Germany's Employment Law Reset: New Court Ruling on References, Minijobber Changes, and Evonik's Job Cuts Reshape the Landscape

A recent decision by Germany's Federal Labour Court (BAG) is forcing employers to take work-reference obligations more seriously. In a ruling issued on May 7, 2026, the court clarified that if a severance agreement includes a clause requiring the employer to accept an employee-drafted reference, that commitment is fully enforceable. The employer can deviate only if there are compelling reasons—but is not required to issue a false document. Violations can trigger fines of up to €25,000.

The ruling lands at a time when German companies are navigating a complex web of termination rules, severance practices, and benefit adjustments. The landscape is shifting rapidly, as illustrated by a wave of new court decisions and legislative changes.

Termination Basics: Paper Still Rules, Deadlines Are Absolute

Any dismissal in Germany must be delivered on paper with a wet-ink signature—email or digital formats do not satisfy the legal Schriftform requirement. Employees then have exactly three weeks from receipt to file a wrongful-dismissal claim. The general protection of the Kündigungsschutzgesetz applies only after six months of employment and in companies with more than ten staff.

For extraordinary (summary) dismissals, the timeline is even tighter. In December 2025, the Baden-Württemberg Regional Labour Court ruled that the two-week filing deadline under § 626 (2) BGB is mandatory. A delay cannot be remedied by applying to the Integration Office—the exception is only for workers with a recognized severe disability. The case is now under appeal at the Federal Labour Court.

Severance Is Not Automatic, and Severance Agreements Carry Risks

A legal right to severance exists only in narrow circumstances—for instance, under § 1a KSchG for operational dismissals, or through social plans. A rough rule of thumb is half a month's gross salary per year of service. But experts warn against rushing. Signing a severance agreement (Aufhebungsvertrag) without a good reason triggers a twelve-week blocking period for unemployment benefits from the Federal Employment Agency. Employees should demand a cooling-off period; challenging the agreement later is possible only in cases of gross exploitation.

Evonik's Massive Restructuring: A Real-World Test

The chemical giant Evonik is cutting roughly 1,850 positions in Essen as part of its "Evonik Tailor Made" program, which runs through the end of 2026 and aims to save €400 million annually. Yet thanks to an agreement with the IGBCE union, no compulsory operational dismissals at German sites are allowed until 2032. Any severance in this context will come primarily from social plans or voluntary severance agreements, not from automatic statutory entitlements.

Minijobbers Get a One-Time Pension Opt-In from July 2026

Effective July 1, 2026, a significant change takes effect for Germany's 7.5 million minijob workers. They can once—and only once—revoke their exemption from compulsory pension insurance. Doing so secures entitlements to disability pensions and rehabilitation benefits. Employers must update their payroll systems in time to handle the opt-ins.

Legal Tech Steps In

As employment law becomes more intricate, startups are moving into the advisory space. nu:legal recently secured €1.3 million in funding. The company uses AI for routine legal tasks while keeping specialized attorneys on complex cases such as wrongful-dismissal proceedings.

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