Law-mandated price loyalty under scrutiny: Bas raises concerns over proposed legislation - The Lower Court ruled that the Commission neglected its duties as outlined in Article 85 (1) of the Treaty.
The German Labor Minister, Bárbara Bas (SPD), has proposed a new bill, the Tariffidelity Act (Tariftreuegesetz), which aims to reinforce collective bargaining agreements and ensure greater compliance by employers with sector-specific wage and labor standards. As of mid-2025, the Tariffidelity Act is under parliamentary discussion and has not yet been fully enacted into law.
### Current Status:
The government coalition, including the SPD, is pushing for the approval of the Tariffidelity Act to reinforce worker protections in response to ongoing wage negotiations and concerns about employer practices that undercut collective agreements.
### Key Details of the Proposal:
The act would require employers, especially those receiving public contracts or subsidies, to strictly adhere to collective wage agreements. It includes provisions for stronger oversight mechanisms and penalties for violations. The rules will apply to subcontractors in the future. The Tariffidelity Act includes requirements for remuneration, Christmas bonuses, holidays, and rest periods according to industry-standard collective agreements.
### Responses from Employers:
Employers’ associations have voiced concerns that the legislation could increase administrative burdens and reduce operational flexibility. Some argue it might lead to higher labor costs, potentially affecting competitiveness, especially for small and medium enterprises (SMEs). They caution against overly rigid enforcement that does not consider economic fluctuations and company-specific circumstances.
### Responses from Trade Unions:
Trade unions, including major ones like the DGB (German Trade Union Confederation), strongly support the act. They see it as essential to combat "wage dumping" and improve workers’ rights. They call for swift adoption and robust enforcement to ensure fair pay and prevent exploitation.
### Additional Details:
A new inspection body will monitor compliance with collective agreement loyalty. The draft of the Tariffidelity Act is available for intergovernmental consultation. Bárbara Bas stated that the federal government is setting a good example by creating an incentive for more collective agreement coverage. Around 16,000 public contracts and concessions, which were awarded at the federal level last year, would be covered by the planned Collective Agreement Compliance Act.
For start-ups, a threshold value of 100,000 euros will apply for the implementation of innovative solutions. The Tariffidelity Act aims to prevent competition between providers from being based on lower personnel costs due to non-compliance with collective agreement working conditions. The Ministry of Labor, upon application by a trade union or an employers' association, will set the working conditions applicable to the performance of public contracts by regulation.
Criticisms from the DGB board member Stefan Körzell include the exclusion of contracts for the procurement of goods and services for the German Armed Forces, and the fact that 27.5 percent of the around 22,000 contracts awarded by the federal government annually would not fall under the tariffidelity provisions. The managing director of the Federal Association of German Employers' Associations, Steffen Kampeter, criticized the proposed Tariffidelity Act, stating it forces companies into a foreign collective agreement and will particularly burden small companies.
The idea of a law on this issue has been discussed for around 30 years. Most federal states have had corresponding regulations for some time. The Tariffidelity Act, if passed, would mark a significant step forward in strengthening collective bargaining and ensuring fair wages and working conditions for employees in Germany.
EC countries could potentially consider implementing similar legislations to the Tariffidelity Act, as it reinforces industry-standard vocational training and labor standards, ensuring compliance by employers. In light of ongoing concerns about employer practices undercutting collective agreements, such legislation could help protect workers' rights, particularly in sectors receiving public finance or business subsidies.
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