Good things come to those who wait? The political parties currently forming the government, Christian Democrats (CDU/ CSU) and Social Democrats (SPD), negotiated a final version of a new coalition agreement for a new term on 7 February 2018. The text below provides an initial overview of the new coalition’s plans that will be important to this field in practice.

I. Drastic restrictions of the law on fixed term employment contracts

1. Imposition of fixed terms without an objective reason limited to 18 months

Fixed-term employment contracts without an objective reason for the limitation are to be limited to 18 months rather than 24 in the future (line 2348 of the coalition agreement). In addition, only one renewal up to this total duration is to be allowed, instead of the current three-time renewal. A quota for employment of persons working under fixed-term contracts without an objective reason for the limitation will also be introduced, with the rate varying by the size of the company. Businesses with more than 75 employees can now only impose fixed terms without an objective reason on a maximum of 2.5% of their employees (line 2341 of the coalition agreement). This planned amendment would lead, de facto, to an abolition of the imposition of fixed terms without an objective reason for larger companies. If a company has 1,000 employees, for example, fixed terms could only be validly imposed without an objective reason for the limitation on the employment contracts for 25 employees. Any further imposition of fixed terms without an objective reason would be invalid, resulting in the lifting of any fixed term imposed on the employment contract.

2. Imposition of fixed terms with an objective reason limited to five years

Unlike before, the duration of fixed terms imposed with an objective reason is also to be limited by law to a maximum of five years (line 2352 of the coalition agreement). In the future, imposition of a fixed term will not be permissible if there has already been an unlimited-term employment relationship, or if there have already been multiple fixed-term employment relationships with a total duration of five or more years, with the same employer. Periods during which employees previously worked for the employer via a temp agency are also supposed to be counted toward the limit (line 2360 of the coalition agreement).

This planned change would also restrict the imposition of fixed terms as a tool for added flexibility. The only bright spot in this context – and it is a small one – would be the codification of a three-year waiting period between fixed terms, after which the imposition of another fixed term is supposed to be possible (line 2364 of the coalition agreement), that is evidently under consideration.

3. Fixed-term claim to part-time employment

Employees who work for companies with 45 or more employees are to have a claim to work part-time for a fixed term not to exceed five years, after which they return to full-time duties (lines 2391 et seqq. of the coalition agreement). For companies with 46 to 200 employees, the coalition agreement provides that for every group of 15 employees or portion thereof, only one employee must be granted the right to work part-time for a fixed term. Employers are supposed to have the ability to deny requests from further employees as being unreasonable. The coalition agreement is silent on the issue of how the person entitled to this claim is supposed to be selected from among every group of 15 employees.

4. Clause opening up collective bargaining agreements (Tarifverträge) in the Working Time Act (Arbeitszeitgesetz)

Plans call for inserting a clause opening up collective bargaining agreements into the Working Time Act (Arbeitszeitgesetz). The new clause is intended to permit companies bound by collective bargaining agreements to achieve greater flexibility in working hours (line 2366 of the coalition agreement). In particular, plans call for the possibility of adding further flexibility to the weekly maximum working hours based on these collective bargaining agreements through works agreements (Betriebsvereinbarungen).

Whether this is truly the best way of meeting the challenges of the evolving working world is doubtful in light of the existing collective bargaining agreement landscape on the subject of working hours.

5. Strengthening works councils by simplifying works council elections

The simplified election procedure pursuant to Sec. 14a of the Works Constitution Act (BetrVG) is to apply on a mandatory basis to businesses with 5 to 100 employees in the future (line 2331 of the coalition agreement) – the threshold was previously 50 employees. Businesses with 101 to 200 employees eligible to vote are to be able to choose between the simplified election procedure and the normal one (line 2333 of the coalition agreement). This will simplify works council elections. Whether this will, in practice, lead to the increased election of works council members that is evidently desired by the coalition partners seems questionable.

6. The evolving nature of work

Plans call for strengthening mobile work in the course of digitization. Employees are supposed to have a claim on the employer to provision of information if the employer denies a request for mobile work (line 1827 of the coalition agreement). Employees are to receive protection from excessive surveillance by employers through improvements in employee data protection (line 1839 of the coalition agreement). Ultimately, new business models are to receive support (on this point, compare Sec. 12a of the Act on Collective Bargaining Agreements (TVG), which sets out provisions on “employee-like” persons, such as “crowd workers”) while the binding effect of collective bargaining agreements is also strengthened at the same time (line 2328 of the coalition agreement). The grand coalition is thus remaining vague again on this highly important subject.

7. Evaluation of the Law on Temporary Agency Workers (AÜG)

Contrary to what had been intended in the exploratory talks, the evaluation of the Law on Temporary Agency Workers (AÜG) is to take place not in 2019, but rather in 2020 (line 2382 of the coalition agreement). This evaluation is already stipulated in Sec. 20 of the current version of the AÜG. The reason for this is probably that it will not be until 2020 that solid data on the effects of the last reform of this act are on hand.

II. Summary

The expected changes in the law with regard to imposition of fixed terms will bring drastic restrictions for employers. Imposition of fixed terms as a tool to achieve greater flexibility will definitely become significantly less important in the coming legislative term.

One welcome development is that the legislators have refrained from introducing further provisions into the AÜG, which is another tool used to achieve flexibility – at least until the evaluation coming up in 2020 is complete. It remains to be seen which projects the legislature will tackle within the framework of the digitization of the working world. The provisions of the coalition agreement are once again not very specific on this point.

The formation of a government, and thus also the implementation of the coalition agreement, are subject to the consent of the SPD members. This survey will probably be performed between now and early March. Only then will it be clear whether the grand coalition will continue, and thus whether the coalition agreement will also be implemented. All this means it will be exciting to see how things develop.