German Court Strengthens Parental Leave Protection as Pension Commission Pushes Later Retirement
23.06.2026 - 09:44:38 | boerse-global.de
A wave of legal and regulatory changes is reshaping the landscape for German employees and employers. At the center of this shift: a key ruling from the Federal Labor Court (BAG) that significantly bolsters job security for parents taking multi-part parental leave, even as a government commission recommends making early retirement harder to reach.
Stronger Protection for Parents During Parental Leave
In a decision dated June 18 (case number 2 AZR 213/25), the BAG clarified that the special dismissal protection applies separately to each individual period of parental leave. The protection begins eight weeks before the announced start of each segment – even if the employee registered all periods in a single prior application.
Crucially, the court stated that this protection also applies during an agreed probationary period. Employers who want to dismiss a worker while on parental leave must first obtain approval from the state labor authority. Without it, an ordinary dismissal is invalid; exceptions exist only in cases of insolvency or full business closure.
Pension Commission Seeks Later Exit Age
On Monday, the government pension commission released a 76-page report containing 33 reform proposals. A central recommendation: raising the minimum age for entering the Altersteilzeit (partial retirement) scheme from 55 to 58, and scrapping the popular "block model" entirely. The commission also proposes lifting the age for a pension without deductions for those with very long insurance histories from 63 to 64.
Beginning in 2041, the retirement age would be linked to statistical life expectancy. For today's new labor-market entrants, that could mean retiring at age 70.
These proposals come as a DAK Health Report shows that 52% of employees aged 50 and older want to retire early. The commission's recommendations, if implemented, would make that far more difficult.
Resigning Without a Job Offer Carries Heavy Penalties
Workers who quit their job without a new one lined up face financial consequences. The Higher Social Court of North Rhine-Westphalia confirmed this in a ruling dated February 19 (case number L 9 AL 65/25), imposing a 12-week waiting period for unemployment benefits.
The case involved an employee who resigned citing subjective under-challenge and lack of integration. The court ruled that a mere feeling of having no prospects does not constitute a "good reason" under the law. In addition, the total duration of unemployment benefit entitlement is shortened by the waiting period.
Mass Dismissals: No Room for Procedural Error
Employers planning large-scale layoffs must follow strict procedures. The BAG ruled on April 1 (case number 6 AZR 157/22) that errors in the mass-dismissal notification process render the dismissals permanently invalid.
The notification to the Federal Employment Agency must be submitted only after the consultation procedure with the works council has concluded. Subsequent corrections cannot fix this procedural mistake.
Tax Changes for Severance Payments Shift Burden to Employees
Since the start of 2025, employees receiving severance must take action themselves. The "fünftel Regelung" (one-fifth rule) that reduces tax progression is no longer automatically applied by the employer.
Recipients must claim the tax relief on their income tax return. The severance is initially taxed as regular income – with a temporarily higher deduction. The tax relief comes only later, when the tax office issues a refund.
AI in Social Selection: Machine Calculates, Human Decides
Artificial intelligence is entering German HR departments, but with clear limits. AI tools may be used to support the social selection process during layoffs – for example, evaluating seniority, maintenance obligations, or age.
The final decision, however, must be made by a natural person. Works councils have extensive co-determination rights. If an employee files a unfair dismissal claim, the employer must fully disclose the logic and parameters of the AI system used.
Anyone who receives a dismissal notice should act quickly: the deadline for filing a claim with the labor court is three weeks.
