Coalition negotiations: what are the plans of the new coalition?

The motto of the new coalition agreement is "Dare to make more progress - an alliance for freedom, justice and sustainability". After about five weeks, the SPD, Bündnis 90/Die Grünen and the FDP agreed on a joint coalition agreement on 24 November 2021. This paves the way for a change of government. Below, we are briefly summarising important plans that are certain to have an impact on the German economy.

Digitisation

As expected, one focus of the coalition partners is the topic of digitisation.

Investments in key technologies such as artificial intelligence (AI), quantum technologies, cyber security, distributed ledger technology (DLT), robotics and other future technologies are to be promoted measurably. Sustainability is to be increased by promoting so-called digital twins, i.e. digital duplicates of analogue products.

In terms of IT security, the coalition partners are striving for interoperability and portability as well as open standards, open source and European ecosystems, for example with regard to 5G or AI. The Federal Office for Information Security [Bundesamt für Sicherheit in der Informationstechnik – BSI] is to become more independent and will be expanded as a central agency for IT security.

The coalition partners want to promote access to and the use of data and enable new business models and social innovations in digitisation, especially for start-ups and SMEs. They also plan to build data infrastructures in the form of data custodians, data hubs and data donations. A new data act is to provide persons who have participated in the creation of data with standardised and machine-readable access to self-generated data. Furthermore, the coalition partners want to introduce a legal claim to open data. Conversely, the state is to be given access to data from companies on fair and competitive terms, where this is necessary for the provision of utility services. A research data act is to promote access to research data for public and private research purposes. 

In parallel, the coalition partners want to improve the protection of personal data and ensure more coherence: firstly through stronger European cooperation and, secondly, by strengthening the position of the Data Protection Conference (DPC). By being granted the authority to issue legally binding decisions in future, it will be possible for the DPC to set uniform national standards and evaluation criteria. In the area of employee data protection, which has been largely shaped by case law to date, new statutory regulations are planned that will ensure greater legal clarity for employers and employees.

Worth particular mention is the fact that the state wants to promote anonymisation techniques on the one hand, whilst making illegal de-anonymisation a punishable offence on the other.

The coalition partners also want to lobby at EU level for the swift adoption of the ePrivacy Regulation.

Climate and environmental protection

The new government also places particular emphasis on climate and environmental protection. To this end, specific real estate is going to be exempted from privatisation and leased out for the construction of wind power and photovoltaic systems instead. The use of pesticides is be reduced significantly and support given to the European ban on deliberately added micro plastics in cosmetics and detergents and on liquid polymers. 

In addition to this, there are to be further obligations in connection with recycling, which will affect many manufacturers. 

In 2023, a CO2 differentiation of the toll on heavy goods vehicles is going to be implemented, which will also include commercial road haulage of 3.5 tonnes or more. 
2030 seems to have been chosen as the year of change: by this time, the coalition partners want to electrify 75 percent of the rail network and support innovative drive technologies. Furthermore, from 2030 onwards, only CO2-neutral vehicles are to be registered, 80 percent of energy requirements are to come from renewable energies and an electrolysis capacity of around 10 gigawatts for the production of hydrogen is to be achieved. The phase-out of coal-fired power generation is also targeted for 2030. Germany is also to become a pioneer in CO2-neutral flying. State subsidies can therefore be expected in these areas. 

The coalition partners also intend to adhere to the German nuclear phase-out.

Working world

As expected, the coalition partners have agreed on a one-time increase of the minimum wage to 12 euros gross. This will also be accompanied by an increase in so-called mini-jobs to 520 euros gross per month. In addition, compliance with the current regulations for mini-jobs will be monitored more closely.

The SPD, Bündnis 90/Die Grünen and the FDP have also agreed to further restrict fixed-term employment contracts. For example, in future, there will also be a time limit of a maximum of six years for employment contracts concluded with the same employer for a fixed termfor a material reason. It will only be possible to exceed the maximum term in narrowly defined exceptions.

Working time legislation is also going to be adapted. After the ECJ ruling from May 2019 on the recording of working time, there has been a lengthy wait for new regulations in this context. Now, it seems that the three coalition partners have initially agreed to examine a possible need to adjust working time regulations with the trade unions and employers' associations. The principle of a daily working time of eight hours will nevertheless remain in force in the future. At the same time, however, a limited possibility of derogation by collective agreement or shop agreement based on collective agreements from the current maximum daily working time is also being created.

Whereas the grand coalition was unable to reach a corresponding agreement during its time in government, the so-called right to discuss mobile working and home office for employees in suitable jobs, based on the Dutch model, is now coming up again. This does not give employees a direct right to work from the home office, but employers may only refuse the request for home office work - similar to what is already known from part-time work law – in case of conflicting operational concerns. In addition, the alliance partners plan to further differentiate home office from so-called teleworking as regards the scope of applicability of the German Workplace Ordinance [Arbeitsstättenverordnung – ArbStättV].

The coalition partners have also made it their goal to make mobile working unproblematic throughout the EU. However, this can hardly be expected to also simplify complex assessments under social security law and, in particular, applications for A1 certificates.

In addition, as part of a pilot project, an online works council election is going to be tested. In light of the upcoming regular works council elections next year, we expect this project to be implemented very soon. The obstruction of co-determination in companies will also be classified as an official offence in future.

