Home-Office Lunchtime Stroll Ruled a Work Accident as Germany Overhauls Labour Law and Taxes
03.07.2026 - 04:44:21 | boerse-global.de
A German court has decided that an employee who slipped while buying lunch during a home-office break was entitled to work-accident compensation, adding a new layer to the country’s fast-changing employment landscape. The ruling from the Hessian State Social Court, dated 28 April 2026, found that the trip to fetch food was closely tied to the insured activity because the worker was fully integrated into the company’s operational flow.
The decision arrives alongside a much broader package of 34 measures approved on Thursday by the coalition committee of the CDU, CSU and SPD. The reforms touch everything from fixed-term contracts and sick leave to tax brackets and the tax-free status of weekend bonuses.
Fixed-Term Contracts Stretch to Four Years
From now until the end of 2030, employers can hire new staff on fixed-term contracts of up to 48 months without needing a specific reason — doubling the previous 24-month limit. Up to six contract extensions are permitted within that period.
This relaxation is paired with a loosening of dismissal protection for high earners. Starting 1 January 2027, employees earning more than €15,000 a month — or around €177,450 in gross annual salary — will find it easier for their employer to end the relationship by offering a severance payment under new contracts. To encourage job mobility, severance pay will receive a tax privilege if the worker quickly moves into a new role.
Day-One Doctor’s Note Returns, Bureaucracy Slashed
The pandemic-era rule that allowed workers to call in sick without a medical certificate is being scrapped. From now, employees must present a doctor's note from the very first day of absence. The Association of General Practitioners has warned that the change will swamp surgeries with red tape.
At the same time, the coalition wants to cut company reporting obligations wholesale and eliminate one in four documentation duties. From 2027, fixed-term employment contracts will no longer have to be in writing.
Tax Relief for Families, Higher Top Rate for the Wealthy
The planned tax cuts carry a price tag of around €10 billion per year. From 1 January 2027, low and middle incomes will benefit from an increase in the basic allowance, child benefit and the employee lump-sum deduction. A family with two children and an annual income of €60,000 should save more than €600 a year from 2028.
The tax-free threshold for Sunday and public holiday bonuses rises from €50 to €75 per hour. To finance the package, the so-called rich tax is being raised: the top rate increases to 45 percent on income above €250,000 and to 47 percent above €280,000. The flat tax on mini-jobs jumps from 2 to 5 percent, while the tax deductibility of skilled-trade services falls from 20 to 15 percent.
Unions and Employers Clash Over Direction
The Federation of German Employers’ Associations (BDA) welcomed the changes as a long-overdue shift in course. IG Metall and the German Trade Union Federation (DGB) see it differently, labelling the package a dismantling of workers’ rights.
Economists are split. Researchers at the Institute for Employment Research (IAB) view the measures as creating positive incentives for job changes, while the German Institute for Economic Research (DIW) dismisses them as largely symbolic politics.
Home-Office Tax Deductions Face Tighter Scrutiny
Separate from the reform package, tax authorities are ramping up checks on the home-office flat-rate allowance. For the 2025 tax year, inspectors are increasingly demanding time logs or employer certificates to back claims for the daily €6 deduction.
