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

The coalition’s July 2026 decision will allow open‑ended fixed‑term contracts to run for up to 48 months, with a maximum of six extensions, before the rule lapses at the end of 2030. The change comes as the proportion of employees on such contracts slipped to 6 % in 2025 – down from 7 % a decade earlier.

The German governing coalition has decided to double the permissible total duration of open‑ended fixed‑term contracts to 48 months, to allow up to six extensions, and to set the measure to expire at the end of 2030. The decision arrives while the share of employees on such contracts fell to 6 % in 2025, down from 7 % in 2015.

According to the Handelsblatt article, the Statistisches Bundesamt reported that 2.2 million people in Germany held fixed‑term contracts in 2025. This represents 6 % of all employed persons aged 15‑64 who were not in education, training or voluntary service.

The same source notes that the share had been 7 % in 2015, indicating a modest decline over the ten‑year period. The figures are based on the official labour‑market statistics published by the Federal Statistical Office and are the most recent data available for the calendar year 2025.

In early July 2026 the governing coalition, under pressure from the Union, announced a amendment to the law governing sachgrundlos (objective‑reason‑free) fixed‑term contracts. The amendment doubles the maximum total duration of such contracts from the previous 24 months to 48 months. It also introduces a provision that permits up to six extensions of the same contract, provided each extension complies with the new overall limit.

The amendment is time‑limited. The text specifies that the new rules will cease to apply on 31 December 2030, after which the previous limits are expected to be reinstated unless further legislative action is taken.

These changes are presented by the coalition as a way to inject “more flexibility and dynamism” into a labour market that the government describes as “lagging”. The wording comes directly from the Handelsblatt excerpt, which quotes the coalition’s rationale.

The amendment is expected to enter into force shortly after the legislative text is formally adopted, which the packet does not date precisely. The next procedural step will be the passage of the amendment through the Bundestag and Bundesrat, after which it will be published in the Bundesgesetzblatt and become legally binding.

Employers: The new ceiling of 48 months and the possibility of six extensions give companies a longer horizon for project‑based or seasonal staffing without having to convert contracts into permanent positions. This could reduce the administrative burden of repeatedly drafting new contracts and may be particularly relevant for sectors with cyclical demand, such as manufacturing, logistics and IT services.

Employees: Workers on fixed‑term contracts will see the potential length of a single employment relationship increase. While the amendment does not alter the right to a permanent contract after a certain period, it does extend the period during which a contract can remain temporary. The impact on job security will therefore depend on how employers use the additional extensions.

Trade unions and employee representatives: The coalition’s move was taken “on pressure of the Union”, suggesting that union leaders have been lobbying for faster implementation of promised reforms. However, unions may still view the extension of temporary employment as a compromise that does not fully address concerns about precarious work.

Policy makers: The expiry clause – ending the amendment on 31 December 2030 – creates a built‑in review point. Ministries will need to assess the amendment’s impact on employment stability, hiring practices and the overall unemployment rate before deciding whether to extend, modify or let the rule lapse.

The packet does not provide details on the exact legislative text, such as whether the amendment includes any sector‑specific carve‑outs or transitional provisions for contracts already in force. It also does not state the precise date when the amendment will be published in the Bundesgesetzblatt, nor the timeline for the Bundestag and Bundesrat votes.

Another unknown is how the six‑extension limit will be operationalised. The source excerpt mentions “up to six times” but does not clarify whether each extension must be of equal length or whether the total of all extensions must stay within the 48‑month cap.

Finally, the impact on the overall share of fixed‑term contracts remains to be seen. While the share fell from 7 % in 2015 to 6 % in 2025, it is unclear whether the new rules will reverse that trend, accelerate the decline, or stabilise the figure.

After the coalition’s decision, the amendment will be drafted into law and submitted to the Bundestag for first reading. Assuming a standard legislative calendar, the bill could be debated and voted on before the end of 2026. Following Bundestag approval, the Bundesrat must also consent, after which the law will be published in the Bundesgesetzblatt. Once published, the 48‑month limit and six‑extension provision will become enforceable from the date specified in the law, likely mid‑2027.

Stakeholders are advised to monitor the legislative process closely, especially any technical guidelines the Federal Ministry of Labour and Social Affairs may issue regarding contract drafting, record‑keeping and compliance checks.

In summary, the German coalition’s July 2026 amendment seeks to give employers more leeway in using fixed‑term contracts while setting a clear expiry date. The change arrives against a backdrop of a modest decline in the share of workers on such contracts, from 7 % in 2015 to 6 % in 2025. How the new rules will shape the labour market over the next four years will depend on implementation details that are not yet public.