Germany: Employment and HR

Germany's proposed employment law reform would allow employers to terminate high earners earning above EUR 177,450 annually in exchange for court-determined severance, even after losing unfair dismissal litigation.

In our article on the German Federal Labor Court’s press release of 25 March 2026 (5 AZR 108/25), we discussed why blanket garden leave clauses may be unenforceable. The Court’s published reasoning now provides further guidance on drafting garden leave clauses, placing employees on garden leave in individual cases, and revoking company car benefits during the notice period.

Germany's coalition government has proposed sweeping reforms to employment law that could fundamentally reshape fixed-term contracts, dismissal protection, co-determination rights, and sick leave reporting. The measures aim to strengthen Germany's competitiveness amid technological change, demographic pressure, and international competition, offering employers significantly expanded flexibility while tightening certain compliance requirements.

Germany's AGG hopping practice involves individuals submitting fake job applications solely to provoke discriminatory rejections and claim compensation under the General Act on Equal Treatment. Courts have established high thresholds for proving abuse of rights, while employers face significant liability risks despite recent case law developments and pending legislative amendments that may further complicate the landscape.

The principle of equal pay between the sexes – i.e. the principle that equal wages must be paid for equal and equivalent work – has become increasingly enforceable by law.

With a recent shift in case law, Germany's Federal Labor Court has significantly lowered the threshold for asserting pay discrimination through the newly affirmed "pair comparison" approach.

The German Federal Labor Court issued two significant rulings in 2025 addressing the adjustment of occupational pension benefits, clarifying when flat-rate adjustment clauses can replace statutory reviews and how employers must exercise discretion in split pension formulas. These decisions have important implications for employers managing legacy pension commitments and determining benefit adjustments above social security contribution ceilings.

Germany's Pension Commission has proposed sweeping reforms that would fundamentally reshape retirement planning, workforce transitions, and employment structures. From dynamic retirement ages linked to life expectancy to the potential elimination of the senior part-time block model and minijobs, these recommendations carry profound implications for employers navigating restructuring, social plans, and pension commitments.

The German insurance market, with €1.9 trillion in assets, represents one of Europe's largest pools of institutional capital, with allocations to alternative investments growing from 23% to 30% over the past two years.

Germany's proposed employment law reform would allow employers to terminate high earners earning above EUR 177,450 annually in exchange for court-determined severance, even after losing unfair dismissal litigation.

Germany's coalition government has proposed sweeping reforms to employment law that could fundamentally reshape fixed-term contracts, dismissal protection, co-determination rights, and sick leave reporting. The measures aim to strengthen Germany's competitiveness amid technological change, demographic pressure, and international competition, offering employers significantly expanded flexibility while tightening certain compliance requirements.

Germany's coalition government has proposed sweeping reforms to employment law that would fundamentally alter fixed-term contracts, dismissal protections, employee co-determination, and sick leave requirements. The package aims to strengthen Germany's competitive position amid technological change and demographic pressures, offering employers expanded flexibility while maintaining worker protections. These initiatives signal the most significant restructuring of German labor law in years, with implications