A daily briefing on European HR, labour law and compliance developments for SME HR teams across the EU, UK, Switzerland and the Nordics.
Top story: Germany’s reform package reshapes fixed-term contracts, sick leave and dismissal rules
The German coalition committee published its 34-point “Programme for Economic Recovery and Employment” on 2 July, and the Bundestag approved the first tranche of legislative changes on 10 July 2026. For HR teams, three measures stand out. First, fixed-term employment contracts without an objective reason can now run for up to 48 months and be renewed up to six times, doubled from the previous limits of 24 months and three renewals. This expanded framework applies to hires completed by 31 December 2030. Second, the option of obtaining a sick note by telephone will be abolished: from 1 January 2027, employees must present a medical certificate from the first day of illness, and a new three-tier partial sick pay model will take effect alongside it. Third, dismissal protection will be removed for employees earning more than 1.75 times the statutory pension insurance contribution ceiling (roughly €177,000 gross per year), allowing employers to end those relationships with a severance payment instead.
These changes represent the most significant relaxation of German employment protection rules in years, driven by the government’s response to the country’s prolonged economic downturn. The fixed-term contract extension alone will give SMEs considerably more flexibility in workforce planning, while the sick-leave changes add a new administrative layer for both employers and employees.
What to do: German employers should review their use of fixed-term contracts to take advantage of the extended 48-month window for new hires. HR and payroll teams should begin preparing for the first-day sick note requirement well ahead of January 2027, including updating internal policies, employee handbooks and absence-management workflows. Companies with high earners above the €177,000 threshold should seek legal advice on how the new severance-based termination route will work in practice once implementing legislation is finalised.
Also developing
Greece: Law 5316/2026, published in the Government Gazette on 6 July, makes Greece the fifth EU Member State to fully transpose the Pay Transparency Directive. Most operational obligations take effect on 1 November 2026, including pre-employment salary range disclosure, a ban on asking candidates about salary history, employees’ right to request pay information for comparable roles, and gender pay gap reporting for employers with 100 or more staff. Joint pay assessments will be required where a gap exceeds 5% and cannot be objectively justified. What to do: Greek employers with 100 or more employees should begin structuring pay data and job classifications now. The 1 November start date leaves less than three months to prepare reporting frameworks and audit existing pay bands for unexplained gaps.
Portugal: A draft government bill partially transposing the Pay Transparency Directive was published for public consultation on 5 August, with the consultation window closing on 25 August 2026. Portugal missed the 7 June transposition deadline, but the draft moves quickly: it will require companies with over 100 employees to disclose salary ranges in job advertisements, justify pay gaps exceeding 5% and shift the burden of proof to employers in pay discrimination disputes. What to do: Portuguese employers should review the draft during the consultation period and begin preparing pay band structures and documentation. Even before the final law is enacted, the direction of travel is clear, and early preparation reduces compliance risk.
Finland: A series of labour law amendments that took effect between January and June 2026 have materially changed the employment landscape. The dismissal threshold was lowered on 1 January from “proper and weighty reason” to “proper reason,” the most significant weakening of dismissal protection in over two decades. Employers may now also sign fixed-term contracts for up to 12 months without a justified reason, provided it is the first employment relationship with that employee in the previous five years. On 1 June, the statutory layoff notice period was halved from 14 to seven days. What to do: Finnish employers should update their dismissal procedures and documentation to reflect the lower threshold, review their use of fixed-term contracts under the new rules, and adjust layoff notification timelines. The reduced notice period in particular requires faster internal decision-making processes.
UK: From October 2026, employers will become liable for harassment of their staff by third parties, including customers, clients and members of the public. This obligation, introduced by the Employment Rights Act 2025, means employers must take reasonable steps to prevent third-party harassment or face claims. The duty extends to all protected characteristics, not only sexual harassment. Separately, since 6 April 2026, employers have been required to keep records of annual leave and holiday pay for at least six years, and sexual harassment now qualifies as a protected whistleblowing disclosure. What to do: UK employers should review their anti-harassment policies to cover third-party scenarios, train customer-facing staff and their managers on reporting procedures, and ensure record-keeping systems for annual leave and holiday pay meet the new six-year retention requirement.
On the radar
UK electronic union balloting (previously covered): Takes effect 25 August 2026.
UK zero-hours contracts consultation (previously covered): Closes 25 August 2026.
Portugal pay transparency consultation: Closes 25 August 2026.
Spain flexible retirement (previously covered): Royal Decree 416/2026 takes effect 28 August 2026.
Ireland My Future Fund opt-out (previously covered): Window closes at the end of August 2026.
Netherlands worker classification (previously covered): Legal presumption must be published in the Staatsblad by 31 August 2026.
EU Platform Workers Directive (previously covered): Member states must transpose by 2 December 2026.
Sources
- CMS: Labour and employment law 2026, the reform package for economic recovery and employment
- Ogletree: Germany’s 2026 labor law reforms, a program for growth and employment
- Euronews: Germany’s Merz announces sweeping reforms
- Lewis Silkin: Greece transposes the EU Pay Transparency Directive
- Zepos and Yannopoulos: Law 5316/2026, Greece transposes the EU Pay Transparency Directive
- Ius Laboris: EU Pay Transparency Directive, which countries have transposed
- Mondaq: Portugal, the Pay Transparency Directive is coming
- DLA Piper: Finland reforms the Employment Contracts Act
- Pinsent Masons: Employment Rights Act, implementation for UK employers in 2026 and beyond
- Freeths: Employment law changes 2025 to 2027
Europe HR Compliance Pulse is an informational summary of publicly reported legal and regulatory developments. It is not legal advice. Always confirm obligations for your specific situation and market with a qualified adviser.
