Labour legislation

The standards governing both individual and collective labour legislation in Germany are set out in a large number of laws and decrees. Collective labour legislation covers above all the areas of employee involvement at group and plant level, and collective agreements. As things stand today, an area that is unregulated or shaped only by case law is negotiations between employers and workers (labour disputes).

Ensure legal certainty and legal clarity

Thus, by contrast with the situation in the 1950s, 60s and 70s, it is no longer possible to say that labour legislation is a largely unregulated terrain. Rather, large swathes of labour legislation suffer from considerable over-regulation Part-time work rights alone are covered by three different laws – i.e. the law on part-time and fixed-term work, the law on parental remuneration and parental leave, and two separate laws on time for family care duties. Such a multitude of legislative rules can scarcely lead to acceptable results.


Yet the impression that labour legislation is strongly characterised by case law is correct. Even beyond the area of labour disputes, judges often come to surprising conclusions that are not always apparent from a reading of the legislative text. In this regard, the unpredictability of rulings that applies not only for the shaping of contractual work relations but also to a large extent for collective labour legislation. This is the root of the short – and hence, in absolute terms, wrong – finding that “labour legislation is worker protection legislation”. What is true is that labour legislation shapes labour relations.

Law-making and jurisprudence at European level is also becoming increasingly important for German labour legislation. The number of directive or regulations on labour-related issues is constantly expanding, for instance the working time directive or agency work directive, the directive on the European works council or the regulation and directive on formation of the European company. Brussels regulates in many areas and the European Court of Justice in Luxembourg reinforces this trend. In addition, decisions of the European Court of Justice seem to be giving greater weight to human rights. That has made German labour legislation even more opaque in recent years. Legal certainty and legal clarity for employers and workers have often fallen by the wayside. The task of the German legislator and the German government is to create legal certainty in labour legislation and in not to lose sight of important employment effects in the process. A good social framework is what creates jobs!

Remove the brakes on employment

Shaping contractual work relations is first and foremost a task for the contracting parties. Employers and workers are best placed to know how to structure their contractual relations. This applies for starting, implementing and ending the work relationship. As in almost all other areas of civil law, the legislator must flank this process. For instance, a contribution to this end is the law on protection against dismissal. However, a law with only 23 paragraphs has now been expanded with 3,000 pages of basic comments. It is clear that this means an imbalance – just compare the basic comments on the German Civil Code with almost 2,000 paragraphs. In this way, the law on protection against dismissal has become an obstacle to employment. This is particularly the case for small and medium-sized enterprises which often shrink from taking on new workers even if they have healthy order books. Hence, further development and contractual leeway in the rules on protection against dismissal can make a contribution to more employment through greater legal certainty.


Under no circumstances should there be new regulation and new bureaucracy. Fixed-term and agency work in particular have proved to be engines for jobs on the labour market and pathways into work. Although individually negotiated contracts are not a specific form of employment and the workers employed under them are covered by the entire corpus of labour and collective agreement legislation in Germany, they are often characterised as a “precarious” form of employment. An individually negotiated contract is not a type of employment but a possibility to organise contractual relations between private individuals, between companies and consumers and also between companies. Individually negotiated terms for protection against dismissal create legal certainty for both parties and as such are conducive to job creation.

Modernise labour legislation and secure autonomous social partnership

The collective components are what distinguishes German labour legislation. The link between collective law on the one hand and worker involvement law on the other is unique in Europe in this form, and perhaps worldwide. No other country in the world has such wide-ranging co-determination and involvement rights for workers, no other partner country in the European Union has so far wanted to copy the German co-determination model. Co-determination at plant and company level can stabilise and safeguard employment. However, for this, it needs to be incorporated in European company and worker involvement legislation. Moreover, co-determination must not be impeded by unduly long consultation periods for business-driven restructuring operations.

Freedom of association and autonomous social partnership are part of the success story of the German labour market. Collective legislation is one of the indispensable components of our economic order. Order and peace in labour relations are their most important task. This order and peace is rooted in acceptance of the German collective agreement system which in turn is essentially characterised by the institution of sector-wide collective agreements. In recent years collective agreements have been modernised and further developed through a large number of opening clauses. They offer a reliable basis for the parties to the collective agreement and, through opening clauses, to partners at plant level. This reliable basis must be preserved. An essential condition for this is that the principle of a single agreement and the duty of peace are secured in the existing law on collective agreements.

BDA therefore stands for:
  • Streamlining and modernisation of existing legal provisions
  • Options for contractual relations between employer and worker
  • Innovative forms of working, in particular flexible working time rules
  • Modern industrial relations and co-determination
  • Functional and autonomous social partnership