Wed, Dec. 24, 2003

Relaxed Employment and Termination Rules Effective Soon

CK - Washington.   Relaxed rules will become effective very soon, Simon's Blawg notes. The Stuttgart Chamber of Commerce provides a useful summary in German.

Companies not older than four years may now conclude temporary employment agreements, for up to four years. The rules on the termination of employees are substantially clearer: There are fixed severance structures for terminated employees who waive their right to challenge a termination in court. In addition, workable criteria apply to the selection of employees for termination based on business developments, and the standard of judicial review of adherence to the criteria is no longer simple negligence. While employees may generally not be required to work more than an average of 48 hours per week over a six month term, new collective bargaining agreements may deviate from this standard.

The effective date of the new employment rules is January 1, 2003. Internationally, they should make the work force in Germany more competitive. The special rules for new ventures should enable international businesses to test the German market for a good number of years without incurring the previously substantial penalties for terminating employees when leaving the market. The severance criteria render the costs of an engagement in Germany greaty more predictable.

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