At a glance

• For employees hired up to 31 December 2030, fixed-term contracts without objective justification could be permitted for up to 48 months with up to six extensions. Re-hiring the same employee on a new fixed-term contract would also become permissible.
• The option of obtaining a sickness certificate by telephone is to be abolished, and employees would be required to present a medical certificate from the first day of absence.
• From 1 January 2027, a new termination mechanism involving a statutory severance payment option is proposed for employees earning more than 1.75 times the pension insurance contribution assessment ceiling
• Further, tax-advantaged premiums and severance payments are part of the reform.
• Practical implications remain subject to the legislative process.

On 2 July 2026, the German Federal Government announced a comprehensive package of measures combining labour market, tax and social policy initiatives. The employment law aspects of the package concern longer fixed-term employment without objective justification, stricter requirements for sickness certification, a relaxation of dismissal protection for high earners, and tax changes affecting Sunday and public holiday premiums as well as severance payments.

Fixed-term employment contracts

The Government intends to extend the maximum duration of fixed-term employment contracts without objective justification to 48 months for employees hired up to 31 December 2030, while also permitting up to six...

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