Legal changes and developments in labor law in 2026 – Overview

Increase in the statutory minimum wage

As of January 1, 2026, the statutory minimum wage has been raised to €13.90 gross per hour worked. The legal basis for this is the Fifth Minimum Wage Adjustment Ordinance of November 5, 2025, which came into force at the beginning of the year. Employers have been obliged to comply with this new minimum wage since then.

Unjustified fixed-term contracts after reaching the standard retirement age

One significant change affects employees who have reached the standard retirement age. For this group of people, the previous ban on continuing employment under fixed-term contracts without objective grounds will no longer apply in future.

The aim of the new regulation is to make it easier for people to continue working voluntarily after retirement and, in particular, to enable them to return to their former employer. Employment during retirement was already legally permissible, for example with another employer, on a fixed-term or permanent basis for objective reasons. However, it was not possible to enter into a new fixed-term contract with the previous employer without objective reasons. This restriction has now been lifted.

Works council elections 2026

In 2026, regular works council elections will take place again as scheduled. The legally stipulated election period runs from March 1 to May 31, 2026.

Employers must facilitate the election and may not influence either the process or the outcome. Preparatory measures – such as the appointment of the election committee – trigger special protection against dismissal and discrimination for the employees involved.

From an employment law perspective, it should also be noted that formal errors in the election process can justify contesting the election. Typical sources of error include election deadlines, the voter list, or the proper election procedure. Dealing with the legal requirements at an early stage helps to avoid undue influence and formal deficiencies. At the same time, with a newly elected works council, issues of cooperation, co-determination, and training regularly need to be reorganized.

Implementation of the EU Pay Transparency Directive by June 2026

Member States must transpose Directive (EU) 2023/970 on strengthening pay transparency into national law by June 7, 2026, at the latest. The directive aims to effectively reduce the persistent pay gap between women and men and to better enforce the principle of equal pay.

Since the gender pay gap in Germany has hardly changed despite the Pay Transparency Act, which has been in force since 2017, the EU is now focusing on binding transparency, verification, and sanction mechanisms. In the future, employers will no longer be able to simply declare that they pay equally, but will have to prove the objectivity, transparency, and gender neutrality of their remuneration systems.

The directive has been in force since June 2023. In Germany, a comprehensive reform of the Pay Transparency Act is expected; the first drafts of the legislation are expected in early 2026. This leaves companies with a tight timeframe to adapt their existing remuneration models.

The directive introduces significant changes in terms of content: salary ranges must be disclosed as early as the application stage, and previous salaries may no longer be used as a basis for remuneration decisions. Employees are granted extended rights to information about their own remuneration and the average remuneration for comparable jobs, broken down by gender. This information must be provided within a short period of time. In addition, criteria for remuneration, bonuses, allowances, and promotions must be documented transparently.

Depending on the size of the company, there are also graduated reporting requirements. If gender-specific pay differences of at least five percent that cannot be explained objectively are identified, mandatory joint pay analyses with employee representatives may be required. Violations can result in fines, claims for back pay and damages, and a shift in the burden of proof to the employer, and pose significant reputational risks.

Companies should therefore review existing remuneration structures, define salary bands, and prepare internal processes for information and reporting requirements.

Platform work: Implementation of the EU Directive by the end of 2026

In addition, the EU directive on improving working conditions in platform work must be transposed into national law by the end of December 2026 at the latest. The directive, which was adopted in 2024, aims to readjust the legal classification of digitally mediated work and strengthen the protective rights of platform workers.

At the heart of the regulation is the introduction of a legal presumption of the existence of an employment relationship, provided that certain control criteria are met. The background to this is that many platform workers are formally self-employed, but in fact their work is largely determined by others. Although individual cases will still be examined on a case-by-case basis, the burden of proof will shift significantly.

In future, an employment relationship will be presumed if the platform controls essential aspects of the work, for example through specifications regarding remuneration, work organisation or conduct towards customers, through performance monitoring (e.g. algorithmic evaluation systems) or through restrictions on entrepreneurial freedoms such as the rejection of orders. In these cases, the platform must demonstrate that the work is not dependent employment.

In addition, the directive contains extensive transparency requirements for algorithmic management. Platforms must disclose how automated systems influence decisions on work assignment, evaluation, or sanctions. Particularly intrusive practices, such as fully automated decisions without human control, will be restricted.

The regulations apply not only to delivery and transportation services, but also to IT platforms, crowdworking models, freelance service portals, and hybrid forms of organization. This increases the risk for companies of subsequent reclassification with significant consequences in terms of labor, social security, and liability law.

An early review of existing contract models, control mechanisms, and technical systems is therefore strongly recommended.

Changes to the responsibilities of local courts

New jurisdiction limits will apply to local courts from January 1, 2026. In civil law, cases with a value of up to €10,000 will be heard there in the first instance. At the same time, the requirement to be represented by a lawyer will no longer apply in this area. However, the previous value limit of €5,000 will continue to apply to proceedings already pending. In addition, the value limits for appeals will be raised.