The German coalition agreement between the parties CDU/CSU and SPD – employment law aspects

The coalition agreement between the future governing parties has been reached. We show you which projects are planned in employment law and related social security law.

(1) Securing jobs and skilled workers

The recruitment of foreign skilled workers is to be facilitated above all by the creation of a digital agency for skilled worker immigration – the "work-and-stay agency". This agency will use a central IT platform to bundle all processes relating to employment migration and the recognition of professional and academic qualifications and reconcile them with the structures of the federal states. The structure and organization of the Central Office for Foreign Education (ZAB), which is responsible for the assessment of foreign educational qualifications in Germany, is to be adapted.

The number of vocational language courses on offer shall be increased. The ban keeping refugees from working shall be reduced to a maximum of three months, except for asylum seekers from safe countries of origin, Dublin cases or people who have clearly abused the right of asylum. 

(2) Social law (benefits and in particular bogus self-employment)

A reform of the welfare state is planned in which social legislation is to be modernized and made less bureaucratic. A commission is to develop recommendations on how, among other things, a massive simplification of the law, increased transparency and the consolidation of social benefits can be achieved. This also includes the possibility of flat-rate benefits. The aim is to provide more citizen-friendly services from a single source and to digitalize processes. Citizens and businesses in contact with social insurance and administrations should only have to enter their respective data once, which can then be used and processed by the federal, state and local authorities (once-only principle). In order to combat child poverty and relieve the burden on single parents, the introduction of a child card for all children entitled to child benefit is to be examined as part of a feasibility study.

The aim is to prevent bogus self-employment. To this end, the status determination procedure is to be made faster, more legally secure and more transparent in the interests of the self-employed, employees and companies, for example also in view of the effects of the Herrenberg verdict (German Federal Social Court, 28.06.2022, B 12 R 3/20 R). To speed things up, a fictitious approval is to be introduced, which is to be implemented as part of the reform of the old-age pension scheme for the self-employed. 

(3) Occupational safety

According to the coalition agreement, high standards are to continue to apply in the area of occupational health and safety. In particular, the prevention of mental illness is to be strengthened in the future. To this end, the effectiveness of all necessary occupational health and safety instruments is to be tested and data exchange made possible. The aim is to create good working conditions for physically demanding occupational groups. In particular, the aim is to advocate higher European occupational health and safety standards for professional drivers, which includes further expanding the sanitary infrastructure at parking and rest areas on federal highways with free access in the future. Furthermore, working conditions in the courier, express and parcel service sector are to be improved by introducing subcontractor liability in this area, comparable to subcontractor liability for social security contributions.

(4) Electronic European Social Security Card and A1 procedure

The coalition agreement provides for measures to improve the mobility and protection of workers within the EU:

• Electronic European Social Insurance Card (EUDI Wallet): The coalition agreement supports the introduction of an electronic European social security card with a digital EU identity (EUDI wallet) as required by European law. This is intended to promote employee mobility.
• Reform of the eDeclaration and A1 procedure: The posting declaration in the EU is to be technically facilitated by the reform of the eDeclaration. The aim is to bundle the posting declaration in the EU with the so-called A1 procedure. In future, everyone should also be able to carry their disability and pension cards and A1 certificates digitally and securely. 

These measures aim to improve the mobility of workers within the EU and at the same time facilitate access to social security benefits."

(5) Minimum wage 

"We stand by the statutory minimum wage", according to the new coalition agreement between the CDU/CSU and SPD. The statutory minimum wage in Germany currently stands at EUR 12.82 per hour. The aim of the grand coalition is to raise this to EUR 15.00 by 2026.

However, the minimum wage level will continue to be determined by an independent minimum wage commission. This commission is made up of economic experts and representatives of employers and employees.

For many employees, the increase in the minimum wage primarily means security in terms of fair wages and social security. Employers, on the other hand, are faced with the challenge of bearing the higher wages and the associated higher social security contributions. This can lead to a considerable financial burden.

Companies not only have to deal with the economic burdens resulting from the increase in the statutory minimum wage, but also with the issue of fair wage distribution in general. This entails the risk that wage costs will be reduced through redundancies or that the increased personnel costs will be passed on to consumers through price increases.

It remains to be seen whether the minimum wage will actually be raised to EUR 15.00 gross per hour. As before, the Minimum Wage Commission will carry out a comprehensive assessment, taking into account both wage developments and the national gross median wage. The aim is for the statutory minimum wage to reach 60 percent of the gross national median wage for full-time employees. Future wage trends in Germany will therefore play a decisive role in determining the minimum wage.

