Berlin Reforms Labour Law as Automakers Slash Thousands of Jobs
Published on 07/08/2026 at 09:06 | Redaktion boerse-global.de
Volkswagen could cut up to 100,000 positions worldwide, and multiple German plants face possible closure, according to media reports. The IG Metall union has called for nationwide protests on 9 July 2026. In a joint resolution, works councils from dozens of companies demand a more active industrial policy and greater planning security to cope with international competition and digitalisation.
At Porsche, the works council managed to reduce planned job cuts at the Zuffenhausen and Weissach sites to fewer than 4,000. Originally, the cuts were expected to reach the mid four-digit range. Over the past 20 months, Porsche has already eliminated around 3,900 roles.
These moves come as the German government passes a sweeping labour-law package, most of which takes effect on 1 January 2027. One headline change: the telephonic sick note is abolished. Employees must present a doctor’s certificate from the very first day of inability to work. Politicians are pushing back — experts warn the rule fosters distrust toward workers.
Fixed-term contracts are also adjusted. Cause-free fixed-term employment will be possible for up to 48 months, with up to six renewals. This regulation is limited until the end of 2030. At the same time, the government plans to scrap the written-form requirement for such contracts.
For high earners — those with an annual gross salary exceeding €177,500 — dismissal protection is relaxed. Tax adjustments are part of the plan: severance pay will be taxed favourably if the employee switches jobs quickly. Bonuses for Sunday and public holiday work remain tax-free up to €75 per hour.
Artificial intelligence is another battleground. Under the Works Constitution Act, works councils have co-determination rights when technical equipment is designed to monitor employee behaviour or performance. Even the mere possibility of such surveillance triggers co-determination. But pure production or logistics processes without personal data are not automatically subject to co-determination. The European AI regulation, according to labour lawyers, does not create an independent co-determination right. The federal government has asked social partners to propose ways to make cooperation more efficient.
The Federal Labour Court (BAG) has further clarified works council rights. In May 2026, the court confirmed that domestic sites of foreign companies can be considered independent operational units — provided they have a minimum level of organisational autonomy. This applies even if key personnel decisions are made at the foreign headquarters. The ruling came in a case involving a site at Berlin Brandenburg Airport, which was granted works council capacity despite being part of an international group.
On working-time recording, the BAG has previously stressed the employer’s obligation to document start, end, and duration of daily work. Works councils have an initiative right regarding the design of the recording system. However, the fundamental decision to introduce time recording remains with the employer, provided they are simply fulfilling statutory duties.
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