Sunday Hours Extended for Bakeries and Libraries in Germany’s Latest Labour Overhaul

Germany's coalition allows Sunday bakery openings, ends phone sick notes, raises top tax to 47%, and offers €10B relief. Unions criticize the pro-business package.

Germany’s ruling coalition has agreed to let bakeries, confectioneries and libraries open for up to eight hours on Sundays starting 1 January 2027, as part of a wider package that also tightens sick?leave rules and raises taxes on top earners. In return, employers must pay higher surcharges for Sunday and public?holiday work.

The Sunday-opening plan is one of several measures aimed at giving businesses more flexibility and customers more service options. But unions have sharply criticised the expansion of Sunday labour, arguing it erodes a hard?won protection.

Phone Sick Notes Scrapped From Day One

A far more controversial change targets workers directly: the so?called telephone sick note – a certificate issued without a physical visit – will be abolished. From now on, employees must present a doctor’s note as early as the first day of illness. The government also announced tougher penalties for physicians who issue medical certificates fraudulently.

At the same time, the coalition is loosening fixed?term contract rules. Employers can now offer up to 48 months of fixed?term employment without a specific reason and allow up to six contract renewals within that period. The change gives companies more planning security, according to the government.

Tax Relief and Higher Top Rates

Starting in 2027, taxpayers are set to receive about €10 billion in relief each year. The tax?free basic allowance will rise gradually to €12,900 by 2028, and child benefit will increase to €272 per child per month.

But the relief has a price: from an annual income of €250,000, a tax rate of 45 percent applies; above €280,000 the rate climbs to 47 percent. The changes effectively sharpen the so?called rich tax, hitting higher earners harder.

State Housing Company Planned, Expropriation Banned

To address the tight housing market, the coalition intends to create a state?owned housing company. At the same time, it will ban the expropriation of private housing firms at the state level – a clear setback for rent?control initiatives such as the one in Berlin.

Flexibility for Tariff?Bound Workplaces

Chancellor Merz announced that the government will shift from a daily to a weekly maximum working?time limit. That flexibilisation, however, will apply only in sectors covered by collective wage agreements. A formal law is expected by summer.

Opinion among economists remains divided. Some see the package as an overdue signal against Germany’s economic stagnation, while others warn it risks creating a social imbalance. Merz himself emphasised the goal of strengthening the country’s economy and injecting more dynamism into the labour market.