Germany has a civil law system, meaning that employment law is governed by a variety of different laws. Nearly 40% of employees are represented by a Works Council, but most of the companies with less fewer than 100 employees do not have one.


A unified statute of labour rules does not exist but employment law is governed by general provisions of the Civil Code, a high number of different employment specific acts (e.g. Protection against Unfair Dismissal Act, Vacation Act, etc.) or relevant provisions from different areas of law such as the social books. Although very unusual in a civil law system, German employment law is also to a high degree governed by case law. Further, employment law can be governed by collective bargaining agreements concluded between an employer or an employers’ association on one side and a trade union on the other side. On a business level, employment law can further be subject to shop agreements concluded between an employer and its works council.

Did you know?

  • The standard of employee protection is very high in Germany so that most of the German employment law is designed to protect employees.
  • The level of protection against unfair dismissal is very high but it is only triggered after completion of six months of service with the employer and only if the employer employs more than 10 employees within the same business.
  • Works councils and unions have much power vis-à-vis the employer and enjoy a high level of protection, which for the unions is even guaranteed by the constitution.
  • There are separate courts for employment law claims. The employment procedure supports mutual settlements by providing for a statutory conciliation hearing at first instance.

Restructuring programmes: key issues

  • Collective employment law is a main aspect of procedure, mainly because of the works councils’ co-determination rights with regard to social, economic and personnel matters.
  • Restructuring measures that have a relevant impact entitle the works council to negotiate on a balance of interest and a social plan.
  • The balance of interest negotiations with the works council are intended to focus on the organisational aspects of a restructuring,
  • The social plan is implemented to compensate employees for any detrimental impact of the restructuring, mainly providing for severance payments in case of redundancy.

General employment

  • Employees enjoy a high level of protection, not only in relation to terminations but also with regard to:
    • social security (e.g. employer and employee funded social security paid vacation)
    • sick pay
    • unpaid parental leave
    • leave to take care of a relative with the right of returning to the same job after a certain period of time.