German Government Targets Sick-Note Rule and Electronic Time Tracking in Sweeping Labour Law Overhaul

Berlin is preparing a major shake-up of workplace regulations that would require employees to present a doctor’s note from the first day of illness, while simultaneously mandating electronic time recording across nearly all sectors. The proposals, contained in a draft bill dated 17 July, form part of a broader reform package that also tackles maximum working hours, fixed-term contracts and Sunday trading.

As German lawmakers push for stricter record?keeping on hours and sick leave, UK employers face their own documentation demands under health and safety law. A free Health & Safety Toolkit provides ready?to?use risk assessments, checklists and templates to help you meet your legal duties and protect your workforce. Download the free Health & Safety Toolkit

Economics Minister Reiche, who has called for a “hard restart” for Germany as a business location, is pushing the sick-note obligation as a standard legal requirement. Alongside cheaper energy and lower social security contributions, she argues the measure would curb absenteeism and boost productivity. The draft also envisages making it easier to dismiss high-earning employees and extending so-called “reason-free” fixed-term contracts to up to 48 months with six possible renewals.

Electronic clock-in becomes compulsory

Under the same draft, employers would be legally obliged to record the start, end and duration of working hours electronically. Companies with fewer than ten staff would receive transition periods of up to five years. At the same time, the compensation period for overtime — the window in which extra hours must be balanced by time off — would shrink from six months to four.

The move follows a failed first attempt on 18 June, when employer associations torpedoed a draft that relaxed daily working-time limits only for companies bound by collective agreements. Now the government is starting over. Chancellor Merz announced that a formal legislative proposal for reforming the Working Hours Act (Arbeitszeitgesetz) would be presented in autumn 2026. Labour Minister Bas has been tasked with replacing the rigid daily maximum working time with a weekly limit, as agreed in the coalition treaty.

Mercedes pushes for longer hours, unions push back

Against this background, Mercedes production chief Michael Schiebe is demanding longer shifts at German plants to protect competitiveness. He points to the carmaker’s factory in Kecskemét, Hungary, where factor costs are around 70 percent lower than in Germany. “They work longer hours in Hungary, and sick leave is lower,” Schiebe said. Mercedes wants to extend weekly hours to 40 without full wage compensation, aiming to cut production costs by 10 percent by 2027. The Kecskemét plant, with capacity for 400,000 units, is already the group’s largest European production site.

Saxony’s state premier Kretschmer has voiced support for longer hours, and employers’ president Dr. Jörg Brückner argued bluntly that “the economic turnaround cannot be achieved with a 35-hour week.” Brückner noted that Germany’s average of roughly 1,300 annual working hours ranks last in the OECD, while the part-time rate has jumped from 16 percent in 2000 to 35 percent today.

But the push for regulatory compliance isn’t just a German story. British employers also face strict duties under the Health & Safety at Work Act 1974. A free toolkit provides nine tools including risk assessments, checklists and a director’s liability guide to help you stay compliant and avoid penalties. Get the free Health & Safety at Work Act 1974 Toolkit

Trade unions are digging in. IG Metall’s Baden-Württemberg chief Barbara Resch rejects material cuts or work-time extensions as a crisis response. Since 2019, she said, around 75,000 jobs have been cut in the metal and electrical industries, most of them in automotive. Ahead of autumn collective bargaining, IG Metall plans to make job security the central demand. DGB regional head Daniela Kolbe warned that longer hours would worsen the crisis rather than alleviate it.

Sunday bakeries and Bavaria’s resistance

The hospitality association Dehoga is pressing for further reforms in the service sector. One proposal would allow bakeries to open for up to eight hours on Sundays — a move that has already encountered opposition from Bavaria’s state government. The broader package, if enacted, would represent the most significant overhaul of German labour law in years, touching everything from sick notes to time recording and the balance between flexibility and worker protection.

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