Labor law in the coalition agreement – How much progress does the “traffic light coalition” dare to make?

Irina Baranova

They sat together for a long time behind closed doors without a hotline to media representatives and sounded out what the content of the first “traffic light coalition” in Germany’s post-war history should look like. In addition to perennial hot topics such as COVID-19, climate protection, migration, digitization and many others, the potential coalition partners also discussed and negotiated which points in the working world should be focused on over the next four years. The plans – however undefined and vague they may be – go beyond the raise of the minimum wage to 12 euros that was discussed during the election campaign.

So what does the coalition agreement say?

Education and training

The traffic light coalition has agreed on a comprehensive expansion of career guidance and youth job agencies together with the federal states. This, together with the modernization of vocational schools, is intended to lay the foundation for qualified young professionals and qualified continuing education. Training is to take place primarily in companies and thus as close to practice as possible. Where there is a lack of in-company training opportunities, extra-company opportunities are to be created in cooperation with the social partners. Financial assistance and support should be expanded and made available to as many people as possible. Excellent vocational training is also to be increased by opening up the federal government’s programs for talents promotion to vocational training, while equivalent vocational qualifications are also to be recognized for higher career paths in the civil service and these are no longer to be reserved for students.

Full-qualification training and professional development for the unemployed is also to be promoted, regardless of duration. The coalition wants to address digital and demographic change with a national continuing education strategy. Part-time vocational training and continuing education are to be promoted and education and labor market policies are to be coordinated. An education (part) time program, as is already possible in Austria, supplements the catalog of measures for attractive continuing education. In general, the offers and opportunities should be easily accessible and clearly designed within the framework of digital possibilities.

Working time and place

It is not the pandemic that has made it clear that the world of work is and has visibly changed and that employees want more flexibility with regard to the question of “when” and “where” services are provided.

Although the 8-hour day is to be retained in principle, the introduction of more flexible working time models is to be made possible through collective bargaining agreements. It shall also be possible to deviate from the applicable regulations of the Working Hours Act on maximum daily working hours by collective agreements to a limited extent.

With regard to the “how” and the “where” of work performance, home office is to be distinguished as an independent form of mobile working from the familiar teleworking and workplace regulations. Employees in suitable jobs – although it remains vague what is considered suitable – are to be given a right to discussion regarding mobile working and home office. The coalition has not provided for a genuine right to home office, but employers can only object to this right to discussion on the basis of operational concerns. The flexibility is to be so comprehensive in terms of location that mobile working shall be possible throughout the European Union.

Minimum wage

The minimum wage will be raised by a one-off adjustment from the current 9.60 euros to 12.00 euros per hour. After that, it will be up to the independent minimum wage commission to determine the further steps of the increase. The traffic light coalition refers here to a proposal of the EU Commission, according to which appropriate poverty-proof minimum wages are to be anchored to strengthen the collective bargaining system. The traffic light coalition believes that these minimum standards have been met with the agreed increase.

Mini- and midi-jobs

In connection with the new minimum wage of 12 euros per hour, the mini-job limit is to be 520 euros/month after the minimum wage has been raised. At the same time, monitoring of compliance with labor law is to be strengthened in the mini-job sector as well and it is to be prevented that mini-jobs are abused as substitute employment relationships. The midi-job limit is to be raised from €1,300 to €1,600 per month.

Fixed-terms

Fixed-term employment contracts – especially chain fixed-term contracts – have always been a thorn in the side of the SPD in particular. It is therefore not surprising that – presumably at the insistence of the SPD – an agreement was reached to abolish fixed-term contracts based on budgetary reasons in the public sector as a first step and to limit chain fixed-term contracts in the federal government even in cases with an otherwise justifying reason to six years with the same employer, except in special individual cases. It remains to be seen whether these restrictions can be extended beyond the public sector. The FDP in particular is currently likely to advocate a different approach.

Employee leasing and mobility

The new government is also focusing on the protection of temporary workers. It wants to strengthen protection in the case of postings abroad and at the same time reduce bureaucratic hurdles. Seasonal workers are to be covered by health insurance from their first day and employees are to be better informed about their rights. The coalition partners also promise to take more effective action against violations of labor law and occupational health and safety and to punish systematic violations in the area of contracts for services and temporary employment. The regulation created in the pandemic, according to which temporary workers can also be entitled to short-time work benefits, is to be reviewed according to the traffic light coalition, especially with regard to low-wage earners. This could be the beginning of a permanent regulation.

Tariff autonomy

Strengthened collective bargaining autonomy should, among other things, help to ensure that fair wages are paid and that wages continue to converge between East and West Germany. In the future, the federal government wants to make the awarding of contracts dependent on whether there is a commitment to a representative collective agreement in the respective industry. In order to continue to counter attempts to evade collective agreements by outsourcing operations, the continuation of applicable collective agreements is to be ensured. Section 613a of the German Civil Code (TUPE rules) remains unchanged for cases of transfer of business. The coalition intends to discuss the further strengthening of collective bargaining coverage in a dialogue with the social partners.

