Germany

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Compared to many other countries, Germany has rather strict labor and employment laws. The current government has just announced plans to make employment law more flexible through comprehensive changes. Among other things, these plans include:

  • Allowing fixed-term employment contracts more frequently and for longer periods
  • Enabling employers to terminate the employment of “high earners” in exchange for a severance payment, even without a specific reason
  • Tightening the requirements for employees to take sick leave
  • Making it easier to implement and update software in companies with a works council.

Against this background, employers should already assess how they can best benefit from the new regulations, for example with regard to employment contracts and proceedings in case of terminations. However, it should be noted that the plans still need to be approved by parliament and implemented into law. Changes to the plans are therefore possible.

Key takeaways

  • For employees hired until December 31, 2030, it is planned that fixed-term employment contracts without objective grounds will be permitted for a maximum duration of up to four years and may be extended up to six times. This would provide additional flexibility for employers and is particularly helpful for companies that rely on such flexibility, such as start-ups.
  • For high earners, it is planned to introduce a regulation effective January 1, 2027 that allows termination of the employment relationship in exchange for a severance payment. Even if a court does not consider the termination to be socially justified, this instrument would still allow the employment relationship to be terminated. This creates a promising tool in termination proceedings involving employees with high income.
  • Other planned changes, such as stricter rules for employees taking sick leave, tax advantages for severance payments also appear attractive for businesses in Germany.
  • Even though the resolutions of the coalition committee must still be approved by parliament, the plans are already quite tangible. The likelihood of approval is increased given that the proposals are the result of negotiations between the coalition parties.

In more detail

More flexibility for fixed-term contracts:

  • For employees hired until December 31, 2030, it is planned that fixed-term employment contracts without objective grounds will be permitted for a maximum duration of up to four years – rather than the previous two years – and may be extended up to six times, instead of the previous limit of three extensions. In this context, it will also be possible to rehire an employee by the same employer for the first time.
Continue Reading Planned Significant Changes to German Employment Law

The EU Pay Transparency Directive’s transposition deadline—June 7, 2026—has passed. As of the June 7 deadline, only a handful of Member States—notably Slovakia, Italy and Lithuania—have fully or largely implemented the Directive, with most others still working through draft legislation or delayed timelines.

Most member states are behind, resulting in uneven implementation across the bloc and leaving employers to navigate a fragmented and evolving landscape with staggered national rollouts and divergent approaches across jurisdictions. Here’s what US-based multinationals need to know now.

The Practical Outlook for Multinational Employers

For US companies managing EU workforces, the next 12–24 months will look like:

Patchwork Implementation

  • Countries will finalize laws on different timelines
  • Some will gold-plate requirements (e.g., broader scope, stricter remedies)
  • Others may take a more minimalist approach

Rolling Compliance Programs

  • Employers will need to sequence implementation by jurisdiction
  • Internal frameworks must be modular and adaptable, not one-size-fits-all

Heightened Litigation & Enforcement Risk

Even before full implementation, expect:

  • Increased employee claims and works council pressure
  • Greater scrutiny of pay equity and transparency practices
  • Use of existing laws (e.g., equal pay frameworks) alongside emerging rules

Reminder of the Directive’s Core Requirements

The Directive introduces a consistent set of core obligations across the employment lifecycle, centered on greater transparency, more rigorous pay monitoring, and enhanced enforcement risk—though the detail and delivery will vary by country.

Continue Reading EU Pay Transparency Directive: Deadlines Missed, But the Real Work Starts Now
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We recently recorded a lively discussion with several of our Baker McKenzie colleagues to discuss the major developments impacting multinational employers operating in Europe. For your convenience, click here for a link to the recording.

To preview some of the key changes our team highlighted, read on!

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As AI adoption accelerates across workplaces, labor organizations around the world are beginning to take notice—and action. The current regulatory focus in the US centers on state-specific laws like those in California, Illinois, Colorado and New York City, but the labor implications of AI are quickly becoming a front-line issue for unions, potentially signaling a new wave of collective bargaining considerations. Similarly, in Europe the deployment of certain AI tools within the organization may trigger information, consultation, and—in some European countries—negotiation obligations. AI tools may only be introduced once the process is completed.

This marks an important inflection point for employers: engaging with employee representatives on AI strategy early can help anticipate employee concerns and reduce friction as new technologies are adopted. Here, we explore how AI is emerging as a key topic in labor relations in the US and Europe and offer practical guidance for employers navigating the evolving intersection of AI, employment law, and collective engagement.

Efforts in the US to Regulate AI’s Impact on Workers

There is no specific US federal law regulating AI in the workplace. An emerging patchwork of state and local legislation (e.g. in Colorado, Illinois and New York City) address the potential for bias and discrimination in AI-based tools—but do not focus on preventing displacement of employees. In March, New York became the first state to require businesses to disclose AI-related mass layoffs, indicating a growing expectation that employers are transparent about AI’s impact on workers.[1]

Some unions have begun negotiating their own safeguards to address growing concerns about the impact that AI may have on union jobs. For example, in 2023, the Las Vegas Culinary Workers negotiated a collective bargaining agreement with major casinos requiring that the union be provided advance notice, and the opportunity to bargain over, AI implementation. The CBA also provides workers displaced by AI with severance pay, continued benefits, and recall rights.

Similarly, in 2023 both the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) negotiated agreements with the Alliance of Motion Picture and Television Producers (AMPTP) that include safeguards against AI reducing or replacing writers and actors. WGA’s contract requires studios to meet semi-annually with the union to discuss current and future uses of generative AI—giving writers a formal channel to influence how AI is deployed in their industry. The SAG-AFTRA contract requires consent and compensation for use of digital replicas powered by AI.

Continue Reading Navigating Labor’s Response to AI: Proactive Strategies for Multinational Employers Across the Atlantic

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