New draft bill for the law on collective bargaining agreements

At a glance

• The Federal Ministry of Labour presented a draft bill for the law on collective bargaining agreements (Tariftreuegesetz).
• According to the draft, public contracts from the federal government will only be awarded to companies that commit to adhering to the collective agreements of the respective industry for the duration of the contract. This applies to contracts with an estimated value of EUR25,000 or more.

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At the beginning of September, the Federal Ministry of Labour presented a draft bill for the law on collective bargaining agreements (Tariftreuegesetz). The key aspect of this bill is that public contracts from the federal government will only be awarded to companies that agree to follow the collective agreements of their respective industry throughout the contract period, benefiting the employees involved. This applies to contracts with an estimated value of EUR25,000 or more. Companies, including any subcontractors, must commit to complying with the law upon being commissioned and provide proof of adherence. The federal contracting authorities plan to conduct random checks, and any violations will be penalised.

The new law aims to broaden the applicability of collective agreements by requiring companies to comply with the relevant collective bargaining regulations when carrying out the numerous and extensive public contracts which are awarded. The draft bill has already been heavily criticised for effectively imposing a collective bargaining obligation, potentially infringing on the right to freedom of association. Additionally, it is foreseen that the planned regulations could result in a high level of bureaucracy for companies due to the unpredictable nature of the evidence required. Also, in view of the contradictory and incomplete data on existing collective bargaining coverage, it remains to be seen what added value such a collective bargaining law can offer at federal level.

Next steps

The governing parties had already agreed in their coalition agreement in 2021 to pass a collective bargaining law. Three years later, the Federal Ministry of Labour has now presented a draft bill, but this is being blocked by the liberal party. It is not yet possible to predict when the law will come into force. In view of the expected bureaucratic burden, companies wishing to participate in public procurement procedures in the future are advised to familiarise themselves with the relevant collective agreements now.