Supplements for overtime that go beyond the collectively agreed working time will be tax-free and social security exempt in future.
Fixed-term deviations from the Working Hours Act and the introduction of trust-based working hours enable more flexible working time models.
The regulations on telephone sick leave should be reviewed and made with little bureaucracy.
Employees who have reached the standard age limit can continue to be employed for a limited period of time without any factual reason, which means that their expertise in the company is retained.
Improved regulations should ensure that more companies offer occupational retirement benefits, particularly for low-income earners.
Improved regulations should ensure that more companies offer occupational retirement benefits, particularly for low-income earners.
Welcome to the future of employment law! The Federal Government has put together a package of measures that is intended to bring significant changes to the German working world. The package was adopted on July 5, 2024 and is due to be fully implemented later this year. Here are the most important points — explained in detail and with some illustrative examples.
Extra work: There is still something going on!
Imagine if your team could work overtime and get not only applause but also more money — all without paying annoying taxes. This is exactly what the new regulation from the Federal Government makes possible. Supplements for overtime that go beyond the collectively agreed full-time work will in future be exempt from tax and social security contributions. This applies to collective working hours of at least 34 hours or 40 hours if there is no collective agreement.
Let's take your accountant Max as an example. He normally works 34 hours a week, but in the hot phase of financial statements, he could now easily increase to 40 hours — and that without tax deductions. More money in your wallet, more efficiency in the office, and you can look forward to a smooth deal. Maybe buy him an extra coffee to get the last icing on the cake of his work motivation.
Working time: Flexibility is the new magic word
Fixed working hours? That was once upon a time. With the new measures, companies and employees can act more flexibly. The Federal Government's planned measures on working time include two main points: the temporary deviation from the regulations of the Working Hours Act and the admissibility of trust-based working hours.
Temporary deviations from the Working Hours Act are possible, provided that collective agreements or works agreements permit this. Her marketing manager Lisa, for example, often has her best creative ideas late in the evening. With the new regulation, she can now arrange her working hours in such a way that these creative spurts are optimally used — and the company benefits from innovative marketing campaigns.
Incapacity for work: Sick reporting made (too) easy?
Calling a doctor is sometimes the quickest route to recovery. The special rules on sick leave over the telephone, which were in force during the corona pandemic, should be reviewed and amended if necessary. The aim is to find a solution that is as low in bureaucracy as possible. So in future, will employees who feel ill in the morning be able to call the doctor from the comfort of their own home and get sick leave? However, the regulation would have advantages and disadvantages: the simpler the sick report, the easier potential misuse. Employees could recover better and be ready for everyday office life more quickly — but they could just as easily call in sick “just now” and go to the swimming lake instead.
Fixed-term law: old age pensioners on duty
The planned changes in fixed-term employment law aim to enable older workers to continue working more flexibly after reaching the standard age limit. The new regulation allows fixed-term employment contracts for employees who are already entitled to an old-age pension without cause. Your salesman Hans, who is not yet thinking about quitting after his 65th birthday, can continue to work for a limited period of time. He brings his years of experience to the table, and you benefit from his expertise.
Protection against dismissal: More flexibility for high incomes
In the financial sector, protection against dismissal for very high income recipients is being relaxed. This is intended to strengthen Germany's financial center in international competition. This means that as an entrepreneur in the financial sector, you have more leeway when it comes to personnel decisions at management level.
Social security law: More net of gross
Workers who have reached the standard age limit no longer have to pay contributions to unemployment and pension insurance. The employer's contribution is then paid directly to the employee. As a result, older workers receive a higher net salary after reaching the standard age limit.
Occupational pension scheme: security for all
Occupational pension plans (bAV) are being revised so that more companies can offer them and low-income employees in particular can benefit from it. Her cleaning specialist Maria may not earn the world, but with the new BAV regulation, she has a solid retirement plan. In this way, you can ensure that all of your employees, regardless of their income, have a secure future ahead of them.
Tariff Compliance Act: Focus on fairness
Compliance with collective agreements is strengthened by making collective agreements a condition for tenders. When applying for public contracts, companies must prove that they comply with the applicable collective agreements. Control mechanisms ensure that the specified working standards are met.
On 05.07.2024, the current federal government presented the growth initiative, which is closely linked to the 2025 federal budget. Most of the measures of the initiative are to be implemented as part of the budget. In addition to the regular budget, the 2025 draft budget also includes a supplementary budget for 2024 in order to provide short-term economic impetus and promote growth opportunities. The growth initiative includes a variety of measures, including tax relief, investments in infrastructure and innovative technologies, as well as measures to promote sustainable development and education policy. These are intended to strengthen Germany's competitiveness and enable stable economic growth in the long term. The focus is on investments in innovative technologies such as artificial intelligence, renewable energy and electric mobility in order to consolidate Germany's position as a technology leader. In addition, the modernization of the infrastructure is being promoted by expanding the broadband network, public transport and renewing transport routes. Another focus of the initiative is on promoting sustainability, climate protection and education policy to ensure long-term and sustainable growth. Overall, the Federal Government is thus striving for a holistic approach to sustainably strengthen Germany's economic future.
These measures taken by the Federal Government are not only intended to increase the attractiveness of the German labor market, but also to combat the shortage of skilled workers and promote economic dynamism. Max, Lisa, Hans and their colleagues can look forward to a breath of fresh air in their day-to-day work. And for employers, get ready for the new rules of the game and take advantage of the opportunities that are available to you!
