Germany

noyb has sent a cease-and-desist letter to SCHUFA, Germany's largest credit agency, for maintaining a 'shadow database' that stores data beyond legal retention periods and denying data subjects full access under GDPR Article 15. This enforcement action signals increased scrutiny on data retention and access practices, with potential class action damages of €500 per affected individual.

The German coalition has proposed amending Section 14(2) TzBfG to extend fixed-term employment without objective grounds from two to four years and allow up to six extensions. Although not yet law, employers should monitor developments and prepare for potential changes.

Germany's reform will allow employers to terminate high earners (annual income above EUR 177,450) via court-determined severance even after losing unfair dismissal litigation, with severance capped at 12-18 months' earnings. This reduces litigation risk and severance costs but requires careful monitoring of the income threshold and unresolved questions on variable pay and existing contracts.

The German Federal Labor Court (BAG) ruled that blanket garden leave clauses are potentially unenforceable, requiring case-specific justification and balancing of interests. Employers must also ensure that revocation of company car benefits during garden leave is based on legitimate business reasons and foreseeable economic consequences.

Germany has enacted a healthcare reform introducing partial incapacity for work under Section 44c of Social Code Book V, effective January 1, 2028. Employers must actively consent to partial incapacity within seven calendar days, and must prepare for new consent and implementation processes.

The German Federal Labor Court issued two decisions in August 2025 clarifying that collective bargaining agreements can validly exclude the employer subsidy for deferred compensation, and that apprentices are included in pension plan rules. Employers must review existing arrangements to ensure compliance and avoid overpaying subsidies.

The German Federal Labor Court issued decisions in 2025 clarifying that flat-rate adjustment clauses are only valid for new pension commitments after 1998, and that adjustments above the social security contribution ceiling must follow equitable discretion. Employers must review existing pension regulations and document adjustment decisions to avoid legal risks.

The Kaiserslautern Labor Court ruled that special dismissal protection under the Family Care Leave Act (FPfZG) can be denied if the employee abuses rights, e.g., by announcing care leave immediately after a separation meeting. Employers must document indicators of abuse to challenge such protection.

The German Federal Labor Court ruled that in cross-border employment terminations, the strict written-form requirement under Section 623 BGB may not apply if the termination is issued from a jurisdiction with less stringent formal requirements. This provides flexibility for employers, especially US-based ones, to terminate German employees via email or phone from abroad.

German labor courts have ruled that registered letterbox delivery no longer provides prima facie evidence of actual receipt due to digitized processes. Employers must use reliable courier services for serving important declarations like termination notices or bEM invitations to avoid invalidation.

The German Coalition Committee has agreed on a package of employment law reforms including easier dismissal for top earners, extended fixed-term contracts, and abolition of telephone sick notes. Companies operating in Germany need to prepare for these changes, with some effective from 2027.

Germany's financial regulator BaFin is creating a dedicated division to conduct targeted IT inspections at financial firms, focusing on vulnerabilities related to AI-enabled cyber attacks. This signals increased enforcement of IT security requirements and heightened regulatory scrutiny on AI cybersecurity risks in the financial sector.

Germany's BaFin found widespread deficiencies in banks' sustainability risk management, ordering improvements on 79 specific issues. Banks must promptly address ESG risk identification and management gaps to comply with regulatory expectations.

The Thuringian Higher Labor Court ruled that employers cannot enforce blanket policies restricting consecutive vacation to two weeks. Annual leave must generally be granted as uninterrupted time, and denials require specific, case-by-case reasons. This reinforces existing German labor law and may require employers to adjust internal vacation policies.

A proposed German healthcare reform will introduce partial incapacity for work (25%, 50%, 75%) for statutory health insurance members with illnesses over four weeks. Employers must adapt internal processes for assessment and payroll, with full salary during the six-week continued-remuneration period and partial pay thereafter.

Germany's Carbon Contracts for Difference (CCfDs) program for 2026 allocates €5 billion to decarbonize energy-intensive industries. Key changes include relaxed emission reduction targets (50% after 4 years, 85% final year) and expanded eligibility for CCUS and industrial steam projects.

The German Federal Labor Court ruled that traditional works council election rules apply unchanged to digital platform work, requiring institutionalized management structures for establishment status. This provides legal certainty for employers but excludes remote digital work units from works council elections under current law, prompting calls for legislative reform.

Germany has implemented a phased B2B e-invoicing mandate requiring all companies to receive e-invoices since January 1, 2025, with full issuance requirements rolling out by 2028 based on company size. The German Federal Ministry of Finance has issued FAQs clarifying practical implementation details, including that simple email inboxes may suffice for receiving and that fully automated processing is not mandatory. This aligns with the EU's VAT in the Digital Age (ViDA) initiative and requires structured formats like XRechnung or ZUGFeRD compliant with EN 16931.