(6) Collective bargaining law 

In the coalition agreement, the CDU, CSU and SPD expressly commit to the goal of strengthening collective bargaining in the future. The coalition partners are strongly stating that collectively agreed wages should once again be the norm rather than the exception.

To this end, a federal law on collective bargaining compliance („Bundestariftreuegesetz“) is to be introduced - a plan that the previous government had already pursued. This law obliges public contracting bodies to ensure that the contracted companies comply with the applicable collective agreements when awarding contracts. The coalition partners expect that this will both secure collectively agreed wages for employees and eliminate potential disadvantages for companies bound by collective agreements in the competition for public contracts. According to the new coalition agreement, this law will now apply to contracts at federal level from 50,000 euros and for start-ups with innovative services for contracts from 100,000 euros. At the same time, bureaucracy, verification requirements and controls are to be kept to a minimum, thus reducing the burden on companies. 

In addition, the coalition agreement makes reference to collective bargaining law in several places and also makes comprehensive reference to collective bargaining conditions in this respect:

For example, the coalition agreement states that the salary structures of the statutory health insurance funds, the medical service and other stakeholders must be based on the collective agreement for the public sector (TVöD) in future. Elsewhere, the coalition agreement states in the context of possible tax-free bonuses for overtime beyond the full-time volume that a weekly working time of at least 34 hours can be considered full-time work for collectively agreed regulations, while full-time work in cases of working hours not stipulated in collective agreements can only be assumed to be 40 hours or more. 

With regard to the latter, the coalition partners are already pointing out that a practical solution is still to be developed in close consultation with the social partners. It is therefore not only in this area that concrete developments remain to be seen. Overall, the coalition agreement that has now been published - apart from the „Bundestariftreuegesetz“ already initiated in the last legislative period - has so far only resulted in many objectives for collective bargaining law, the final achievement of which still requires the development of specific regulations.  

(7) Works constitution law

The coalition agreement between the CDU, CSU and SPD published on 10 April 2025 also addresses the new government's plans to modernize works constitution law in several places. The regulatory plans are characterized by the objective of wanting to take into account the "increasing challenges of digitalization and artificial intelligence" in the world of work and in the area of employee co-determination. 

The main aspects of the coalition agreement in terms of works constitution law are as follows: 

1. Co-determination and digitalization 
   
   The coalition plans to enable works meetings and works council meetings in online formats. Online formats are to become an equivalent alternative to face-to-face meetings. 
   
   In addition, online voting will also be possible for works council elections in future. These innovations could already be relevant for the next regular works council elections in spring 2026.
    
2. Co-determination and AI 
   According to the coalition agreement, the use of AI should also require the qualification of employees and fair regulations on the handling of data in the company.
   
   Even if this is not explicitly stated, this objective also has an impact on employee co-determination. In any case, co-determination rights of the works council would have to be observed with regard to qualifications for AI measures. 
   According to the current version of works constitution law, the works council has no co-determination rights with regard to the use of AI. Nevertheless, the use of AI is generally associated with the use of software, for which co-determination rights exist. It remains to be seen whether the co-determination rights will now be expanded and explicitly extended to the use of AI. 

(8) Working time

Weekly instead of daily maximum working hours

The Working Hours Act currently stipulates a maximum daily working time. According to this, working hours on weekdays may not exceed eight hours as a rule, or ten hours in exceptional cases. The coalition partners now want to modify this and plan a weekly instead of a daily maximum working time. This should be in line with the European Working Time Directive and, in particular, support the compatibility of family and career. The specific details of this plan are to be worked out in a dialog with the social partners. 

The decision to allow employers and employees to decide more flexibly on the distribution of working hours within the framework of weekly working hours is generally welcome in principle. This enables the parties to the employment contract to better adapt working hours to both operational and individual needs. Both sides can benefit from this. Nevertheless, it must be ensured that the recovery and health of employees stay guaranteed. The coalition agreement therefore stipulates that no employee may be forced to work longer hours against their will. Possibilities for abuse are to be ruled out. Further details on how the proposal is to be execute are not yet known.

