German employment law is currently developing on two levels. On the one hand, in several decisions issued in summer 2026, the Bundesarbeitsgericht (BAG), Germany’s federal labour court, directly changed the legal position, including on protection against dismissal and continued pay during sickness absence. On the other hand, the Federal Government has announced far-reaching reforms concerning, among other things, fixed-term employment and formal written requirements. This article puts both developments into context and shows where action is already needed today and where a wait-and-see approach is the wiser strategy.
What the government is planning
On 2 July 2026, the coalition committee of CDU/CSU and SPD adopted the package “Ein Programm für Aufschwung und Beschäftigung” (A Programme for Recovery and Employment). It includes, among other things, several employment-law proposals that would have a tangible impact on businesses. For now, however, these remain political announcements. Until the proposals have been enacted into law and published in the Federal Gazette, the current legal position remains unchanged.
Fixed-term employment without objective justification for up to 48 months. Under current law, a fixed-term employment contract concluded without an objective justification may generally last no more than two years and may be extended no more than three times (§ 14(2) TzBfG, the German Part-Time and Fixed-Term Employment Act). The plan is now to allow, for new hires until the end of 2030, a term of up to 48 months with up to six extensions. Since its introduction through the 1985 Employment Promotion Act (Beschäftigungsförderungsgesetz), fixed-term employment without an objective justification has served as an instrument of employment policy. The proposed extension is intended to stabilise the labour market during periods of weak economic growth and enable businesses to meet their staffing needs flexibly during transformation phases, without having to rely on an objective justification. For companies building a German team, testing a market or hiring for a project, this would significantly reduce the risk associated with termination during the start-up phase. Until the law changes, however, the two-year limit continues to apply strictly.
Removal of the written-form requirement for fixed-term clauses from 1 January 2027. nder current law, the fixed-term clause in a fixed-term employment contract must be agreed in writing, with handwritten signatures, before work begins (§ 14(4) TzBfG). The written-form requirement applies to the fixed-term clause itself, not to the employment contract as a whole. If this requirement is not met, the employment contract is deemed to be for an indefinite term. This is a common mistake when HR processes are managed centrally from abroad and contracts are signed electronically. The plan is to abolish the written-form requirement from 1 January 2027. Until then, the current contracting practice should not be changed.
Obligation to provide a medical certificate from the first day of sickness. It is also planned to abolish telephone sick notes and to allow employers to require a medical certificate from the first day of sickness absence. This could provide an additional management tool in German teams showing unusually high absence rates. Until the change is adopted, however, the existing contractual rules continue to apply. These often provide for a medical certificate from the third day of sickness, in accordance with the statutory rule in § 5(1) sentence 2 EFZG, the German Continued Remuneration Act.
Back pay for the period during which the employer is in default of accepting work: what information may the employer request after a dismissal?
On 26 August 2026 (Az. 5 AZR 37/25), the BAG drew an important boundary in dismissal disputes. For employers with an international background, this is often unfamiliar territory: if a dismissal is later declared invalid, the employer must pay back the remuneration for the entire intervening period, even though the employee did not work. In lengthy dismissal proceedings, this back pay can quickly reach six-figure sums.
The employee must, however, set off anything earned elsewhere during that period or deliberately not earned (§ 11 No. 2 KSchG, the German Dismissal Protection Act). Employers therefore often seek to obtain as much information as possible about the former employee’s job search.
The BAG has clarified that the employer may request information about vacancies referred by the Agentur für Arbeit or the Jobcenter, public employment-placement bodies. It may not, however, compel the employee through a standalone claim to disclose every job application made, the outcome thereof or the application documents.
Further details about the employee’s own job-search efforts can become relevant only in the main proceedings. There, the employer may make specific, substantiated submissions on concrete and reasonable employment opportunities, after which the employee must explain, under the secondary burden of pleading, why those opportunities were not taken up. There is no prior, general entitlement to comprehensive disclosure of the employee’s entire application history.
In practical terms: do not rely on reducing this back pay at a later stage through a broad information claim. The defence should be prepared from the outset: send suitable job vacancies to the dismissed employee, document the steps taken and rely on concrete, reasonable employment opportunities. A blanket questionnaire covering the entire application history will not help.
Parental leave: protection against dismissal arises afresh before each period
The BAG decision of 18 June 2026 (Az. 2 AZR 213/25) is also relevant to dismissal practice. Employees on parental leave enjoy special protection against dismissal (§ 18 BEEG, the German Federal Parental Allowance and Parental Leave Act). This protection generally begins when parental leave is requested, but no earlier than eight weeks before the start of the relevant parental leave period.
If an employee applies for parental leave in several blocks, for example directly after the birth and again a year later, the special protection against dismissal arises afresh before each individual block. This also applies where all periods were requested in a single letter.
In practice, before proceeding with a dismissal, it is therefore not sufficient to check whether the person is currently on parental leave. You must also verify whether a further parental leave period has already been validly requested for a later date. That request may already trigger protection against dismissal today, even though the parental leave has not yet begun. If this is overlooked, the dismissal is void (§ 134 BGB, German Civil Code).