As Most German Workers Take Severance Without a Fight, Coalition Plans to Ease Firing Rules for High Earners

Just 16% of laid-off employees in Germany reject their employer’s first severance offer, according to a new survey of 6,000 people. The Kündigungsreport reveals that 62% accept the initial proposal without any back-and-forth, and more than a quarter sign the agreement during the very meeting where they are told they are being let go.

The numbers expose a sharp social divide. Nearly half of all dismissed workers receive no severance payment at all. In small companies that share rises to 60%. The unwritten rule in most cases: half a month’s salary for every year of service.

These findings come as Germany’s economy struggles. The ifo Employment Barometer hit 92.3 points in June, and the Institut der deutschen Wirtschaft reports that one in three companies is planning to cut jobs. Against that backdrop, the question of dismissal protection has shot back to the top of the political agenda.

Coalition targets top earners

In early July the coalition committee presented concrete plans to loosen protection for employees earning more than 1.75 times the contribution assessment ceiling — roughly €180,000 a year. Dismissals would become easier against a severance payment, modelled on rules already in place for risk-takers in the banking sector.

Lawyers have raised constitutional concerns. No formal bill has been drafted yet. If adopted, the new rules could take effect on 1 January 2027. Parallel to that, the coalition wants to replace the written-form requirement for employment contracts with simple text form, and extend fixed-term contracts without a specific reason from two to four years.

BAG strengthens parents’ protections

While the government loosens rules for high earners, the Federal Labour Court (BAG) has moved in the opposite direction for parents. On 18 June the judges ruled that the pre?emptive dismissal protection that arises before each individual segment of shared parental leave is renewed each time — even when all the periods are bundled into a single application.

That means a dismissal between two parental?leave segments is void unless the state authority has given its consent. Earlier this year the BAG also clarified that firing a severely disabled employee during the probation period is invalid if the disabled?workers’ representative was not properly involved. Employers must observe the one?week deadline for that body to submit its opinion.

Works councils and cross?border complications

In spring the Berlin?Brandenburg Regional Labour Court confirmed that a works council based at a German site retains full co?determination rights even if the company’s legal seat is abroad or it moves functions overseas.

On 13 July the Federal Finance Court (BFH) refined its approach to cross?border commuters. An employee does not automatically have a claim for reimbursement simply because the employer withheld tax in violation of a double?taxation treaty. Specific relief procedures must be followed instead.

Pay transparency tightens

The BAG ruled in April that employers must communicate corporate targets for variable pay at the start of the financial year. Missing that deadline opens the door to damages claims for the lost bonus.

Additional pressure comes from the EU Pay Transparency Directive, which flips the burden of proof in pay?equality lawsuits. A BAG ruling from autumn 2025 had already established that knowing the salary of a single male colleague can be enough to create a presumption of gender?based discrimination.

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