Germany’s Public Sector Job Shield: Workers Over 40 With 15 Years Are Nearly Impossible to Fire
19.06.2026 - 05:02:27 | boerse-global.de
For public sector employees in western Germany, the TVöD (collective wage agreement for the public service) creates an extraordinary barrier to dismissal: workers aged 40 or older who have been employed for more than 15 years are essentially unfireable. When public employers do want to part ways, they often must resort to complex mutual termination agreements.
This job protection exists alongside a patchwork of rules on severance pay that differs sharply from private-sector practice. In Germany’s public administration, no general legal right to severance exists. Legal experts point out that payments are permitted only when anchored in a social plan, a collective agreement, or a court settlement.
The contrast with Switzerland is instructive. On Thursday, the Swiss Council of States voted 21 to 13 to ban severance payments for top executives of the federal administration and state-owned enterprises. Previously, departures could include payouts of up to one year’s salary. The trigger was a 340,000 Swiss franc severance for a police department head in 2024. Annual totals varied wildly: around 49,000 francs in 2022 but over 1.6 million francs in 2021. The lower house still has to approve the measure.
In Germany’s private sector, the Protection Against Unfair Dismissal Act provides a standard severance of 0.5 monthly earnings per year of service, but only if the employer offers it and the employee lets the three-week claim deadline lapse. Civil servants, however, have no claim to classic severance; they may receive transitional payments under the Civil Service Pensions Act only under specific conditions, such as for temporary soldiers.
Pressure to reform public-sector pensions is building. Federal Labour Minister Bärbel Bas has called for including civil servants in the statutory pension insurance system. The German Economic Institute (IW) in Cologne estimates that civil servants would face monthly losses of 600 to 800 euros. The state would see short-term additional costs of up to 20 billion euros per year.
The Interior Ministry is drafting a reform of civil service pay to comply with Federal Constitutional Court rulings. A draft law foresees nearly 7 billion euros in extra costs for 2026 and 2027. Demographic shifts and a skilled-labour shortage are driving the overhaul. As of March 2026, some 67,000 positions in public administration and social security were unfilled, including about 700 leadership roles.
Some public-sector employers are already pushing for job security pacts. The public broadcaster MDR concluded an agreement in late May 2026 that rules out operational dismissals until October 2026. The context: budget deficits caused by delayed broadcasting-fee increases, with a 160-million-euro savings programme running through 2028.
For senior managers considering exit packages, experts urge caution about lump-sum payments. Older executives risk sacrificing substantial pension entitlements. More advantageous are staged transition arrangements that extend salary payments for six to 18 months or early-retirement schemes starting at age 55. These models often yield higher net benefits than one-time capital payouts, which also come with steep tax burdens.
