At a Glance

• The German Coalition Committee has agreed to a draft package of political resolutions, including several that would impact employment law.
• Proposed changes would amend the separation process for highly compensated employees, revise the law governing fixed-term employment, create preferential tax treatment for certain severance payments, abolish sick notes issued by telephone, and require the provision of a certificate of incapacity for work from the first day of illness, among others.

The German Federal Government, formed by the CDU/CSU (conservative political party union) and SPD (social democratic political party), has agreed in the Coalition Committee on a comprehensive “Program for Growth and Employment.” The package of measures includes a number of employment-law initiatives that employers should monitor closely over the coming months. Of particular relevance are new options for terminating employment relationships with high earners, the planned expansion of fixed-term employment without objective grounds, and changes relating to the certificate of incapacity for work.

Below is an initial overview of the key employment-law proposals and assessment of their practical significance for companies, should the program be enacted in this form:

1. Easier Separation from Top Earners: From Protection against Dismissal to Protection by Severance

The planned introduction of a “dissolution of the employment relationship with a severance option” for top earners would...

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