German Public Sector Workers Face September 2026 Deadline to Trade Bonus Pay for Extra Days Off

A narrow window is opening for public-sector employees who want to convert part of their annual bonus into extra holiday time. Under the "Zeit statt Geld" (Time instead of Money) scheme embedded in the collective agreement for the public service (TVöD), staff can swap up to three additional free days per calendar year — but only if they file a written request with their employer before 1 September 2026.

The trade-off works on a fixed formula: one extra day off equals roughly 5.4 percent of an individual’s yearly supplementary payment. Workers must then notify their employer of the specific day at least four weeks in advance. No financial penalty applies if illness or urgent operational needs prevent the planned time off. However, a crucial split exists between federal and municipal employees: unused swap days at the federal level are paid out, while in local government they simply expire without compensation.

Sick-Note Rule Tightening Looms for Everyone

Alongside the vacation-swap deadline, the federal government has pushed through a broader reform of labour law. A package passed in July 2026 introduces a requirement for a medical certificate from the first day of sickness — a sharp change from the current rule, which only demands a doctor’s note after the fourth day.

Tariff employees in the public sector would be directly affected by the amendment to the Entgeltfortzahlungsgesetz (Continued Pay Act). For civil servants, the transfer of the new rule remains undecided. The Federal Ministry of the Interior has signalled openness to adapting it, while unions such as the dbb and the GEW have voiced sharp criticism. Recent absentee figures highlight the scale of the issue: in federal administration the average number of sick days per year stood at 20.9, compared with 11.6 in Bavaria’s state administration.

Pay Adjustments and Constitutional Challenges

Simultaneously, the annual special payment is rising. For municipal staff it will now uniformly amount to 85 percent of the reference sum. Federal employees see a sliding scale of between 75 and 95 percent, depending on their pay grade. In Bavaria, the scheduled salary increase has been postponed to October 2026. Several proceedings concerning public-sector pay are pending before the Federal Constitutional Court, brought by cases from Bremen, Saarland and Schleswig-Holstein. A planned Federal Alimentation Act is still in the inter-ministerial coordination phase.

Digitalisation Bumps and Teacher Pay Ruling

Local-government leaders remain deeply sceptical about the federal government’s digitalisation strategy. A survey of roughly 1,300 mayors gave it an average rating of 3.7 out of a possible perfect score. Regulatory red tape, tight budgets and a shortage of skilled staff were named as the biggest obstacles.

Administrative hurdles also worry experts when it comes to implementing the new leave-swap and sick-note rules. Potential pitfalls include form errors, fixed-term contracts and the necessary involvement of works councils. The recording of working hours continues to be a focal point: as early as May 2025 the Federal Ministry of Labour stated that there were no legal arguments against full-scale time tracking.

Separately, the Federal Labour Court clarified the rules for teacher pay grades in a ruling dated 22 April 2026. Teachers who meet the requirements for civil?service status do not automatically receive a higher tariff classification. To claim a higher salary, all beamtenrechtliche conditions must be satisfied — including a formal assessment of probation and the availability of the post under budget law.

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