German Coalition Agrees Eased Dismissal for High-Earners as Courts Tighten Rules on Sick Notes and Mass Layoffs
Published on 07/04/2026 at 14:57 | Redaktion boerse-global.de
Employers in Germany face an increasingly complex legal landscape after a wave of court rulings and a new government reform package reshaped firing rules, sick-note obligations and protection periods. The changes, which took effect with a coalition decision on July 2, 2026, and a string of Federal Labour Court (BAG) judgments over the past year, create both new flexibility and fresh pitfalls for companies.
Higher salaries, shorter notice
The most significant element of the reform package targets executives and top earners. Employees with an annual salary above €177,500 can now be let go more easily in exchange for a severance payment. Courts may dissolve the employment contract without requiring the employer to show special cause. Severance ranges from 12 to 18 months’ salary. The coalition also loosened fixed-term rules: fixed-term contracts without a specific reason can now last up to four years and be renewed up to six times. The written-form requirement for such contracts has been dropped.
Sick notes: from phone to paper, and the risk of dismissal
The same package abolishes the telephone-based sick note that had been in place since the pandemic. From now on, employees must produce a medical certificate from the first day of illness. Courts have simultaneously ramped up scrutiny of sick notes. In 2026, the Hamm Regional Labour Court (LAG Hamm) upheld an immediate dismissal after an employee submitted an online sick note without any doctor’s consultation, calling it a severe breach of trust. The Cologne Regional Labour Court added that a sick note’s evidentiary value can be undermined if it coincides suspiciously with workplace conflicts or newly issued shift schedules.
Federal Labour Court rulings pile on pressure
On April 1, 2026, the BAG issued multiple judgments that make mass dismissals riskier. A dismissal is void if the mandatory notification to the Federal Employment Agency (Bundesagentur für Arbeit) is missing or arrives too early. The court clarified that the notification may only be filed after the consultation procedure with the works council is complete. A premature or defective filing triggers a dismissal ban that cannot be cured later – a position already established in a BAG ruling from March 19, 2026, and grounded in the European Mass Redundancy Directive, which the European Court of Justice confirmed in autumn 2025.
Another BAG decision, dated May 7, 2026, severely weakens digital delivery receipts. The Deutsche Post’s digital proof for registered mail no longer establishes a prima facie case that a letter reached the recipient. In the case at hand, a dismissal failed because the employer could not prove delivery of an invitation to a return-to-work meeting (betriebliches Eingliederungsmanagement). Employer-side lawyer Alexander Birkhahn warns that, alongside delivery issues, errors in social selection remain among the most common risks in operational redundancies.
Berlin court voids dentist-association dismissal
The Berlin Labour Court in July 2026 declared the dismissal of a department head at the dentists’ chamber pension fund ineffectiv. The employer had missed the two-week deadline for an extraordinary termination and failed to properly consult the staff council for an ordinary dismissal. The background: massive investment losses that allegedly created a pension shortfall of over €1 billion.
Novum Hospitality facing union accusations
In Mainz, a wave of roughly 50 dismissals at hotel group Novum Hospitality – including pregnant employees and apprentices – has drawn union fire. The NGG union suspects the company is trying to block the formation of a works council. Novum Hospitality denies the allegation.
Parental leave protection remains firm
Even where employers believe they have found a loophole, courts are closing ranks. The LAG Hamm ruled in November 2025 that the special dismissal protection during parental leave applies comprehensively – even when an employee requests the leave in several separate blocks.
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