No More Sick Leaves In Germany, Workers Could Need Medical Certificate From Day One

Germany is preparing to tighten its workplace rules under a sweeping reform package that could significantly change how employees take sick leave. One of the biggest proposals would end the practice of calling in sick over the phone, with workers instead required to submit a medical certificate from the very first day of illness.

Germany Plans Tougher Sick Leave Rules

The proposal is part of Chancellor Friedrich Merz's 34-point reform package aimed at reviving Germany's slowing economy, improving business competitiveness and overhauling labour, tax and pension policies. The government hopes to push the main elements of the package through parliament before the end of the year.

The proposed changes would also allow companies to hire employees on fixed-term contracts of up to four years until 2030. Employers would receive greater flexibility in offering dismissal-with-compensation arrangements for high-income workers.

Merz Says Reforms Will Boost Economy And Jobs

Defending the package, Merz said the reforms are intended to make German businesses more competitive while preserving the country's social welfare model.

"We are working to increase the flexibility of our businesses," Merz said.

"We are working to cut red tape. We are working to protect our welfare state, and we are working to ease the burden on employees and companies by lowering taxes," Merz said.

The Chancellor also stressed the urgency of the reforms as Germany faces economic challenges and stronger global competition.

"We want to get Germany back on track," Mr Merz told reporters.

Announcing the proposed changes to sick leave, Merz added, "We know this is a tough decision. But we can no longer afford this competitive disadvantage caused by prolonged absences from work."

The package includes annual income tax relief worth €10 billion for lower-income earners. To help fund these measures, Germany plans to increase the top income tax rate from 45% to 47% for individuals earning €280,000 or more each year.

Finance Minister and Vice Chancellor Lars Klingbeil defended the move, saying, "The highest earners in this country will take on a larger share" of the tax burden. "That is fair, so that our country can move forward."

Pension Overhaul And Hiring Flexibility

Alongside labour reforms, the government is pressing ahead with changes to Germany's pension system. A commission has proposed gradually increasing the retirement age beyond 67 and introducing a Swedish-style pension fund model to improve the long-term sustainability of public finances.

The government has said parliament is expected to approve the pension reforms before the end of the year.

Officials are also planning to reduce staffing across federal ministries by 8% through digitisation as part of wider efforts to cut bureaucracy and improve efficiency.

Reactions Remain Divided

Business groups have largely welcomed the reform package, describing it as an overdue step to improve Germany's investment climate.

Carsten Brzeski, global head of macro at ING, said, "The reform train has no brakes... this is a substantial package designed to strengthen Germany as a business location in the long run and put public finances on a ?sustainable footing."

"One is tempted to shout, 'Finally!' It took a year, but the 'summer of reform' has arrived," he said.

Employers' Association President Rainer Dulger called the proposals a "long-overdue change of course."

However, labour unions and medical professionals have raised serious concerns.

Christiane Benner, chair of IG Metall, welcomed the tax relief for workers but criticised the expansion of fixed-term contracts as an "attack on workers' rights."

Markus Blumenthal-Beier, head of the German Association of General Practitioners, warned that removing telephone sick notes would be "absolutely catastrophic" and could overwhelm the country's healthcare system.

Economists have generally welcomed the package, saying it offers long-awaited structural reforms after months of political disagreements. Marion Muehlberger of Deutsche Bank Research described it as one of Germany's most significant reform efforts in decades and said it could improve confidence in the economy during the second half of the year.