Germany’s Labour Law Overhaul Pushes Fixed-Term Contracts to Four Years as Public Backlash Grows
Published on 07/14/2026 at 23:25 | Redaktion boerse-global.de
More than half of Germans oppose the centrepiece of a sweeping labour-law reform now taking shape in Berlin: the extension of fixed-term employment contracts without specific justification from two to four years. According to government plans, such contracts could be renewed up to six times, with the special arrangement valid until the end of 2030.
The reform, prepared by the federal government, bundles several changes that affect minimum wages, temporary work, minijobs and procedural rights. The minimum wage was already raised at the start of the year—to €13.90 an hour from January 2026 and slated to climb to €14.60 in January 2027. Workers in temporary employment will see stepped increases: €14.96 from July, €15.33 from September and €15.87 from April 2027.
Tensions are surfacing in specific sectors. In mid-July, trade union ver.di and cinema operator Cinemaxx met for a third round of collective bargaining. The company offered a starting pay of just ten cents above the minimum wage; the union is demanding roughly €15.50 an hour. In retail, talks have been suspended in several federal states, including Bavaria and Berlin-Brandenburg. Retail associations cite a grim outlook: about 65% of traders expect revenues to fall in 2026. They warn that rising labour costs are piling pressure on margins and are calling for ancillary wage costs to be capped at 40%. Business groups stress that profits are a precondition for investment, but note that profit ratios recently hit a low point.
Minijobs Face Higher Levies and a Push towards Social Insurance
The threshold for minijobs (low-paid mini-jobs) is indexed to the minimum wage. In 2026 it stands at €603 a month (€7,236 a year). The midijob band currently runs up to €2,000 in monthly earnings; some government drafts also mention a ceiling of €633 for 2026. A key proposal would raise the employer’s flat-rate tax from 2% to 5%. Another plan under discussion would make pension insurance mandatory for minijob holders.
Researchers at the Institute for Employment Research (IAB) estimate the extra cost for businesses at roughly €18 a month per minijob. Supporters of the changes hope the state will gain between €500 million and €1 billion in additional revenue. Critics counter that the reform creates little incentive to switch into full social insurance jobs. A final decision is expected in the autumn.
Administrative Changes Aim to Cut Paperwork but Tighten Some Deadlines
Alongside the contract-extension provisions, several procedural rules are being altered. From now on, employees must present a doctor’s note on the first day of illness. In return, the deadline for filing discrimination claims under the General Equal Treatment Act (AGG) is lengthened from two to four months. A bureaucratic simplification arrives in January 2027: the requirement for a written form when concluding fixed-term contracts will be dropped entirely. The package faces a divided public—surveys show that more than half of those asked reject the broadened opportunities for fixed-term employment.
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