Fixed-Term Employment Without Objective Grounds for Up to Four Years? What the Proposed Reform Means for Employers

In early July 2026, the coalition committee announced a significant expansion of fixed-term employment without objective grounds: employment relationships are to be permitted for up to 48 months without objective justification and may be extended up to six times; the proposal also contemplates a “renewed initial hiring by the same employer.” For employers, this would create greater flexibility. However, several issues remain unresolved, including the continued application of the prior-employment prohibition, the treatment of existing fixed-term arrangements, and the temporal scope of the new rules.

Under Section 14(2) of the German Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz – TzBfG), an employment agreement may currently, as a general rule, be entered into for a fixed term without objective grounds for a maximum of two years and may be extended no more than three times.

These limitations are set to be extended. According to the “Program for Growth and Employment,” employees hired on or before December 31, 2030 are to be subject to a maximum fixed-term duration of 48 months, with up to six extensions. However, no draft legislation has yet been published. Whether additional requirements will apply therefore remains to be determined by the future statutory text. Until the new law enters into force, Section 14(2) TzBfG continues to apply unchanged in its current form.

Under Section 14(2) sentence 2 TzBfG, a prior employment relationship generally precludes a fixed-term employment arrangement without objective grounds. Case law already recognizes certain exceptions where the prior employment occurred a very long time ago, was of an entirely different nature, or was only of very short duration. There is no fixed waiting period; for example, the German Federal Labor Court held that prior employment dating back 22 years did not preclude a new fixed-term arrangement (BAG, judgment of August 21, 2019 – 7 AZR 452/17).

Against this backdrop, the announced “renewed initial hiring by the same employer” would significantly alter the current prior-employment prohibition. It remains unclear, however, whether the future rules will provide for a statutory waiting period or broader exceptions.

For existing fixed-term employment arrangements without objective grounds, any transitional provisions will be critical. One conceivable approach would be to permit extensions up to the new maximum overall duration while crediting prior periods of employment and prior extensions.

For example, if an employee has already been employed for 18 months under a fixed-term arrangement without objective grounds when the new law enters into force, the employment relationship could potentially be extended up to an aggregate total of 48 months. By contrast, if the employment relationship has already ended after exhaustion of the current 24-month limit, any subsequent rehire would depend on how the concept of “renewed initial hiring” is ultimately structured.

It also remains open whether an employment relationship commenced on or before December 31, 2030 may still be extended after that cutoff date and whether the full maximum duration of 48 months may then be exhausted.

The reform would create new options for employers, but it is not yet applicable law. Companies should therefore continue to align their contract practices with the current legal framework.

This means:

Until the draft legislation is published, employers should therefore monitor the reform closely while continuing to structure fixed-term arrangements strictly in accordance with current law.

As of August 18, 2026