Focus on labor law – this is what the 2025 coalition agreement provides for

The CDU/CSU and SPD agreed on a coalition agreement on April 9, 2025. The overarching title of the paper is “Responsibility for Germany”. On 146 pages, the CSU/CDU and SPD set out the relevant topics for the next legislative period.

A wide range of topics are planned for employment law in particular – an overview:

Minimum wage

The coalition parties “stand by the statutory minimum wage”. As expected, the minimum wage will continue to be set by an independent minimum wage commission. As part of an overall assessment, this is to be based both on the development of collective wage agreements and on 60 percent of the gross median wage of full-time employees. “In this way, a minimum wage of 15 euros in 2026 is achievable”. Although the CDU/CSU and SPD refer to the Minimum Wage Commission, they nevertheless make a specific recommendation. This increase will certainly be a challenge, especially for companies in the low-wage sector. It remains to be seen whether the increase in the minimum wage will not stand in the way of the major goal of economic growth.

Collective bargaining

The CDU/CSU and SPD are striving for greater collective bargaining coverage and are taking up the legislative initiative for the Federal Collective Bargaining Act. According to the draft law, public contracts may only be awarded to companies that adhere to collectively agreed working conditions and pay their employees wages in line with the standard industry rate. According to the coalition agreement, the Federal Collective Bargaining Act is to apply to contracts at federal level from 50,000 euros and to start-ups with innovative services from 100,000 euros in the first four years after their foundation.

Revolution in weekly working hours

The CDU/CSU and SPD want to enable more flexible working time models. In particular, a weekly instead of a daily maximum working time should apply, as provided for in the EU Working Time Directive. Employers and employees would thus be freer to divide up their weekly working hours. However, rest periods must still be observed. The electronic recording of working hours should be unbureaucratic and provide for appropriate transitional rules for small and medium-sized enterprises. Trust-based working hours should also be possible without time recording in accordance with the EU Working Time Directive.

Tax incentives for more work

The coalition parties are also passing on benefits in the form of tax incentives. On the one hand, bonuses for overtime are to be tax-free if they exceed the working hours of full-time employees. The standard for full-time work with collectively agreed weekly working hours is at least 34 hours and 40 hours for working hours that are not collectively agreed. On the other hand, part-time employees may be enticed to extend their working hours with a tax-privileged bonus. Employees should also have incentives to work even after reaching the statutory retirement age. Anyone who then continues to work voluntarily is to receive a tax-free salary of up to 2,000 euros per month. It should also be possible to continue working for the same employer for a limited period of time; the ban on previous employment in the context of fixed-term contracts without objective grounds will be lifted. Finally, membership of trade unions is to be made more attractive for members through tax incentives.

Employment of skilled workers from abroad

Easier immigration policy measures should also ensure more skilled workers. For example, the immigration of foreign skilled workers is to be made easier by reducing bureaucracy and accelerating digitalization. Professional qualifications from abroad are to be recognized more quickly. A digital agency for the immigration of skilled workers – a “work-and-stay agency” – is to be set up for this purpose.

Registration under the EU Posting of Workers Directive

The registration required for some business trips and postings in accordance with the EU Posting of Workers Directive is to be technically simplified by the reform of the eDeclaration and bundled with the A1 certificate. Both measures would significantly reduce the administrative burden on companies and will certainly be welcomed by the respective global mobility managers.

Implementation of the EU Transparency Directive

The draft law was eagerly awaited under the last government as part of the implementation of the EU Pay Transparency Directive. The aim of the directive is to combat pay discrimination and any gender pay gap. The coalition parties are also pursuing this goal, namely “equal pay for equal work for women and men by 2030″. A corresponding commission is now to present proposals for implementation by the end of 2025. This is also high time, as the directive must be transposed into national law by June 2026. Companies will not have much time left to prepare and should already be addressing the main points of the directive now.

AGG reform

According to the coalition parties, disadvantages and discrimination are poison for social and economic development. Protection against discrimination should therefore be strengthened and improved.

Digitalization

The coalition partners also want to drive digitalization in the world of work. Online works council meetings and online works meetings are to be made possible as equivalent alternatives to face-to-face formats. The option of holding digital works council elections is also to be enshrined in the Works Constitution Act. In future, trade unions are to be given digital access that corresponds to their analog rights.

Other

The CSU/CDU and SPD have also agreed on a number of measures to reduce bureaucracy. One example is the reduction of written form requirements, for example for fixed-term contracts. The coalition partners also want to improve occupational health and safety, especially for particularly stressed occupational groups such as professional drivers, and strengthen the prevention of mental illness. The number of statutory company representatives is also to be reduced. Company pension schemes are to become more attractive, including for small and medium-sized enterprises (SMEs) and low earners. To this end, company pension schemes are to be simplified and made less bureaucratic. The coalition partners also want to increase the portability of occupational pension schemes when changing employers.

The plans in the coalition agreement for labor law should be implemented quickly

Both coalition parties were able to score victories in the negotiations and anchor important issues in the coalition agreement. The aim now should be to form a government quickly so that the issues presented can be implemented promptly.