Germany Moves to Weekly Working Limit as Merz Presses Ahead with Labour Reform

Chancellor Merz pushes weekly work caps over daily limits; fixed-term contracts extended to four years. Unions oppose, while ministers cite competitiveness.

A political battle is intensifying over Germany’s working-time rules, with Chancellor Friedrich Merz backing a system that lets non-union employers schedule staff across the week rather than capping each day. The plan, confirmed at Merz’s summer press conference on 16 July, would replace the current daily maximum with a weekly upper limit. Labour Minister Bärbel Bas is expected to present a draft bill in autumn, giving companies without collective agreements more flexibility to cope with fluctuating demand.

The Chancellor’s stance directly contradicts a June draft from his own labour ministry, which tied any flexibility to the existence of industry-wide collective bargains. Industry associations such as Dehoga, the hotel and restaurant federation, have long pushed for this opening, arguing it helps them adjust to shifting customer loads.

Alongside the working-time overhaul, the coalition committee agreed at the start of July to rewrite fixed-term contract rules. From now, new hires can be offered up to four years of fixed-term employment without giving a specific reason — double the previous two-year limit. The number of possible extensions jumps from three to six. This special provision is limited until the end of 2030. At the same time, the ban on rehiring someone who previously worked for the same company has been lifted. The requirement for paper-based employment contracts will disappear altogether on 1 January 2027.

Legal experts from a commercial law firm pointed out in mid-July further deregulation: dismissals for high earners will become easier. The government is also discussing a general requirement for a doctor’s note from the first day of illness — a measure lawyers say could deter short-term absences but only if paired with professional sick-leave management.

Federal Economics Minister Katherina Reiche, speaking on 17 July, defended the package as essential for Germany’s competitiveness. “We have lost ground internationally and can no longer claim premium-location status,” she said. She called for longer hours, the sick-note rule, lower social contributions and relief on energy costs. Reiche described the current reforms as a “basic version” and demanded further steps, such as building cheaper overhead power lines instead of expensive underground cables and cutting subsidies for heating systems.

The unions are pushing back hard. The German Federation of Trade Unions rejects any extension of daily hours. Internal surveys show 72 percent of employees prefer a strict eight-hour day. Barbara Resch, chair of IG Metall, explicitly opposed longer hours in the automotive industry during a statement on 17 July, linking her position to the upcoming autumn wage negotiations. “The priority is securing jobs,” she said. Since 2019, about 75,000 positions have disappeared in Baden-Württemberg’s metal and electrical sectors alone.

Public opinion is divided, but the fixed-term expansion draws clear opposition. A YouGov poll found 54 percent of respondents against extending the unlimited fixed-term period, with only 26 percent in favour.