German coalition doubles maximum fixed‑term contract length to 48 months as share falls to 6 % in 2025 — UnionPress

The governing coalition announced in early July 2026 that the permissible total duration of open‑ended fixed‑term contracts will be doubled to 48 months, with up to six extensions, while Statistisches Bundesamt data show the share of such contracts slipped to 6 % of the employed 15‑64 population in 2025.

In early July 2026 the German governing coalition decided to double the maximum total duration of open‑ended fixed‑term contracts to 48 months, to allow up to six extensions and to set the provision to expire at the end of 2030. The decision arrives against a backdrop of a modest decline in the use of fixed‑term contracts: Statistisches Bundesamt data show that 2.2 million workers – 6 % of employed persons aged 15‑64 – were on such contracts in 2025, down from a 7 % share in 2015.

The latest labour‑market statistics released by Statistisches Bundesamt and reported by Handelsblatt indicate that 2.2 million people in Germany held a fixed‑term contract in 2025. This represents 6 % of the employed population aged 15 to 64 who were not in education, training or voluntary service. The same source notes that the share had been 7 % in 2015, confirming a slight downward trend over the past decade.

These figures are significant for public‑affairs professionals because they provide a baseline against which the impact of the upcoming legislative change can be measured. A reduction from 7 % to 6 % suggests that the market is already moving away from temporary employment, a development that may influence how employers and workers perceive the new flexibility measures.

According to the same Handelsblatt article, the coalition decided in early July 2026 to double the permissible total duration of sachgrundlos – that is, without a concrete justification – fixed‑term contracts from the previous limit of 24 months to 48 months. The decision also introduces the possibility of up to six extensions within that total period. Both the duration increase and the extension allowance are set to expire on 31 December 2030.

The legislative text does not alter the fundamental requirement that a fixed‑term contract must be justified after the first 24 months, but it does broaden the window in which employers can use sachgrundlose contracts without providing a specific reason. The coalition framed the change as a way to inject “more flexibility and dynamism into a sluggish labour market,” a phrase taken directly from the source.

Steffen Kampeter, speaking on behalf of the employers’ lobby, warned that “the hiring brakes must now be lifted quickly.” His comment, quoted in the source, underscores the pressure from business groups for rapid implementation of the promised easing.

The timeline provided in the research packet is straightforward. In 2025 Statistisches Bundesamt published the labour‑market figures that form the statistical backdrop for the policy debate. The coalition’s decision followed in early July 2026, after negotiations with the Union party, which had pressed for a faster rollout of the reforms.

From the date of the decision, the new maximum duration and extension rules are expected to enter into force once the corresponding amendment to the German Civil Code (BGB) is formally adopted. The packet does not specify the exact adoption date, but the expiry clause is fixed at 31 December 2030, meaning that any employer‑or‑employee dispute arising after that date will be judged under the pre‑2026 rules.

Stakeholders should therefore monitor the legislative process for the formal publication of the amendment in the Bundesgesetzblatt. The amendment will likely be accompanied by guidance from the Federal Ministry of Labour and Social Affairs (BMAS) on how to document extensions and calculate the cumulative duration of a sachgrundlos contract.

Employers across sectors will be able to offer longer temporary contracts without having to justify each extension individually, provided they do not exceed the 48‑month ceiling or the six‑extension limit. For workers, the change could mean longer periods of employment security under a fixed‑term arrangement, but also a potential extension of the time before they acquire the same rights as permanent employees, such as protection against unfair dismissal after six months of continuous employment.

Collective‑bargaining organisations and trade unions have signalled that they will scrutinise the implementation to ensure that the extension mechanism is not abused. The expiry clause at the end of 2030 offers a natural point for evaluation: if the share of fixed‑term contracts continues to decline, the coalition’s rationale for the amendment may be reassessed.

From a compliance perspective, HR departments will need to update contract templates, internal tracking systems and employee communication strategies before the rule takes effect. The BMAS is expected to publish a detailed implementation guide, which will likely include a template for recording each extension and a checklist for verifying that the cumulative duration does not exceed 48 months.

These gaps highlight the need for ongoing monitoring of both statutory publications and employer‑reporting data once the amendment is in force.

In sum, the July 2026 decision marks a clear policy shift aimed at increasing labour‑market flexibility while the statistical trend points to a gradual reduction in the reliance on fixed‑term contracts. Employers, workers and legal advisers should prepare for the procedural steps that will follow the formal amendment, and keep an eye on the expiry date in 2030, which will provide the first opportunity to evaluate the reform’s effectiveness.