market in years, touching everything from how long companies can hire temporary staff to the way working hours are recorded. The package, approved by the coalition committee in July 2026, marks a decisive shift toward flexibility for employers while stirring sharp resistance from workers and unions.

One of the most contentious changes concerns the maximum length of fixed-term contracts without a specific reason. Starting on 1 January 2027, companies will be able to hire staff for up to 48 months on a temporary basis, double the current 24-month limit. The number of permissible extensions will also increase, from three to six. The new rules apply to all new hires until the end of 2030. At the same time, the government plans to scrap the existing ban on rehiring former employees under a fixed-term arrangement and to relax the written-form requirement for such contracts.

Stricter compliance rules aren’t unique to Germany. UK employers also face rising expectations for workplace safety documentation. A free Health & Safety Toolkit gives you ready-to-use risk assessments, checklists and toolbox talks to help you stay compliant with the Health and Safety at Work Act 1974, COSHH and more. Download the free Health & Safety Toolkit

Parallel to that, a draft revision of the Working Hours Act will require employers to record the beginning, end and duration of daily working time electronically. That obligation covers all employees, including those on trust-based working time. Transition periods vary by company size: large businesses get one year, those with fewer than 250 staff receive two years, and micro-enterprises with fewer than 50 employees have up to five years to comply. Companies with a maximum of ten employees and those covered by collective agreements may be exempted.

Another element of the reform is the planned shift from a daily to a weekly maximum working time. The government announced it will present a further bill in autumn 2026. Business associations have welcomed the added flexibility, while unions oppose any extension of the daily working limit.

The sick-note requirement has reignited a heated debate. Under the proposed changes, employees would need a medical certificate from the very first day of illness, regardless of how short the absence is. Surveys indicate that 59 per cent of the workforce oppose such a rule, and more than 70 per cent say they already feel intense pressure to justify sick days.

A new instrument aims to make job changes less risky. The cabinet has approved a “job-to-job trial period” allowing workers to spend up to four weeks, or in exceptional cases six weeks, testing a new position without quitting their current job. The model is part of a larger relief package that, according to the Labour Ministry, will save companies €720 million annually in bureaucratic costs.

From 1 January 2028, a concept called “partial incapacity to work” will be introduced under the GKV Contribution Rate Stabilisation Act, passed by the Bundestag on 10 July 2026. Employees can then be certified as unfit for work at 25, 50 or 75 per cent, provided their employer agrees to a reduced work schedule.

Just as German employers must now navigate complex new labour rules, UK companies need to stay on top of the Health and Safety at Work Act 1974. Over 37,000 UK businesses already use a free toolkit packed with 9 essential compliance tools, including risk assessments, checklists and a director liability guide. Get the free Health & Safety at Work Act 1974 Toolkit

A recent ruling by the European Court of Justice strengthens workers’ rights regarding travel time. Travel from a base to changing work sites now counts as full working time. This primarily affects sectors such as construction, trades, and outside sales. If unpaid travel time pushes a worker’s effective pay below the minimum wage, back payments may be due. The statutory minimum wage will rise to €13.90 per hour on 1 January 2026.

In a separate decision, the Hamm Regional Labour Court confirmed that submitting an online sick certificate without any doctor contact—neither in person, by phone, nor via video—constitutes a breach of trust that justifies immediate dismissal. The ruling reinforces the employer’s position when confronted with questionable medical absences.

Finally, the Federal Labour Court has clarified that a “Einwurfeinschreiben” (a registered letter by insertion) does not guarantee proof that a dismissal has actually reached the recipient. Legal experts now recommend personal handover with witnesses for legally safe delivery of documents such as termination notices or invitations to the company’s reintegration management process.

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