Germany’s Top Labour Court Resets Parental-Leave Shield Before Each Leave Period

Federal Labour Court rules dismissal protection reactivates before each leave segment; wages due by month-end; partial sick notes from 2027.

A landmark ruling from the Federal Labour Court (BAG) on 18 June 2026 has significantly strengthened dismissal protection for employees taking parental leave. The judges decided that the special protection under the Federal Parental Allowance and Parental Leave Act (BEEG) is reactivated before each individual leave segment – even when several segments were filed in a single application.

Employers now face a stricter duty to check whether parental leave has already been requested for future periods before issuing any notice. If a dismissal is served within the eight-week “pre-effect” window that precedes a leave segment, it is automatically void.

The ruling also clarified what happens when a dismissal is struck down in court: the employer must back-pay wages for the intervening period. That claim can be reduced, however, if the employee wilfully fails to take on a reasonable alternative job. The BAG stressed that workers should document any job applications made when there is a realistic prospect of success.

Payment delays: a three-month red line

Separate rules under Section 614 of the German Civil Code (BGB) set a clear deadline for salary: wages are due on the first day of the following month unless a contract states otherwise. If an employer misses that date, late-payment interest and, in some cases, compensation claims automatically arise.

Labour-law experts advise staff not to work indefinitely without pay. The recommended limit is three months. Anyone who waits longer runs a significant financial risk – especially if the employer later becomes insolvent, because the statutory insolvency benefit is time-limited.

One point the courts have made explicit: salary is not a company secret. The Regional Labour Court of Mecklenburg-Western Pomerania confirmed that colleagues are generally allowed to discuss their pay with one another.

Home office: no permanent right without a contract

The Düsseldorf Labour Court ruled that without a contractual agreement or a works council settlement, employees have no lasting entitlement to work from home. At the same time, an employer cannot arbitrarily withdraw a previously granted home-office arrangement. Any move to require on-site presence must be justified with concrete reasons showing that it genuinely improves operations.

Sick pay: new rules and a 2027 change

A decision by the Regional Social Court of Lower Saxony-Bremen in early 2025 established that signing an employment contract alone does not create a claim to sick pay if the employee never actually started working. The right to continued wage payment during illness only arises after a four-week waiting period.

From 1 January 2027, a significant reform takes effect: partial sick notes will be introduced in three levels – 25, 50 and 75 percent of the usual working hours – provided both the doctor and the employer agree. The maximum benefit period of 78 weeks remains unchanged. The underlying law, part of the package to stabilise the statutory health-insurance contribution rates, was passed on 10 July 2026.

Job cuts at major employers

Restructuring is under way at several large German companies. O2 Telefónica plans to eliminate more than 1,000 positions – roughly every sixth or seventh role. The firm is relying on voluntary programmes. Legal experts advise affected employees not to sign severance agreements without scrutiny and to negotiate individual compensation amounts.

At Volkswagen and Mercedes-Benz the situation is intensifying. Volkswagen is the subject of speculation about massive job losses and possible plant closures in Hannover, Emden or Zwickau. The works council has sharply criticised CEO Oliver Blume for failing to share information. Mercedes-Benz is reportedly considering cost-saving measures that include ending home-office arrangements and potentially increasing the weekly working hours. The company is expected to publish its quarterly results on 28 July 2026.