A watered-down version of Germany’s new collective bargaining act will strike a better balance between fair wages and practical procurement, an expert has said.
Dr. Lars Hettich of Pinsent Masons was commenting after the Bundestag passed a scaled-back version of new collective bargaining legislation, resolving a conflict that has for months strained the relationship between the coalition government’s social policy ambitions and the realities of public procurement law.
The Federal Collective Agreement Compliance Act, passed by the Bundestag on 26 February, will require all companies seeking federal contracts to comply with the working conditions set out in collective bargaining agreements.
A draft bill (52 pages/528 KB PDF) was first introduced by the Federal Ministry of Labor and Social Affairs on 22 July 2025 to promote fair competition and prevent ‘wage dumping’ in publicly funded projects. However, the proposals drew criticism, particularly around concerns that they would introduce unnecessary bureaucratic burdens to the public contract procurement system.
Following a consultation, the core objective of the legislation remains intact: to prevent wage dumping, avoid placing collectively bound companies at a disadvantage and to tie the award of public funds more closely to the concept of "decent work".
However, the coalition government has rolled back on certain aspects that were originally included in the draft bill. Although the act still covers contractors and...
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