Sick Leave and Fixed-Term Contracts: The Reform Package Creates More Pressure Instead of Breaking Chains

The "chains" are supposed to be broken, which "our system also imposes on companies," as Federal Chancellor Friedrich Merz (CDU) formulated during the presentation of the reform package today. An interesting formulation, especially when it comes to the rules regarding fixed-term contracts and the protection of employees.

The reform package certainly has significant implications: In addition to other far-reaching changes, fixed-term contracts without a specific reason are now to be possible for up to four years, instead of the previous maximum of two years. According to the federal government's intentions, contracts can be extended up to six times within this period. This is a straightforward doubling of the current regulations. And all this in the name of flexibility, as Labor Minister Bärbel Bas stated.

This is intended to particularly benefit companies, such as startups, that want to invest in "new innovations," as well as businesses looking to expand. According to Merz, this would be "an important opportunity to create new jobs." The legislative change is set to remain in effect until December 31, 2030.

Pressure on Employees Increases

During the presentation of the reform package, it was mentioned that employees and companies should be strengthened equally. However, the pressure on many employees is increasing immensely due to the new regulations—especially through the new laws on fixed-term contracts. Ironically, the companies themselves could also feel the repercussions of this.

Job insecurity is a significant stress factor: Employees with fixed-term contracts experience a greater sense of job insecurity than those with permanent contracts. According to scientific studies, this can negatively impact health, well-being, and productivity.

Job Satisfaction Also Benefits Companies

People who received a permanent contract after a fixed-term one reported increased job satisfaction, which positively influences their commitment to the respective company. This is also practical for firms: When employees are committed to the company long-term and exhibit high work morale, it positively affects the success and growth of the business.

Whether companies will reap the benefits they hope for is also uncertain: A Belgian study examined the impact of temporary employees on the competitiveness of companies across various industries. The result: A higher proportion of fixed-term employees had no significant impact on the competitiveness of an average company—although there were differences between individual sectors.

Stricter Rules for Sick Leave Will Also Have Negative Effects

Also associated with more pressure: The option for telephone sick leave is to be abolished, and the submission of a medical certificate from the first day will be introduced—since we can no longer afford the competitive disadvantage caused by high sick leave rates in this country.

Instead of addressing the problem at its root, the pressure on employees is again intensified here. When the threshold for reporting sick is raised, it also increases the likelihood of presenteeism. This means employees work despite being ill. As a result, the chances of illnesses becoming chronic increase, colleagues may get infected—and ultimately, costs for the company rise.

The AOK also notes that a declining sick leave rate does not necessarily mean that employee health has improved—it can also be a sign of increasing performance pressure. And this will certainly not have a positive impact in the future.