Co-determination

The coalition partners want to further develop co-determination at the workplace. Works councils are to decide for themselves whether they want to work in analog or digital form. It is therefore to be expected that the option of virtual works council meetings created during the pandemic, will also be opened up in the future. As a pilot project, it should also be possible to hold the works council elections due in 2022 online. Against this backdrop, the Works Council Modernization Act is also under scrutiny. Trade unions are to be given the option of digital access to companies in the near future.

The obstruction of democratic co-determination is to be made an official offense, reflecting the importance of uninfluenced participation by employees. Germany occupies a special position worldwide in the area of co-determination and should continue to do so. Abuse and avoidance of employee co-determination rights should be explicitly prevented.

As part of the further development of corporate co-determination, the coalition aims to ensure that employee co-determination on the Supervisory Board in accordance with the One-Third Participation Act can no longer be completely prevented even by a conversion into an SE company. In addition, the attribution to the group under the One-Third Participation Act is to depend in future on de facto control and not on whether a control agreement or full integration exists.

Digital platforms

The coalition recognizes digital platforms as an important area of the working world in the future and wants to ensure good and fair working conditions there as well. To this end, a dialogue is to be initiated with platform providers, workers, the self-employed and the social partners, and the implementation of EU-wide regulations is to be promoted.

Occupational health and safety

Occupational health and safety is to be adapted to changes in the labor and employment world while maintaining the existing level of protection. In particular, the focus should be on the mental health of employees. Prevention and implementation of occupational health and safety should be promoted, especially in small and medium-sized enterprises. By improving and linking rehabilitation measures with the labor market, longer and healthier working lives should be made possible.

(Company) pension schemes

Financial security in old age has always been part of the welfare state principle and is thus firmly anchored in the Basic Law. It should be possible to provide for oneself in old age through one’s own work. However, the planned strengthening of the statutory pension with a constant minimum level of 48% and avoidance of an increase in the contribution rate will not be sufficient on its own to achieve this, nor will the change in investment options – e.g. by setting up a professionally managed pension fund. For this reason, occupational pensions continue to be an elementary component for a financially secure life in old age. The coalition partners want to strengthen occupational pensions and make them more attractive by offering investment options with higher returns.

These are certainly steps in the right direction. However, it is doubtful whether it is sufficient to state that the social partner model introduced by the Act to Strengthen Company Pensions must now be implemented. The hurdles and requirements placed on the option of setting up a company pension scheme are too high, which is demonstrated not least by the fact that since its introduction in 2017 it has only been possible to get one such social partner model off the ground after lengthy negotiations.

Inclusion

Inclusion is to be promoted in all areas of society. In labor law, one focus is on the labor market integration of people with disabilities. It is worth noting here that a compensatory levy is to be charged if employers do not employ workers with disabilities despite an obligation to do so. Workshops for people with disabilities are to be aligned with the general labor market, and inclusive companies are to be privileged (also in terms of taxation).

Outlook – Will it all be implemented?

There is no shortage of (good) ideas and real plans from the future government. However, it remains to be seen whether, when and how implementation will actually be tackled and succeed given the wealth of tasks ahead (not only in the area of labor law). Certainly, some more specific content would have done well in some places, especially with regard to the time horizon and individual planned steps. However, the non-binding nature of the coalition agreement, which in the area of labor law shows a clear signature of the Social Democrats (employee rights) but also of the Liberals (for example, in the area of digitization), also has one good thing: virtually anything is possible!

So, for the time being, we are left to speculate about individual projects that are important to the parties. The increase in the minimum wage, a key election promise of the Social Democrats, is relatively certain to be high on the agenda and will probably be implemented in the nearer future. In addition, from both the employers’ and employees’ point of view, the implementation of the insights gained in the pandemic on new flexible working models and working hours into regulated channels should certainly also be mentioned as an important step toward a new, modern and more digital working world. It is important that the good ideas and approaches employers and employees are developing and to a large extent already putting into practice together, gain legal certainty for both sides. Whether the plans for social security in old age can be implemented and will be successful against the backdrop of financing problems, in particular the continuing low-interest phase, will probably only become clear after some time. For this very reason, however, the right direction is crucial right now.

The coalition agreement, which is vague in this respect, therefore promises suspense as to when which of the new government’s plans will be implemented. Perhaps the ongoing pandemic will continue to determine political action for the time being and thus cause delays in other areas. It will therefore be up to the employers and employees to develop and promote ideas, visions and wishes within the scope of their possibilities. The fact that this is possible – in some cases even without a legislative initiative – has been demonstrated in many places and repeatedly, especially during the Corona crisis.

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