Federal election 2021: what next for Germany’s labour law?
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Insa Ritta
Insa Ritter is an associate at vangard I Littler



Last Sunday, the citizens of Germany elected a new federal parliament and thus decided how the country will be shaped during the next four years. What the polls had indicated in the run-up to the election has now been confirmed: the Christian Democratic Union (CDU) lost ground, while the winners are the Social Democrats (SPD) and the Greens, with the former gaining the most votes and thus being called on to form a government.

This task is not an easy one due to the results of the election. The only possible two-party coalition would be a so-called grand coalition of SPD and CDU, which has governed Germany since 2013, albeit with the latter as the larger party. However, the SPD has already rejected such an alliance, which means that for the first time since the 1950s it is very likely that Germany will have a governing coalition of three parties.

At present, it is still unclear which three-party coalition will prevail. The most likely scenario is a so-called traffic light coalition (based on the parties' colours of red, yellow and green) involving the SPD, Liberals, and Greens. If such an alliance should not work, however, a so-called Jamaica alliance (black, yellow, green) – composed of CDU, Liberals, and Greens – would also be possible.

Based on the election programmes of the parties, we have analysed what the election results and possible coalitions may mean for the direction of German labour law over the next four years.

Fixed-term contracts and home working

Since both the Greens and the Liberals would be involved in both of the aforementioned coalitions, both parties have announced they will first perform exploratory talks to identify common ground, work out critical issues, and find possible solutions.

In labour law, the election programmes already show the two parties do not have much in common, but are instead characterised by their differences. First and foremost, the Greens would like to abolish fixed-term contracts without cause, thus making it much more difficult for employers to reduce the headcount of employees without a reason for dismissal after the maximum six-month probationary period has ended. Here, however, the Greens’ programme coincides with that of the SPD, while the Liberals have not addressed this topic.

Like the SPD, the Greens plan to introduce a right to work from home, so that employees – unlike before – would be granted an enforceable right to work from home permanently. The Liberals also included home-working rights in their election programme, but unlike the Greens, they do not want to impose an obligation on employers to offer home working, only a right to a discussion. According to this, the employer should examine the employee’s request for mobile work and a home office and discuss it with the employee. Here, a compromise between the political parties can be expected. Therefore, it is likely that the topic of the employee’s right to work from home will be regulated by law and that it will be more difficult for employers to refuse the employees’ requests in the future.

Gender pay gap and temporary workers

Both the Liberals and the Greens address the gender pay gap in their election programmes. The Liberals plan to impose an obligation on companies to identify and publish the gender pay gap, whereas the Greens only strive to stipulate an obligation for companies and collective-bargaining partners to monitor the gap. Due to this common ground, it is quite likely that companies will be held more accountable than before concerning the gender pay gap to identify and thus also address it.

The treatment of temporary workers and the regulations governing temporary employment are also included in the election programmes of both parties. The Greens, like the SPD, are committed to ensuring that temporary workers receive the same pay as the employees of the hiring company from day one. The equal-pay principle can be deviated from for the first nine months by collective agreement. The Liberals, on the other hand, would like to lift the current maximum period of 18 months for temporary workers to work for the same hirer. This once again shows the difference in perspective between the SPD and the Greens (more employee-friendly) and the Liberals (more employer-friendly).

Minimum wage and collective bargaining

There is also clear common ground between the Greens and SPD as to an increase in the minimum wage. Both parties are in favour of an increase to €12 per hour (currently it is €9.60 per hour). The Liberals do not have a corresponding demand.

If – contrary to expectations – a traffic light coalition does not form, the election programmes show that a Jamaica coalition would hardly have an easier time.

The Liberals would like to link the mini- and midi-job limits (currently €450 and €1,300 per month, respectively) to the statutory minimum wage, so that the maximum earnings limits would rise accordingly as the minimum wage increases. An increase in the mini-job limit to €550 per month is also envisaged in the CDU’s election programme, but without a link to the statutory minimum wage.

Another common ground between the Liberals and the CDU can also be seen in the reform of the Working Hours Act, in which the previously applicable maximum working hours of 10 hours a day are to be changed to maximum weekly working hours. In addition, the CDU prefer an increase in the maximum daily working hours for non-hazardous professions.

By contrast, the election programmes of the CDU and the Greens show little agreement. It is only concerning declarations of the general applicability of collective agreements (the effect of which is that the legal norms of a collective agreement also become binding for employees and employers not previously bound by collective agreements within the material and territorial scope of a collective agreement) that both parties agree on.

Overall, it becomes obvious that the election programmes of the SPD and the Greens, in particular, have some common ground. However, it seems likely that the Liberals will find sufficient overlaps with both parties for a governing coalition, especially since the points of agreement on labour law with the CDU do not appear to be broader. Therefore, it can be expected that labour law in Germany will become even more employee-friendly under a new government led by the SPD, and employers should keep a close eye on upcoming developments so they can adapt to changes in good time.