The central purpose of labour law is to protect employees. Employees are dependent on their employers, not just economically, but personally under their contract of employment. The resulting need for special protection is met by labour law. The basic idea of labour law is to bring about a fair balance of interests between employers and employees. The main purpose of labour law consists of protecting employees from violations of personal integrity, economic disadvantage and health risks involved in working as an employee.
Home workers, who are especially economically dependent on their employers, are also covered by labour law, partly under special provisions and partly under provisions applying to all employees. Labour law is divided into individual labour law, which governs relations between employers and employees, and collective labour law, which applies to legal relations between unions and employer associations at company and most of all at inter-company level.
What individual labour law covers
Individual labour law centres on the relationship between a person in work and his or her employer, as governed by the employment contract between them.
There are two main questions dealt with by every employment contract: what work you are expected to do, and what pay you are entitled to in return.
Your employment contract may also lay down other rights and duties that go to make up your overall working conditions. Certain minimum standards for conditions of employment are contained in various laws, including the Federal Paid Leave Act (Bundesurlaubsgesetz), the Continued Payment of Remuneration Act (Entgeltfortzahlungsgesetz), the Part-time and Fixed-term Employment Act (Teilzeit- und Befristungsgesetz), the Caregiver Leave Act (Pflegezeitgesetz), and the Family Caregiver Leave Act (Familienpflegezeitgesetz).
Subject to certain requirements, the Part-time and Fixed-term Employment Act allows employees to reduce their working hours; employees can also apply for this for a limited duration (‘Brückenteilzeit’, meaning a fixed-term ‘bridge’ period of part-time employment with the right to return to the former working hours). The Act’s provisions are designed to prevent part-time employees from being treated differently to full-time employees unless there are justified grounds for doing so.
The Caregiver Leave Act and the Family Caregiver Leave Act make it easier to reconcile work and family care by allowing employees, subject to certain requirements, to look after close relatives in need of nursing care at home for up to six months while being fully or partly released from employment.
The statutory guaranteed minimum standards generally apply for all employees, including people employed on a fixed-term, part-time or marginal basis and people employed by temporary work agencies.
Labour law allows employers and employees to agree more favourable working conditions – going beyond the statutory minimum – by individual contract of employment or by collective agreement (see under Collective Bargaining Law).
Protection against dismissal
When it comes to the termination of the employment relationship, the employee enjoys a certain protection, mostly governed by the Protection Against Dismissal Act (Kündigungsschutzgesetz). Under the scope of the Protection Against Dismissal Act, a legally effective dismissal requires a “social justification”. Additionally, a dismissal has to meet certain formal requirements (e.g. notice period). Employees that consider their dismissal as unlawful can file a lawsuit to the competent labour court within three weeks after the reception of the dismissal in writing.
The preconditions for limiting the term of an employment contract and the legal consequences of an invalid term limitation are governed by the Part-time and Fixed-term Employment Act (Teilzeit- und Befristungsgesetz). Fixed-term employment contracts terminate without notice when the contract period expires or on achievement of a specified purpose. A fixed-term employment contract may be terminated with the agreed period of notice before the contract period expires if the possibility of termination is agreed in the employment contract or applicable collective agreement. An employee wishing to contest the validity of a term limitation in an employment contract must file legal action with the labour court within three weeks of the agreed end of the contract.
The General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz) provides protection against discrimination at work by prohibiting discrimination due to race or ethnic origin, gender, religion or belief, disability, age or sexual identity.
The Act regulates rights and measures that employers can take to prevent discrimination and protect employees’ rights. In case the employee feels discriminated against he or she can ─ under certain circumstances:
- lodge a complaint with the competent department in the firm;
- refuse performance without loss of pay insofar as this is necessary for his or her protection;
- or obtain damages or compensation from the employer.
What collective labour law covers
Collective labour law can be subdivided into two levels:
Collective bargaining law – the level dealing with relations between trade unions, employer associations and individual employers.
Workplace labour relations law (also known as works constitution) – the level dealing with relations between employer and workforce in individual establishments.
Collective bargaining law
Collective bargaining autonomy is among the constitutionally protected rights of trade unions and employer associations. The collective bargaining partners thus have the right to enter into collective agreements under their own responsibility.
Social Security at a Glance - Total Summary [PDF, 1MB] > Chapter: Collective bargaining law > From page 55
A general statutory minimum wage went into effect in Germany on 1 January 2015. The minimum wage is regulated by the Minimum Wage Act, which was evaluated in 2020. In addition to this, binding sectoral minimum wages can be negotiated on the basis of the Posted Workers Act and the Temporary Employment Act.
Through a one-off law amendment the minimum wage has been 12.00 euros gross per hour since 1 October 2022. The independent Minimum Wage Commission will determine possible further adjustment steps – for the first time by 30 June 2023 for the period from 1 January 2024.
The minimum wage also applies to foreign workers, if they work in Germany – regardless of whether they are employed by a domestic or a foreign employer.
As has been the case already with sectoral minimum wages, the Federal Customs Administration unit in charge of enforcing the law on illegal employment and benefit fraud (Finanzkontrolle Schwarzarbeit – FKS) is responsible for monitoring compliance.
Minimum wage violations can be punished with a fine of up to 500,000 euros. Infringements of obligations to be complied with during inspections, such as presenting the documentation of working time, may be penalised by a fine of up to 30,000 euros. In addition, the company can be excluded from the award of public contracts.
Social Security at a Glance - Total Summary [PDF, 1MB] > Chapter: Minimum Wage > From page 71
Posting of Workers Act
The Posting of Workers Act (Arbeitnehmer-Entsendegesetz) provides a legal framework for setting higher binding sector-specific minimum wages for all employees in a sector, regardless of whether the employer or temporary work agency is based in Germany or in another country. Such sector-specific minimum wages take precedence over the general minimum wage.
Social Security at a Glance - Total Summary [PDF, 1MB] > Chapter: Posting of Workers Act > From page 72
Act on Temporary Agency Work
If proposed by the collective bargaining parties for temporary agency work, under the Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz), the Federal Ministry for Labour and Social Affairs (BMAS) can issue an ordinance setting a binding minimum wage independent of whether, in its capacity as the employer, the temporary work agency is domiciled in Germany or in another country. The basis of this proposal is in each case a collective agreement regulating minimum hourly wages in temporary work. Temporary agency workers are entitled to pay of at least that amount.
The Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) regulates the co-determination of employees in operational matters that directly affect them at their workplace. In every establishment in the private sector within the territory of the Federal Republic of Germany with at least five employees entitled to vote, three of whom are eligible for election, the employees have the right to elect a works council.
The works council represents the interests of all employees towards the employer and shall examine proposals put forward by the workforce and forward them to the employer. One of the works council’s most important duties is to ensure that effect is given to all Acts, ordinances, safety regulations, collective agreements and works agreements designed for the benefit of the employees.
In addition, the works council has a number of participation rights, in particular regarding social welfare, personnel and economic matters.
Social Security at a Glance - Total Summary [PDF, 1MB] > Chapter: Workplace labour relations > From page 59