Overview

• The draft law would require companies bidding on federal contracts worth at least €50,000 (or €100,000 for start-ups) to guarantee employee rights under applicable collective bargaining agreements.
• Subcontractors on covered projects must meet the same standards for pay, paid leave, rest periods and other tariff conditions as primary contractors.
• A new central Prüfstelle would oversee compliance with powers to impose fines of up to 10% of a contract’s value, suspend or terminate contracts and exclude repeat offenders.
• Labor Minister Bärbel Bas and Economics Minister Katherina Reiche finalized the draft on July 22 ahead of a planned cabinet decision in August and Bundestag debates later this year.
• Employer associations warn of increased administrative burdens and potential rigidity; unions and the DGB praise the proposal as a tool to curb wage dumping with public funds.