Labor and social law: What the new coalition agreement contains

On April 9, 2025, the CDU, CSU and SPD agreed on a coalition agreement. This will now be submitted to the various party committees for approval. The SPD will allow all members to vote on the agreement. The deadline for such approval is April 29, 2025.

On seven pages and in various other sub-sections, the coalition agreement provides the following information on labor and social affairs:

Labor law

• The coalition maintains the minimum wage. In future, however, such minimum wage is to be determined exclusively by the Minimum Wage Commission. It is to be based on wage developments and 60 percent of the gross median wage. In 2026, the minimum wage is intended to be 15 euros gross per hour. However, this is only one item on the agenda.
• The coalition is pursuing the goal of greater collective bargaining coverage. Therefore, it intends to enact a federal law on collective bargaining, which will apply at federal level to contract awards worth EUR 50,000 or more and to start-ups with innovative services worth EUR 100,000 or more in the first four years after their formation. The aim is to keep bureaucracy to a minimum.
• In order to achieve more flexibility in working hours, the possibility of weekly instead of daily maximum working hours is to be created in accordance with the European Working Time Directive. The specific structure is to be agreed with the social partners. It is questionable whether this will block implementation for employers not bound by collective agreements.
• The electronic recording of working hours is to be regulated in an unbureaucratic manner. There is to be a transitional period for small and medium-sized companies.
• Trust-based working time without time recording remains possible.
• Work on Sundays and public holidays in accordance with Art. 10 of the Working Hours Act will be extended to include the bakery trade.
• Rest period regulations, which have often been the focus of discussion in the past, are to be retained.
• Overtime pay in excess of the collectively agreed full-time working hours is exempt from tax. For collectively agreed full-time work, the minimum working week is 34 hours and for non-collectively agreed working hours 40 hours. Part-time employees who work more than their contractually agreed working hours can receive tax-privileged bonuses from their employer.
• Operational co-determination is being further developed. Online works council meetings and online works meetings are equivalent to face-to-face formats. In future, it will also be possible to hold works council elections online.
• Written form requirements, e.g., for fixed-term contracts, are to be reduced.
• The trade unions' right of access to companies is being extended to include digital access. This creates exactly the situation which has been recently rejected by the German Federal Labor Court (“BAG”).
• The use of AI in the company is to be regulated with regard to the handling of data.
• Membership of trade unions is made more attractive for members through tax incentives. 

More on the coalition agreement:  This is to change in tax law.

Labor market policy/social law

• In order to secure the skilled labor base, the rate of female employment is to be strengthened. The immigration of skilled workers is to be strengthened through the digitalization and centralization of processes and accelerated recognition of professional qualifications. A digital agency for the immigration of skilled workers, the so-called “Work-and-Stay Agency”, will be established. Barriers to refugees taking up employment will be removed and work bans reduced to a maximum of three months. This does not apply to asylum seekers from safe countries of origin.
• People with disabilities must be able to realize their right to full, effective and equal participation. The Disability Equality Act is to be further developed. The transition from a workshop for people with disabilities to the general labor market is to be strengthened.
• The unemployment payment (“Bürgergeld”) is to be replaced by basic income support for jobseekers. This would be guided by the principle of “encourage and challenge”.
• The focus is on occupational health and safety with high standards. In particular, the prevention of mental illness is to be strengthened.
• The coalition is committed to higher European occupational health and safety standards for professional drivers. In particular, the sanitary infrastructure at parking and rest areas on federal highways is to be expanded. 
• The working conditions for the courier, express mail and parcel service industry are to be improved. This is to be ensured through subcontractor liability.
• The hairdressing industry will be included in the catalog of industries in the Act to Combat Illegal Employment.
• Company pension schemes are also to be strengthened and promoted, particularly in small and medium-sized companies and among low earners.
• Pensioner employment will be encouraged. Anyone who reaches the statutory retirement age and continues to work voluntarily receives a tax-free portion of their salary of EUR 2,000 per month. In addition, the pre-employment ban under Art. 14 (2) of the Part-Time and Fixed-Term Employment Act no longer applies to employees who have reached the statutory retirement age, allowing them to continue working for a limited period of time.

Reducing bureaucracy is the top priority in all areas. Social data are to be collected only once for all branches of social insurance (“once-only principle”). The administrative processes for social benefits are to be digitalized. In future, it should be possible to form a new company within 24 hours.

Conclusion: positive concepts, but no major breakthrough

Although the coalition agreement contains some positive concepts, a real change in labor law is still a long time coming. The plans clearly bear a social democratic signature, even if the abolition of fixed-term contracts without objective grounds did not make it into the coalition agreement. It remains to be seen how these plans will actually be implemented.

We keep an eye on current developments in labor and social law and are happy to advise you and your company.