Germany’s New Coalition Deal Scraps Phone Sick Notes, Raises Surcharge on Top Earners
02.07.2026 - 18:15:15 | boerse-global.de
Employees in Germany will need to see a doctor in person from the first day of illness, ending the pandemic-era practice of phone-based sick notes. The change is one of 34 measures in a reform package agreed Thursday by the leadership of the centre-right Union and centre-left SPD.
Health Minister Warken defended the move as a necessary step to curb absenteeism. The German Association of General Practitioners reacted angrily, warning that a mandatory doctor’s certificate on day one will be nearly impossible to manage organisationally.
Tax relief for families, higher rates for high earners
Starting in 2027, private households will receive roughly €10 billion in annual income-tax relief, fully phased in by 2028. The package raises basic and child allowances, lifts the standard employee deduction, and increases child benefit to €272 per month by 2028. A family of four with a gross annual income of €60,000 will save more than €600 a year once the changes take full effect.
To finance the relief, the government sharpens the so-called rich tax. Incomes above €250,000 will face a 45% rate; above €280,000, 47%. The top marginal rate remains 42%. The flat tax on mini-jobs climbs from 2% to 5%. Meanwhile, the craftsman bonus shrinks: only 15% of costs will be deductible, with a maximum saving of €900.
Labour market flexibility expands — with a trade-off for Sunday premiums
The package gives employers more room to manoeuvre. Fixed-term contracts without a concrete reason can now run up to 48 months, with as many as six renewals. That rule applies to new hires until the end of 2030. High earners — those above 1.75 times the contribution assessment ceiling — can be dismissed more easily against a severance payment.
In exchange, Sunday and public-holiday bonuses of up to €75 per hour become tax-free, provided they are regulated by collective agreement. Unions DGB and IG Metall gave the plan a mixed review: they reject the labour-market flexibilisations but welcome the tax cuts for lower-income groups.
Red tape slashed, strategic sectors named
The coalition intends to scrap one in four documentation obligations and largely eliminate existing reporting duties. On data protection, the government plans to use leeway under the GDPR to benefit small and medium-sized enterprises. A new data code is under consideration.
The reform designates automotive, chemicals, pharmaceuticals, clean tech, artificial intelligence, machinery, semiconductor production and battery technology as strategic future industries. The Deutschlandfonds will be expanded to channel additional investment. In housing, a new state-owned housing company will be created, while the law will explicitly rule out the socialisation of private housing firms.
Economists and business groups split
Deutsche Bank CEO Sewing praised the accord as a positive signal. Economist Monika Schnitzer, a member of the German Council of Economic Experts, called it a step in the right direction. The Federation of German Industries (BDI) said the measures do not go far enough. The Association of German Chambers of Commerce (DIHK) warned that the higher rich tax burdens mid-sized companies.
Researchers from the Kiel Institute for the World Economy and DIW Berlin doubt the expected growth effects, describing them as modest. Council member Achim Truger criticised the package as a one-sided deregulation agenda.
