Bundesrat Vote Looms as Germany's 34-Point Employment Reform Stirs Deep Divisions
Published on 07/10/2026 at 20:11 | Redaktion boerse-global.de
The Bundesrat is expected to decide Friday on austerity packages that accompany Germany's most ambitious labour-market shake-up in years—a 34-proposal programme that would scrap the daily working-time cap, extend fixed-term contracts to four years, and phase in mandatory digital time tracking. The legislation is due to reach parliament before the summer recess, but the political battle lines are already drawn.
Chancellor Friedrich Merz defended the package, dubbed "Aufschwung und Beschäftigung" (Upswing and Employment), in a government statement yesterday. He argued that German businesses need more flexibility to regain competitiveness and cut red tape. Yet unions and parts of the opposition have met the plans with fierce criticism, warning they will weaken worker protections without delivering the promised economic spark.
Daily Cap Replaced by Weekly Limit
A flagship change: the current daily maximum working time would give way to a weekly maximum, letting employers distribute hours more unevenly across the week. The construction industry immediately welcomed the move, saying it matches real-world scheduling needs. A corresponding bill is expected later this year.
Parallel to that, the obligation to record working hours digitally is tightening. From 2026, any company with more than ten employees must use electronic time tracking—a requirement rooted in rulings by the European Court of Justice and Germany's Federal Labour Court. Smaller firms are not forced to comply, but legal experts recommend it to stay on the safe side, especially when staff work from home or on the move.
Fixed-Term Contracts and Dismissal Rules Loosened
Under the reform, employers would be able to offer fixed-term contracts without stating a reason for up to 48 months—double the current limit. The measure is initially capped at 31 December 2030.
Dismissal protection would also be curbed for high earners: anyone grossing more than €15,000 a month (roughly 1.75 times the contribution assessment ceiling) would lose full protection and instead receive a statutory severance option. Economists from a leading research institute dismissed the change as largely symbolic, since it affects only a tiny fraction of employees.
Other proposals include:
- Abolishing the telephone sick note (so workers must see a doctor in person from day one)
- Tax exemptions for Sunday and public-holiday premiums up to a €75 hourly wage
- Tax incentives for workers who move quickly to a new job
- Reducing hurdles for deploying artificial intelligence in the workplace
Car Industry Tensions Amplify the Debate
The reform debate has been supercharged by news from Germany's flagship carmakers. Mercedes is reportedly considering reintroducing the 40-hour week, while Volkswagen faces potential job cuts of up to 100,000. Discussion also centres on a return to the 40-hour week without wage compensation—effectively a pay cut, according to IG Metall and Green party representatives, who have attacked the idea.
The Federation of German Industries (BDI) issued a cautiously supportive statement yesterday, acknowledging the government's approach but calling for more radical steps: a full abolition of the solidarity surcharge and sharper tax relief to generate a real growth boost.
Meanwhile, the Federal Constitutional Court dismissed urgent motions against other coalition bills earlier this week, clearing a procedural hurdle. The labour package itself still faces a rocky ride through both chambers before the parliamentary summer break.
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