German Employers Brace for July 31 Deadline: Fines Up to €10 Million and New Court Rulings Reshape Workplace Law

With less than a week to go before the NIS2 registration deadline, German companies are scrambling to comply not only with stricter IT security requirements but also with a rapidly shifting landscape of labour court decisions. The Bundesarbeitsgericht (BAG), Germany’s top labour tribunal, has issued a string of rulings that tighten protections for employees on parental leave, raise the bar for sickness-based dismissals, and oblige workers to actively seek new jobs during litigation over their own firing.

Under the NIS2 directive, organisations that miss the 31 July 2026 registration cut-off risk administrative fines of up to €10 million or two percent of their global annual turnover. The penalty applies specifically to failures in IT security and, as a separate requirement, to shortcomings in digital time recording. Since the BAG’s landmark decision of 13 September 2022 (case reference 1 ABR 22/21), every employer must record the start, end, and duration of each employee’s daily work. A violation of that duty can now trigger the same six-figure-plus penalty as a data breach.

Parental- and Sick-Leave Protections Get Sharper Teeth

On 18 June 2026 (case 2 AZR 213/25), the BAG clarified that the special dismissal protection afforded by the Federal Parental Allowance and Parental Leave Act arises anew before each individual block of parental leave. The protection applies even when an employee requests several leave periods simultaneously. Employers who plan a termination must first check whether future parental-leave intervals have already been announced and whether the advance-notice window is running.

A separate BAG decision from 7 May 2026 (case 2 AZR 184/25) raises the evidentiary bar for sickness-related dismissals. The court held that a registered letter dropped into a mailbox — with only a scan of the delivery slip — does not constitute conclusive proof that an invitation to a betriebliches Eingliederungsmanagement (company reintegration meeting) actually arrived. Without a properly documented bEM process, most illness-based terminations are automatically considered socially unjustified.

O2 Telefónica Opens Voluntary Redundancy Programme

Against this legal backdrop, telecoms operator O2 Telefónica has begun cutting roughly 1,000 of its 6,820 positions — one in every six or seven jobs. In initial departments a voluntary scheme is running, offering mutual termination agreements and severance pay. Labour lawyers stress that employees are not obliged to sign such contracts; the amount of compensation is not fixed by law but depends on negotiation skills or existing social plans. Anyone who receives a redundancy notice still has a strict three-week window to file a dismissal-protection claim.

The cuts come as the BAG issued a separate warning for workers: A ruling under case number 5 AZR 177/23 states that employees who fail to apply for suitable jobs during their own dismissal-protection lawsuit risk losing their entitlement to continued wages (Annahmeverzugsentgelt). If an employer later names positions the applicant could have taken, a refusal may be deemed wilful, leading to a reduction in salary claims. The Baden-Württemberg regional labour court had previously taken a more lenient view.

Home Office and Sick Notes: No Automatic Rights

The Düsseldorf Labour Court (case 3 Ca 6587/25) has rejected the idea that years of working from home create a permanent entitlement to remote work. Employers may demand a return to the office as long as they exercise fair discretion and give a reasoned justification for the change.

Meanwhile, the federal government is preparing a reform that would require a medical certificate from the very first day of illness and abolish the option of a telephone sick note. Legal experts point out that existing contracts which only require a doctor’s note after three days will probably remain valid thanks to the principle of favouring the more favourable provision (Günstigkeitsprinzip).

Salary Payment: Strict Deadlines and a Warning for Employees

Wages must be paid by the first day of the following month at the latest. If an employer defaults, interest and damages for follow-up costs — such as return-debit charges — become due automatically. Labour advisers caution workers not to keep turning up for more than three unpaid months, because the risk of losing claims through the employer’s eventual insolvency increases sharply after that point.

Taken together, the recent court rulings and the looming NIS2 deadline are forcing HR departments and legal teams across Germany to update their checklists fast. The combination of stricter IT penalties, enhanced parental- and sick-leave protections, and clearer duties for employees during dismissal disputes means that both sides of the employment relationship face a more demanding environment — with substantial financial consequences for getting it wrong.

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