Flexibility is today an integral part of the working world. Since the coronavirus pandemic at the latest, telephone sick notes, increased remote work, and the like have become an indispensable part of everyday life. Now the federal government is discussing legislative changes that would fundamentally and long-term influence the labor market. But what exactly does this mean for companies, especially the startup scene?
For young companies in particular, labor law is a decisive factor, as startups must grow quickly, respond flexibly to market changes, and compete for skilled workers at the same time. Accordingly, the scene – including in the Munich ecosystem – is following the announced plans for labor market reform very closely. While some measures could reduce administrative overhead or open up new scope for action, others face significant criticism.
Fitness to work certificates: More control or more bureaucracy?
Among the discussed changes is a requirement that employees submit a fitness to work certificate (AU) from the first day of illness onwards. At the same time, the option of telephone sick notes is to be eliminated.
For Niclas Lehnert, co-founder of Pulsetrain, this combination would be scarcely practical.
“This contradicts our flexible startup core. For example, someone suffering from gastroenteritis at home shouldn’t have to drag themselves to a doctor’s office on top of that.”
From his perspective, the regulation could even have the opposite effect. Overloaded doctor’s offices could issue longer sick notes to avoid additional appointments. The result could be longer average periods of illness absence instead of greater control.
There is also the risk that employees come to work despite being ill to avoid visiting the doctor – with correspondingly higher infection risk in the team.
Longer fixed-term contracts: More flexibility – but not for every startup
Another component of the labor market reform concerns fixed-term employment contracts. In future, fixed-term contracts without a specified reason are to be permitted for up to 48 months instead of the previous 24 months. The number of permissible contract extensions is also to increase from three to six.
For Pulsetrain, this would be particularly beneficial for student workers and minijob employees. Niclas Lehnert sees more flexibility for smaller companies that often need to plan their staffing on a project-by-project basis.
Karen Brandt, chief people officer at Munich-based auto subscription company Finn, assesses the planned change quite differently.
“A flexible labor market is very valuable for startups. The coalition now wants to enable longer fixed-term contracts, which in theory should provide that flexibility. In practice, this is an attempt to solve a problem that at least for Finn is not one.”
According to her experience, fixed-term contracts primarily increase administrative overhead.
“Our experience: Fixed-term contracts significantly increase administrative complexity and costs without creating genuine flexibility. We use fixed-term contracts only very selectively and always pursue the goal of binding talent to Finn long-term and on a permanent basis.”
In the competition for tech talent, long-term perspectives are more important than additional opportunities for fixed-term contracts.
Minijobs could become less attractive after labor market reform
Minijobs are also on the reform agenda. According to the current plans, the flat tax rate is to increase from currently two to five percent.
From Pulsetrain’s perspective, this could reduce the attractiveness of minijobs. Should employers increasingly avoid this form of employment, companies would need to offer alternative employment relationships. This could increase personnel costs and restrict flexibility, particularly for smaller companies, or reduce their job offerings. In political discussions, there was even talk at one point of completely abolishing minijobs.
Dismissal law: Support at Finn
In addition to fixed-term contracts, the reform package also contains changes to dismissal law for high earners.
Finn evaluates this part of the reform positively.
“We welcome restricting dismissal rights for high earners. This also demands more from income groups that are less affected by fixed-term contracts, for example. Otherwise, you’re shifting the risk onto those you actually mean to protect.”
Less data protection bureaucracy could relieve startups
In addition to labor law changes, the government program also contains economic policy measures that particularly affect technology-oriented companies.
Pulsetrain welcomes the announced simplification of data protection for smaller companies. Fewer documentation requirements could free up resources to be invested instead in product development or growth.
The company also evaluates the planned support for battery cell and semiconductor production positively. Pulsetrain is itself active in this industrial environment and could benefit from additional investment.
