German Employment Law

After the German Election: What’s on the Horizon for Employers under “Jamaica”?

After Germany’s general election, a “Jamaica” alliance could soon rule Germany, being mathematically possible and, after the Social democrats SPD announced their return to opposition, only viable option not involving the right-wing AfD.

What’s in a Name?

A “Jamaica” alliance is named after the colors of the parties involved: Chancellor Angela Merkel’s conservative Christian Democratic Union/Christian Social Union (CDU/CSU) (black), the Free Democratic Party FDP (yellow) and the Green Party (green). The term likely also refers to the “exotic” nature of such an alliance (at least from a German point of view), even though there have been “Jamaica” governments on state level before. Such coalition certainly will face challenges to find a common ground – and a coalition agreement.

We provide a quick summary for employers of potential changes in employment law under “Jamaica”:

Working Time

Currently, the German Working Time Act provides for a rather strict working time regime: Working time must, in principle, not exceed 8 hours per work day. This may be extended to up to 10 hours per work day, however, only if it does not exceed 8 hours per work day on the average. Only under certain conditions, collective bargaining agreements may provide for further extensions. Also, at the end of a work day, there must be an uninterrupted rest period of 11 hours. If taken seriously, this causes problems especially when employees check e-mail or have calls in the evening at home.

CDU has announced to modernize the Working Time Act. Employer’s associations and unions shall have more leeway and be able to develop and agree on more flexible working time schemes. However, this shall not result in an increase of the maximum overall working time per week of 48 hours. Also, in addition to the already existing claim for part-time work, employees shall have the right to return to full time unilaterally after having reduced hours, creating an entitlement to limited part-time.

Like the CDU the FDP wishes to provide more flexibility to employers and employees. The Liberals plan to abolish the maximum working time of 8 respectively 10 hours per work day and the mandatory rest period of 11 hours. Instead, in line with European directives, a weekly maximum working time of 48 hours shall be implemented.

The Greens plan on extending employee rights as regards working time. Employees shall have a rather far-reaching right to choose their working time between 30 and 40 hours per week. Within this range, as a rule, employees shall be entitled to determine their own working time scope, however, observing certain notice periods. Employers may reject a reduction or increase in hours in case of urgent operational reasons. Also, employees that have reduced hours shall be entitled to return to full time. Moreover, employees working on bank holidays or Sundays shall be entitled to receive mandatory supplement payments.

Minimum Wage

US employers are used to (increasing) minimum wage legislation. In Germany, a minimum wage has only been introduced in 2015 with transition period until the end of 2016. Since January 1, 2017, the minimum wage is set at EUR 8.84 gross per hour.

CDU and traditionally business-friendly FDP want to cut back on red tape and form-filling for employers related to the minimum wage. Both parties criticize the provisions of the Minimum Wage Act, in particular the extensive documentation obligations for employers, as being too bureaucratic.

The Greens are in favour of extending industry-specific minimum wage levels above the statutory minimum wage. When determining the minimum wage levels, protection of employees against wage dumping, safeguarding employment and fair competition shall be considered.

Digitalization and Mobile Working

German employment law is not exactly being considered to be up-to-speed with the digitalization of work. For example, despite several attempts, a comprehensive legislation on employee data protection is missing, so are specific provisions on mobile and remote work.

While the CDU’s program does not contain any specifics on the effects of digitalization on employment, the FDP plans to implement modern rules for mobile working, cut back red tape for remote working/home office and to abolish outdated workplace regulations.

The Greens stress the necessity of up-to-date occupational safety regulations and effective employee data protection. Requirements of today’s modern working world are to be aligned with the employees’ needs.

Fixed-Term Employment

Under current legislation, fixed-term employment is lawful only where there is cause (e.g. temporary need, substitute employment during parental leave) or without cause only for a total period of up to 2 years, while contracts for a shorter period can be extended up to three times. In essence, companies can test new hires for a period of up to 2 years.

The Greens plan on abolishing fixed-term employment without justification. So any fixed-term employment would require cause.

FDP does not plan to implement any further restrictions for-fixed term employment, while the CDU’s program only states fixed-term employment may not be abused by employers to simply replace unlimited employment.

Agency Work

Agency work is already strictly regulated in Germany. Just recently a reform of the Act on Temporary Agency Work came into effect, limiting the maximum hire period of agency workers to 18 months and providing for equal pay for agency workers after 9 months.

The FDP is against any further regulation of agency work. The conservative CDU’s program refers to the recent changes in German law on agency work and does not provide for any stricter regulation.

The Greens advocate even further regulation of agency work, including entitlement to equal pay for agency workers from day 1.

Collective Bargaining

The CDU’s program provides for more flexibility and leeway for the social partners – employers and employers’ associations on the one side, unions and works councils on the other side. Statutory provisions shall be amended accordingly, so there is more freedom for agreements on company and operational level.

In order to safeguard working conditions for employees, the Greens plan on implementation of a simplified procedure to declare collective bargaining agreements universally applicable and binding. Consequently, such collective bargaining agreements would apply even though neither the employer is member of an employer’s association nor the employee is union member.

FDP’s program does not contain any specifics, but the party, traditionally being liberal and business-friendly, is likely to oppose extension of collective bargaining.

So What’s Next?

It remains to be seen how the negotiations proceed in the coming weeks (and potentially months). Depending on the assertiveness of each of the three potential coalition partners, the coalition agreement and the legislative period will impact employers in Germany. Though this will likely not be comparable to the revolution of the French employment law under Macron, significant changes to German employment law appear to be likely in the very near future.

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