Employment law 2026: Employers must be aware of these changes now

New obligations, increasing requirements and growing liability risks for companies

The year 2026 brings with it a number of changes to labor law that will have significant practical implications for employers. Human resources departments, in particular, will need to implement new transparency obligations, documentation requirements, and compensation regulations in a legally compliant manner. While employees in certain areas will benefit financially, the organizational and legal burden for companies will increase noticeably. Early legal advice from a labor law expert will help reduce liability risks and avoid compliance violations.

Minimum wage increase and new challenges for mini-jobs

As of January 1, 2026, the statutory minimum wage was raised to €13.90 gross per hour. The legal basis is Section 1, Paragraph 2 of the Minimum Wage Act (MiLoG). Employers are obligated to comply with this minimum wage, regardless of the contractual arrangements.

There are immediate consequences for marginal employment. The earnings limit for mini-jobs has been adjusted to €603 per month. The relevant provision is Section 8, Paragraph 1, Number 1 of the German Social Code, Book IV (SGB IV). In practice, the combination of the rising minimum wage and the fixed earnings limit means that the maximum permissible monthly working hours will decrease further. Even minor overtime can trigger mandatory social security contributions. Employers should therefore carefully monitor working hours and regularly review existing employment contracts.

The minimum wage increase is particularly important in the care sector. From July 2026, higher sector-specific minimum wages will apply based on the Care Working Conditions Ordinance. Care facilities must adjust their remuneration structures accordingly to avoid violations of the Minimum Wage Act.

Active pension: New incentives with potential for legal conflict

The so-called "active pension" was introduced at the beginning of 2026. It is designed to incentivize employees to continue working voluntarily even after reaching the standard retirement age. Additional monthly earnings of up to €2,000 remain tax-free; income exceeding this amount is subject to regular income tax.

In principle, the existing system will remain in place under social security law. The regulation is initially temporary and will be evaluated after two years. The exclusion of certain groups of people, particularly the self-employed, freelancers, and those in marginal employment (minijobs), is legally controversial. In this context, constitutional concerns are already being discussed with regard to the principle of equal treatment enshrined in Article 3, Paragraph 1 of the Basic Law. Initial lawsuits have been announced and could lead to court decisions during 2026.

Later retirement for severely disabled people

For severely disabled individuals, the retirement age for a full pension without deductions has been raised. According to Section 236a of the Sixth Book of the German Social Code, a full pension without deductions is now only possible upon reaching the age of 64. Early retirement from the age of 61 remains permissible, but is still subject to permanent deductions. A recognized degree of disability of at least 50 is a prerequisite. Transitional provisions apply to older age groups.

Pay transparency will become a central issue in labor law in 2026.

The greatest need for action on the part of employers arises from the implementation of the EU Pay Transparency Directive (Directive (EU) 2023/970), which must be transposed into national law by 7 June 2026. The aim is the consistent enforcement of the principle of equal pay for equal or equivalent work.

In the future, employers will be required to include information about compensation or salary ranges in job postings. Furthermore, employees' rights to information will be expanded. This development is linked to Section 7 of the German Pay Transparency Act (EntgTranspG) and goes significantly beyond its scope. Violations will result in fines and claims for damages.

These guidelines are supported by the current case law of the Federal Labor Court. According to the so-called "pair comparison" case law, it is sufficient that a female employee earns less than a specifically named colleague in a comparable position. In this case, discrimination is presumed, and the employer bears the burden of proof for objective reasons for the pay difference (Federal Labor Court, Judgment of October 23, 2025, Case No. 8 AZR 300/24).

Time tracking remains a perennial issue.

The obligation to record working time already exists. The legal basis is Section 3 Paragraph 2 Number 1 of the Occupational Health and Safety Act. The Federal Labour Court has expressly confirmed this obligation and derived it from the Working Time Directive in accordance with EU law (Federal Labour Court, decision of 13 September 2022, case no. 1 ABR 22/21).

Legal regulations are expected to be more specific by 2026, particularly regarding electronic time tracking and more flexible working time models. Even though details are still pending, employers should already ensure that working hours are fully, objectively, and transparently documented.

Works council elections 2026 and increasing susceptibility to errors

Regular works council elections will take place between March and May 2026. The relevant provisions are those of the Works Constitution Act, in particular Sections 7 et seq. The increasing complexity of company organizational structures increases the susceptibility of the election process to errors. Formal errors can lead to an election challenge under Section 19 of the Works Constitution Act. Therefore, early legal support during election preparation is strongly recommended.

Conclusion: 2026 requires active labor law management

The 2026 labor law will not bring relief to employers, but rather a further intensification of legal obligations. Minimum wage, pay transparency, time tracking, and works council elections require structural adjustments and legally sound processes. Those who act early and review their internal procedures reduce legal risks and avoid costly disputes. Sound legal advice on labor law is a crucial factor for success in this regard.

Frequently asked questions about Labor Law 2026