Dismissal Lawsuits Jump 63% as Germany Unveils Controversial Labour Reform Package
Published on 07/10/2026 at 20:11 | Redaktion boerse-global.de
The number of unfair dismissal cases handled by a major German legal expenses insurer has surged 63% over five years, with 2025 alone recording a 33% increase and the first half of 2026 adding another 9.8%. The sharp rise, which the insurer says increasingly affects middle and higher income brackets, comes as the federal government prepares to ease job protections for the country's highest earners while tightening rules on sick leave.
Under the proposed Programm für Aufschwung und Beschäftigung — a reform package designed to lift employment and economic activity — employees earning roughly €15,000 a month would become easier to dismiss with a severance payment from 2027 onwards. That threshold captures approximately 0.27% of the workforce, according to the Institute for Employment Research (IAB). The same draft law would also extend the maximum duration of fixed-term contracts without a specific reason to 48 months, a provision set to expire at the end of 2030 and permitting up to six renewals. IAB researchers warn the change could block career progression, and trade unions have voiced sharp criticism.
Parallel to the dismissal overhaul, the government is pushing to make a medical certificate compulsory from the first day of illness, scrapping the telephone sick note introduced during the pandemic. At present, employers can only demand a day-one certificate on an individual basis. The reform responds to climbing sickness rates: between January and November 2025, employees were absent an average of 18.6 days, up from 13 days in 2021. Yet insurance industry experts question whether a mandatory doctor's visit would cut absences. Their concern is that physicians issuing notes for a single day in person may actually prolong leave, because they are less likely to certify just one day of illness when a patient comes to the surgery.
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Two recent court rulings illustrate the legal boundaries employers face when trying to enforce conduct-based dismissals. In Alicante, a logistics worker was lawfully fired after persistently arriving 30 to 45 minutes before her shift began, despite clear instructions from management to stop. By contrast, a court in A Coruña found that an employee who had been on sick leave since May 2023 after a stroke was discriminated against when her employer filmed her shopping and sacked her without notice. The company must reinstate her and pay €5,000 in compensation for pain and suffering.
Meanwhile, the Higher Regional Court of Bamberg (case reference 3 UKl 15/25 e) has restricted termination clauses in consumer contracts. Mobile network operators offering unlimited tariffs may no longer unilaterally cancel customers' contracts before the end of the minimum term. Such clauses in general terms and conditions, the court ruled, unfairly disadvantage consumers.
The reform package, still to pass through parliament, arrives against a backdrop of rising insolvencies and economic uncertainty — echoed in the growing caseload of Germany's labour courts. In Baden-Württemberg alone, new filings jumped from 38,021 to 42,488 within a single year.
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