German Labour Law Overhaul Draws Fire as Fixed-Term Contracts Double and Sick Note Rules Tighten

Germany's coalition approves sweeping labour-law changes, including doubling fixed-term contracts to 4 years, mandatory sick notes from day one, and minimum wage hikes, drawing backlash from unions and 54% of public.

A sweeping package of labour-law changes approved by Germany's coalition government has ignited fierce opposition from unions, church groups, and more than half the public. The reforms, due to take effect mostly from January 2027, include doubling the maximum duration of fixed-term contracts without a specific reason, making sick notes mandatory from day one, and raising the minimum wage in two steps.

The coalition committee had already agreed on 2 July to extend the cap for so-called sachgrundlose Befristung – fixed-term employment without a substantive justification – from two years to four years for new hires until the end of 2030. The number of possible extensions rises simultaneously from three to six. An employer could, for example, offer six consecutive eight-month contracts. The previous ban on rehiring a former employee on such terms is also to be loosened or scrapped entirely.

A YouGov poll published on Wednesday found 54 percent of respondents opposed to the reform, with just 26 percent in favour. Critics warn the changes will fuel precarious employment and undermine social-security-covered permanent positions.

Wider package: sick notes, minimum wage, temp work

Among the most controversial measures is the reintroduction of a mandatory medical certificate from the first day of illness. The current option of phone-based sick notes (telefonische Krankschreibung) will be abolished. Medical associations have warned this could trigger up to 30 million extra visits to doctors’ surgeries each year, overwhelming practices.

The statutory minimum wage, already scheduled to rise to €13.90 in January 2026, will increase further to €14.60 at the start of 2027. For temporary agency workers, the minimum hourly rates will climb in stages: €14.96 from July 2026, €15.33 from September 2026, and €15.87 from April 2027.

A separate reform – the Job-to-Job-Erprobung (job-to-job trial period) – was approved by the federal cabinet on Wednesday. Employees will be able to work for a new employer for up to four weeks (six in exceptional cases) without resigning from their current job. Labour Minister Bärbel Bas said the aim is to accelerate the movement of skilled workers between sectors. The legislative process for this measure is to be completed by the end of November 2026.

Legal protections and high earners

The reform also extends the deadline for filing discrimination claims under the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz) from two months to four months. For high earners with an annual income above €177,450, statutory protection against dismissal will be replaced by a severance-pay arrangement.

On the digitalisation front, the requirement for a written form for fixed-term contracts will be dropped from January 2027.

Reaction from unions and employers

Frank Werneke, head of the Verdi trade union, and DGB chairwoman Yasmin Fahimi both reject the plans. The church labour service of the Bavarian Evangelical Lutheran Church warned on Tuesday that a four-year period with up to six renewals creates "a long phase of uncertainty" for workers.

Employers' associations, by contrast, welcomed the signals of greater flexibility. Organisations such as the German Association of General Practitioners and the Arbeiterwohlfahrt (AWO) welfare association described parts of the package as purely symbolic or organisationally disastrous.

Scale of fixed-term employment

Data from the Institute for Employment Research (IAB) shows that in 2025 one in four new hires was on a fixed-term contract – and 37 percent among under-25s. The Hans Böckler Foundation put the share at nearly 38 percent. While experts acknowledge the additional flexibility for companies, they fear the erosion of permanent, social-security-covered jobs.

Alongside the labour changes, the coalition plans to raise the earnings threshold for mini-jobs (Minijobs) to an expected €633, while increasing the employer flat-rate social contribution from 2 percent to 5 percent.