Electronic working time recording

Following the decision of the Federal Labor Court (Decision of September 13, 2022 - 1 ABR 22/21) that the entire working time of employees in Germany must be recorded, the announced changes to the Working Hours Act by the former government have not been realized. Apart from an internal government draft, the entire process stagnated, resulting in major uncertainty for companies. The coalition agreement now stipulates that the obligation to record working hours is to be regulated in an unbureaucratic manner. In particular, the document mentions an electronic time tracking. Appropriate transitional regulations are to be provided for small and medium-sized companies. Trust-based working hours are to remain possible without time recording in accordance with the EU Working Time Directive. It is to be hoped that the future government will finally remove the current unclear situation with a legally secure and practical solution.

Expansion of the list of exceptions

Furthermore, the list of exceptions under Section 10 of the Working Hours Act for working on Sundays and public holidays is to be extended to include the bakery trade. The high standards of occupational health and safety are to be maintained and the current rest period regulations retained. 

In summary, it remains to be seen whether the future government will find a balanced and practicable approach to implementing these plans that takes sufficient account of both employee protection and operational requirements in view of the economic challenges and the modern world of work.

(9) Surcharges

In the future, overtime bonuses are to be tax-free if they exceed the collectively agreed or collectively agreed full-time working hours. The background to this is that overtime should pay off more from the employees' point of view. The aim is therefore to create incentives for employees to work overtime. At least 34 hours per week should be regarded as full-time work within the scope of collectively agreed regulations and 40 hours per week outside the scope of collectively agreed regulations. According to the clear wording of the coalition agreement, tax exemption for overtime bonuses is to be introduced "immediately".

(10) Digitalization and AI

The new government is generally committed to further digitalization. In doing so, it wants to promote sovereignty, innovation and social progress. It sees the expansion of a digital ecosystem as the key to this.

In detail:

The immigration of skilled workers is to be simplified with the help of a digital agency for the immigration of skilled workers (see point (1)). 

The new government is also aiming to digitize official documents. For example, the new government supports an electronic European social ID card with a digital EU identity (EUDI wallet) (see point (4)) and would like to digitize all disability and pension cards as well as the A1 certificate in the future.

The future government wants authorities to work together more digitally, for example to combat illegal employment. 

The new government plans to create a social partnership framework for digitalization and artificial intelligence. In doing so, it will have to observe the regulation on artificial intelligence (EU 2024/1689), which sets clear limits for its use.

It should be possible to apply for benefits digitally in future. The corresponding infrastructure is to be established.

(11) Statutory pension insurance

In the area of statutory pension insurance, the status quo is to be maintained throughout the legislative period. This also applies to the option of claiming an old-age pension without deductions after 45 years of contributions.

Securing the pension level

The pension level is to be legally guaranteed at 48% until the year 2031. This will inevitably lead to a further increase in federal subsidy to the statutory pension insurance scheme, financed from tax revenues. Only a growth-oriented economic policy, a high employment rate and appropriate wage developments will make this financially sustainable in the long term.

Continued Employment Beyond Retirement Age

Instead of a statutory increase in the retirement age, the new federal government is relying on a voluntary approach. The transition from work to retirement is to be made more flexible and continuing to work beyond the statutory retirement is to be given tax incentives.

The instrument of postponing the start of retirement according to § 41 of the German Social Code, Book VI (SGB VI) is already established. However, this only applies if the employment contract contains a clause on a mandatory retirement age.

In the future, returning to a former employer after reaching the standard retirement age is to be facilitated by abolishing the prohibition on prior employment pursuant to § 14 (2) sentence 2 of the Act on Part-Time Work and Fixed-Term Employment (TzBfG) This should make it possible to continue working for a limited period of time. Those who reach the statutory retirement age and voluntarily continue working shall also be allowed to earn up to 2,000 euros per month tax-free. This is attractive and an incentive to continue working, especially for those on low statutory pensions.

Both new regulations are to be welcomed without reservation. It will be interesting to see how they are implemented in detail. It should be examined whether the tax reliefs will apply to early retirement before reaching the standard retirement age, and it appears they will only apply to employment subject to social security contributions.

Company pension scheme

In the area of company pension schemes, there are only very general statements whose practical relevance remains unclear. 

The intention is to strengthen company pension schemes and further promote their spread, particularly in small and medium-sized companies and among low earners. Unfortunately, the means by which the urgently needed further expansion of company pension schemes is to be achieved remain unclear. The only measure mentioned is an improvement of the low-income earners’ subsidy.

Company pension schemes are to be digitalized, made less bureaucratic, simplified and more transparent. In addition, the portability of company pension schemes is to be increased in the event of a change of employer. While all of this sounds promising, the actual implementation remains to be seen.