Roughly 4,000 demonstrators took to the streets of Hamburg in early July, voicing anger over what they see as a looming rollback of social protections. The protest came just days after the German government approved an extensive reform bundle touching everything from sick leave rules to the tax code. Chancellor Friedrich Merz defended the changes at a party conference, calling them essential for future economic success. But within the ruling coalition itself, key details remain unsettled.
Doctors Blast Return of Day-One Sick Notes
Under the new rules, employees will again need a doctor’s certificate starting on the very first day of illness. Telephone-based sick notes—a pandemic-era convenience—are being scrapped entirely. The German Association of General Practitioners and the National Association of Statutory Health Insurance Physicians (KBV) have slammed the move as symbolic politics that will swamp practices with
The general practitioners’ association estimates that the change could trigger roughly 30 million extra visits to doctors’ offices each year, straining already tight medical capacity. The German Institute for Economic Research (DIW) warns that crowded waiting rooms could increase the risk of infection. Yet data from the KBV’s central institute show that phone-based sick notes currently account for only about one percent of all medical certificates for incapacity to work. Critics accuse the government of sending a signal of mistrust toward employees.
Fixed-Term Contracts Double; Job Protection Eases for Top Earners
One of the most far-reaching measures extends the maximum duration of fixed-term contracts without a specific reason from two years to four. Within that 48-month window, up to six renewals are allowed. The provision is temporary, running until the end of 2030. Employer associations welcome the added flexibility, while the German Trade Union Federation (DGB) and the ver.di service union warn of growing job insecurity and a further precarisation of the labour market.
Separately, the government is loosening dismissal protection for high earners. Workers earning roughly €177,000 to €180,000 a year—the top ten percent of the income scale, an estimated 2.4 million full-time employees—could lose their current protection against unfair dismissal and instead receive a statutory severance entitlement. The change is scheduled to take effect on 1 January 2027.
Tax Cuts for Families, Higher Levies on the Wealthy
On the tax side, a family earning an average of €60,000 a year stands to save about €600 annually. The basic tax-free allowance rises to €12,900. To fund these reliefs, the so-called “rich tax” is being tightened: incomes above €250,000 will be taxed at 45 percent, and those above €280,000 at 47 percent.
Social welfare organisations and the Left Party complain that millions of low earners who already pay no income tax get nothing from the reform. At the same time, the government plans a crackdown on alleged benefit fraud. A new competence centre under the Federal Employment Agency will enforce stricter cooperation duties for recipients of basic income support—the scheme that replaces the former Bürgergeld.
Coalition Strains and Unanswered Questions
Despite the government’s united front, leading figures from the Social Democratic Party (SPD) have recently signalled willingness to negotiate the practical implementation of the sick-note requirement. Opposition parties and economists question the scientific basis for the stricter sick-pay rules. Experts note that a significant portion of the recent rise in sick leave rates can be traced to the switch to electronic sick notes (eAU)—not to abuse.
