German Working Time Act: Is long-awaited flexibility finally coming?

German Working Time Act: Is long-awaited flexibility finally coming?

Since the Federal Labour Court (BAG) confirmed in 2022 that employers must record working hours under the Occupational Health and Safety Act, the Federal Government has repeatedly announced a comprehensive reform of the Working Time Act (Arbeitszeitgesetz, ArbZG) to codify recording duties and modernise working time rules.

So far, however, draft legislation has failed to materialise, reflecting coalition differences and resistance from employee representatives. Recent signals from the Federal Ministry for Economic Affairs indicate that this could finally change. The Ministry has presented labour market proposals (National Tourism Strategy, 28 January 2026), including moving from a strict daily maximum working time to a more flexible weekly limit of up to 48 hours, in line with EU law.

Concrete elements suggested by the Federal Ministry of Economic Affairs

The Federal Ministry suggests the following labour market measures:

• Shift towards a weekly working time limit (up to 48 hours) instead of a strict daily cap, enabling more flexible scheduling.
• Financial incentives for additional work, including tax free overtime premiums and favourable treatment for part time employees who temporarily increase hours.
• Retention of older workers via “Active Pension”: since 1 January 2026, up to EUR 2,000.00 of post retirement employment income can be earned tax free.
• Facilitated access to skilled labour from abroad, with the creation of a fully digital “Work and Stay Agency” serving as a single contact point, centralised online application procedures and a target of eight week qualification recognition.

Part of a wider call for structural reform – new debate on part time

The initiative of the Ministry of Economic Affairs sits within a wider push to modernise Germany���s labour and social framework, reduce bureaucracy and address structural labour shortages. Most recently, the CDU’s economic wing has sparked debate with a proposal to limit the statutory entitlement to request part time work to specified reasons (e.g., childcare, care for relatives, training). The proposal has drawn significant criticism, also within the government, and from employees’ and employers’ organisations.

What to expect next

While the need to reform the Working Time Act is broadly acknowledged, there is still no certainty when the awaited reform of the Act will be delivered. Working time limits and restrictions on part time entitlements may dominate the current debate. At the same time, discussions on narrowing time recording obligations continue, including reform proposals to exclude certain groups such as:

• Employees with salaries above certain salary thresholds, e.g. exceeding the social security assessment ceiling amount (in 2026: EUR 101.400.00/year).
• Statutory Managing Directors, Board Members and Executive Employees;
• Certain professions, e.g. independent professions (e.g. lawyers);
• Certain sectors (e.g. financial services, legal services, consulting or specific IT functions).

Practical Action Points for Employers

Employers should use the current window to stress test working time models and time recording systems, so they can move quickly if a compromise emerges.