Germany’s Program for Growth and Employment Proposes New Rules for Fixed-Term Employment and Termination
In July 2026, the German Coalition Committee of the CDU/CSU (the conservative political party union) and SPD (the social democratic political party) proposed new rules for fixed-term employment without objective grounds and for certain termination cases. The changes are among the 34 measures contained in the Program for Growth and Employment, which was adopted by the German Coalition Committee.
Fixed-term employment without objective grounds
Under the proposed rules, a limited, four-year employment relationship would be allowed without objective justification for the fixed term. This represents an increase from the previous two-year limit. These relationships may be extended up to six times, an increase from the earlier cap of three extensions. These new rules would apply to employees hired on or before December 31, 2030.
The proposal also addresses “renewed initial hiring by the same employer,” which would change the existing prior-employment prohibition. It’s not yet clear whether a statutory waiting period or other exceptions will apply.
Rules for termination of employment may change for high earners
New conditions for employment termination are among the other measures included in the Program for Growth and Employment. The program suggests a provision that allows employers to end employment relationships with certain high earners — those earning at least €177,450 EUR gross per year or approximately €14,788 EUR gross per month — without the need to present a valid reason. Severance payments are suggested in certain situations.
Currently, a court can only dissolve an employment relationship in exchange for severance in exceptional cases. The proposed reform would expand the exceptions under which employment termination is allowed, and high remuneration on its own would be sufficient cause; reasons for the termination would not be required in those cases. Severance would be expected only when there is no social justification for the conclusion of the relationship.
If approved, these proposed rules for termination of high earners could go into effect in 2027.
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