German Coalition Bargains Over Eight-Hour Day as July Deadline Looms

Business associations, unions, and lawmakers are locked in tense negotiations this week over a sweeping labour-market reform package, with a self-imposed deadline of 6 July to settle financing and the 2027 federal budget. At the heart of the dispute: whether Germany’s traditional eight-hour workday should remain the legal rule or give way to more flexible, weekly-hour models.

The German economy’s hourly labour costs hit roughly €45 in 2025, well above the EU average of €34.90. That gap has spurred employer groups such as the BDI and DIHK to call for a break from what they call the “rigid eight-hour day.” They want fewer bureaucratic hurdles and a shift toward weekly maximum hours rather than daily caps, arguing that competitiveness depends on more adaptable schedules.

CDU politician Mathias Middelberg stressed ahead of the coalition committee that any reform should allow a “more flexible distribution of hours without necessarily expanding the total volume.” The Association of Business Law Firms explicitly backs replacing the daily limit with a weekly ceiling.

But the hospitality sector is frustrated. DEHOGA Bayern criticised a draft presented on Tuesday, saying it primarily permits deviations from the eight-hour rule through collective agreements. They argue that falls short of what the coalition agreement had promised.

Recording Working Hours: A Legal Patchwork

While the Bundestag has yet to pass a definitive statute on working-time recording, companies are already required by law to log hours. The obligation stems from a 2019 European Court of Justice ruling and a 2022 decision by the Federal Labour Court (BAG). Employers must document start, end, and duration of daily work including breaks—even for trust-based working time.

Bundestag President Bärbel Bas has announced a new legislative draft for June, after a previous attempt by the Labour Ministry collapsed in 2023. Until then, businesses retain some discretion over the recording method, provided data protection and practicability are ensured. In the SME sector, discussions are intensifying around local solutions that reduce reliance on cloud-service providers.

Overtime and Travel: What Counts as Work?

Employers can only order overtime unilaterally if the employment contract, a works agreement, or a collective bargaining contract explicitly allows it. Without such clauses, compulsory overtime is permissible only in unforeseeable emergencies. In all cases, the daily maximum of ten hours and the mandatory eleven-hour rest period remain inviolable.

Court rulings are also sharpening the rules on travel time. The normal commute between home and office still does not count as working hours. However, according to the BAG, field-service trips to the first customer, or business travel by train or plane, can be considered working time. Drivers and co-drivers are subject to separate regulations.

Tax Relief for Small Incomes – With a Handicraft Warning

Parallel to the hours debate, the coalition committee is hammering out tax relief. Germany’s unit labour costs stood about 22 percent above those of key competitor countries in 2024. The planned response: raise the basic tax-free allowance to as much as €13,084, targeting low and middle earners.

Craft and trade associations are wary of additional burdens. Jörg Dittrich, president of the German Confederation of Skilled Crafts, urged politicians not to hamper small and medium-sized enterprises with fresh bureaucracy. The Central Association of German Crafts has demanded a one-year postponement of the mandatory e-invoicing requirement, arguing that many firms are not yet technologically ready to receive digital invoices.

The coalition aims to reach a comprehensive agreement on both the reform package and the 2027 budget by 6 July. Whether the eight-hour day will survive the deadline intact remains the most contentious question on the table.

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