In line with the "analogue" right of access of trade unions to a business, trade unions are now also to be given digital access to businesses. What concrete form this will take remains to be seen.

Finally, corporate co-determination on the supervisory board will also be undergoing changes. This will especially affect the company form of Societas Europaea. Co-determination within the corporate group is also going to be strengthened.

Enterprises

Compliance and corporate law

The coalition partners want to review and modify the existing regulations on corporate sanctions. However, the coalition agreement does not contain any concrete plans in this regard. It merely contains the announcement that the statutory provisions will be reviewed with regard to the level of sanctions. This announcement leaves it unclear whether, in case of violations, possible preventive compliance measures can be taken into account to mitigate penalties.

The creation of a legal framework for internal investigations should make it easier for companies to comply with ever-increasing compliance obligations. However, it remains unclear whether access to and the use of internal company investigations by law enforcement authorities is to be allowed. 

The omnipresent topic of digitisation in the coalition agreement is also reflected in the area of corporate law. The possibility of holding an online general meeting, which was introduced on grounds of the pandemic, is going to remain possible even after the end of the pandemic. Furthermore, the formation of companies and the notarisation of shareholders' resolutions via video communication shall also be possible in the future. This should significantly simplify processes for companies.

The coalition partners have also set themselves an ambitious target: to make Germany a leading location for start-ups in Europe. To this end, the existing state funding options are to be developed further. In addition, it should be possible in future to mobilise private capital from institutional investors for start-up financing. Furthermore, new forms of company are to be possible, such as social enterprises or companies with tied assets.

Small and medium-sized enterprises are to be given greater consideration in award procedures and subsidy programmes and investment grants shall be made much easier to apply for and document, among other things through digitisation, especially for small and medium-sized enterprises and self-employed persons. 

Furthermore, the coalition intends to lobby at European level for the "Corporate Sustainability Reporting Directive" project initiated by the European Commission. The aim is to achieve a uniform transparency standard for sustainability information.

Litigation

Germany shall be strengthened further as a place of jurisdiction. However, the future coalition is also in favour of continuing to allow English-speaking specialised chambers for international commercial and economic disputes. In the recent past, several federal states already established such English-speaking specialised chambers under the name of "commercial courts". It remains to be seen whether these specialised chambers will also be given authorisation in future to issue judgements in English.

In addition, the coalition partners envisage better adapting the German Code of Civil Procedure [Zivilprozessordnung – ZPO] to the digital world and thereby enabling faster and more effective court proceedings. For example, it will be possible to document the taking of evidence by audio-visual means. This announcement is to be welcomed, as it brings the German Code of Civil Procedure into line with other jurisdictions and arbitrations, where such documentation is already standard practice.

The existing instruments of collective legal protection in Germany are going to be further expanded and supplemented by a collective action for performance. The implementation of a collective action for performance shall take place within the framework of the implementation of the EU Directive on Collective Actions. However, model declaratory actions and collective actions for performance will remain open only to privileged associations. This serves to continue to ensure the bundling of mass proceedings. A novelty is the announcement that small companies will also have access to the instruments of collective legal redress. Until now, only private individuals were able to join collective proceedings. It remains to be seen whether this will indeed make it easier to deal with waves of complaints in the future.

Intellectual property rights

If a company violates the German Unfair Competition Act [Gesetz gegen den unlauteren Wettbewerb – UWG], a warning can be issued to the perpetrator by competitors and associations specifically authorised to issue such warnings. Already with respect to the first warning, lawyers can be instructed and the pertaining costs charged to the perpetrator. The coalition partners have announced that they will examine whether further precautions are necessary to prevent an abuse of this reimbursement claim. It would appear that the chargeable first warning, on the other hand, is to remain possible.

With regard to the recently much-discussed “upload filters”, the coalition partners have made it clear that they explicitly reject a mandatory introduction in order to protect the freedom of information and opinion. Freedom of information and opinion should also be guaranteed in the case of automated decision-making mechanisms. How this is going to be realised in practice, however, remains unclear. All that was agreed was that the EU copyright reform implemented by the SPD and CDU at the beginning of 2021 should be assessed as to its practicability. What timeframe the coalition has in mind for this remains unclear.

Foreign trade and defence

In the coalition agreement, the SPD, Bündnis 90/Die Grünen and the FDP endorse their commitment to the EU, NATO and bilateral partners. Particular emphasis has been placed on the German-French partnership. In addition, three percent of the gross domestic product is to be invested in international trade in the long term, therewith strengthening diplomacy and fulfilling NATO commitments. To the delight of many businesses, the government is committed to ensuring that European companies are better protected against extraterritorial sanctions.

The coalition partners are particularly in favour of European projects for digital infrastructure, a common European railway network, an energy infrastructure for renewable electricity and hydrogen, as well as corresponding research. At the same time, they are also focussing on national independence in the area of critical technologies and infrastructure. This is consistent with the laws already amended in 2020 and 2021 on the examination of corporate acquisitions in these areas. This is likely to continue to have a restrictive effect on investment from third countries. 

As already agreed at EU level, arms exports to countries directly involved in the war in Yemen continue not to be approved and the transfer of surveillance technologies to repressive regimes is also going to be stopped. 

More information about the coalition negotiation can be found here:

• German Federal Election 2021: What plans does the new coalition have on armaments and defence?
• Coalition Agreement: soon codetermination? The "traffic light" coalition paves the way for an extension of corporate codetermination.

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