German Government Lowers Firing Barriers for Top Earners in 34-Point Reform Push
03.07.2026 - 04:53:12 | boerse-global.de
A sweeping overhaul of Germany’s labour, tax and pension rules has ignited a fierce backlash from unions, doctors and social welfare groups, even as business leaders cheer the coalition’s “long-overdue course correction.” Among the most contentious measures: employers will find it easier to dismiss workers earning about €15,000 a month or more.
The reform package, unveiled by the federal government, contains 34 separate initiatives. One provision relaxes dismissal protection for employees whose income exceeds 1.75 times the national contribution assessment ceiling — roughly €15,000 monthly. In such cases, courts would be able to dissolve the employment relationship by awarding severance, rather than requiring reinstatement. Critics within the coalition and beyond argue that salary alone should not determine a worker’s right to job security. The German Managerial Association (ULA) sent an open letter denouncing the plan, demanding instead a Danish-style social safety net for all workers.
At the same time, the government is extending the maximum duration of fixed-term contracts without a material reason. From now until the end of 2030, such contracts can run for up to 48 months and be renewed six times. Union leaders — including the heads of ver.di and IG Metall, as well as the DGB chairman — have labelled the change an “attack on employee rights” and a “fixed-term madness” that will not generate sustainable growth. Employers’ president Rainer Dulger countered that the economy urgently needs more flexibility.
The reform also targets Germany’s sick-leave rules. Telephonic medical certificates are to be scrapped, and employees will be required to present a doctor’s note from the very first day of illness. The German Association of General Practitioners called the move a “bureaucratic catastrophe” that will overload practices. The National Association of Statutory Health Insurance Physicians went further, calling it “sheer madness” and proposing a waiting day without pay instead. Even within the Social Democratic Party (SPD), voices are questioning the abolition of phone-based sick notes, seeing it as a step backward. Supporters hope the tighter rules will lower absence rates and improve oversight.
On taxation, the coalition promised average households relief of roughly €600 per year. Simultaneously, the so-called “rich tax” will rise: a 45 percent rate applies from €250,000 in annual income, and 47 percent from €280,000. The German Economic Institute and the Taxpayers’ Federation warn that gains may be wiped out by rising pension contributions, leaving many families with no real improvement in purchasing power. The opposition has dismissed the entire package as a “fake deal.”
Pension changes include raising the retirement age and abolishing early retirement after 45 contribution years. A capital-market component is to be introduced. Economists such as Gabriel Felbermayr call these steps forward-looking. IG Metall, however, has vowed to fight the removal of the 45-year rule. Social welfare organisations also note that long-promised reforms in long-term care are entirely absent from the package.
With doctors, unions, and parts of the coalition itself voicing objections, the government’s ambition to modernise the labour market faces an uncertain path through parliament.
