No more sick leave for German workers without medical certificate in Merz's new labor reforms

German Chancellor Friedrich Merz on Thursday outlined a 34-point package of pension, tax and labor reforms to “cut red tape” and boost growth, employment and competitiveness.

“We are working to reduce red tape. We are working to protect our welfare state and we are working to ease the burden on employees and businesses by cutting taxes,” Merz said, adding that the government aims to push the main elements of the package through parliament by the end of the year.

For German workers, however, this means that they will no longer be on sick leave without a medical certificate.

Quick answers to key questions

•5 QUESTIONS

Under Merz’s new labor reforms, German workers must submit a medical certificate from the first day of their incapacity for work, eliminating sick days without such documentation.

The requirement for a medical certificate is intended to reduce the number of sick days of employees, thereby increasing productivity and participation in the workplace.

The changes to incapacity for work, which require medical certificates from day one, are part of a wider 34-point package of labor reforms proposed by Merz, which is expected to be enacted by the end of the year.

Yes, the reforms are partly aimed at preventing the abuse of social benefits, which includes tightening measures against fraudulent sick leave applications.

Merz’s reforms include provisions for fixed-term contracts, easier dismissals for high earners and tax breaks for families, all designed to boost growth, jobs and competitiveness.

In an effort to reduce days lost due to sick leave, German workers would not be able to call in sick by phone under new labor market reforms, Reuters reported. They would need a medical certificate from the first day of their incapacity for work.

Reuters reported that by 2030, companies would be given more room to offer fixed-term contracts of up to 48 months to new hires. They would also be offered more freedom to make layoffs with compensation for very high earners.

Read also | The internet goes berserk when a manager requests an employee’s current location on sick leave

Pensions

In the 34-point package, Merz proposed implementing the pension commission’s recommendation to introduce an additional capital markets-based element to the state pension system, along with a gradual increase in the retirement age over the coming decades.

Tax credits for households

There is also a household income tax break of more than €600 ($685) for a working family with two children through higher benefits, with moderated progression for middle income earners.

The measures would reportedly provide €10 billion in relief annually. It would be partly funded by increasing the top tax rate to 47% from 45% for top earners with an annual taxable income of €280,000 or more.

Read also | Heat wave in Europe: Germany, Denmark and the Czech Republic experience the hottest days on record

Industry and technology

The package also seeks to support key industries including automotive, chemicals and pharmaceuticals, cleantech, machinery, batteries, semiconductors and artificial intelligence.

The Deutschlandfonds investment financing framework would expand to a strategic investment vehicle focused on resilience, energy and raw materials, Reuters reported.

Intervention against the abuse of social benefits

Measures against benefit fraud should be strengthened through greater data sharing between authorities and better enforcement.

Energy & Infra

Accelerate the expansion of the electrical distribution network with the aim of halving the implementation time of network projects. Industry to get clearer guarantees on grid connection timetables.

Trade

Strengthen EU anti-dumping and anti-subsidy measures and EU preferential rules. In certain strategic sectors involving non-European investment, technology transfer requirements should be considered.

Read also | From US to Germany: Indian students eye ‘new era’ study destinations. Here’s why

Housing

Create a federal housing corporation to build affordable housing and ease mortgage lending requirements to stimulate mortgage financing. Adopt legislation that will prevent the transition to public control of private rental housing by regional authorities.

Measures to reduce deregulation and red tape

Reduce reporting and documentation requirements and reduce the company’s compliance burden, including by limiting supply chain due diligence obligations to very large companies.

The measure would include automatic approval of applications after four months if authorities did not intervene, and a targeted 8% reduction in staffing across much of the federal government.