In Germany there are currently more job vacancies than ever before. The shortage of skilled workers has arguably become the biggest brake on the economy. This is reason enough to take a look at possible solutions from an employment law perspective. In the first of a two-part series, we discuss creative, sometimes bold solutions to help companies not only avoid losing the skilled workers they have, but also to attract new skilled workers.

What employment law tools can be used to reduce turnover? The answers to this question have changed in recent times. Not so long ago, the first thing employment law specialists would suggest was to attach the most severe negative consequences possible to an employee’s resignation in order to retain them. But it is no longer enough to bind important employees to the company with long notice periods, temporary exclusion of dismissal, long-term incentives, key date clauses or other long-term financial incentives. These remedies only tackle the symptom of the skills drain. They overlook the cause.

In 2022, according to a representative survey by the opinion institute forsa, 37% of employed people in the DACH (Germany, Austria, Switzerland) region were open to a change of job. Alongside the “classic” factors of salary and career prospects, an increasing number of soft factors are playing a role here. Good management behavior, flexible working hours, personal fulfilment as well as the compatibility of work and private life are becoming increasingly important for employees. With a little creativity, the flexibility and work-life balance which are so much in demand these days, and which so often lead to a change of employer, can readily be accommodated into an employment contract. In this way, employers tackle the problem of skills drain at its root, instead of just combating the symptoms and investing time and money in recruiting and onboarding ever new employees.

These creative means can include, for example:

1. The Four-Day Week

According to a study by 4 Day Week Global from 2022, 97% of respondents wanted to keep the four-day week after it was introduced on a trial basis. Employees hope that an additional day off will give them more time for family and leisure and reduce health problems. Employers can reduce sick days, increase their attractiveness to job applicants and increase effectiveness and efficiency in work performance.

However, its introduction requires extensive preparation and planning as well as the involvement of the works council, if applicable. In addition, it is subject to the tight corset of the Working Time Act (“Arbeitszeitgesetz”). In particular, the maximum daily working time of 10 hours limits the flexibility for overtime or flexitime with a 40-hour working week.

2. Stay in Touch Programs

During longer periods of absence, e.g., during parental leave or a sabbatical, the focus of the employees shifts. Employees sometimes lose their attachment to their employer and no longer feel part of the team. This increases their propensity to make career changes.

Employers cannot force the employees to stay in touch with colleagues during such time out. However, they can make offers. Invitations to company events (e.g., Christmas party, summer party), information on important company or personnel developments (e.g., new products, reorganization, new colleagues), the designation of specific contact persons during the time out as well as timely “re-onboarding” can strengthen the feeling of belonging and avoid the skills drain.

3. “Workation”

One risk of remote work and flexible working hours is that the cohesion of the “team” suffers. Communication and joint events become increasingly important. For this, especially in creative professions, “workations” are the ideal solution. Employees can work together as a team in a new environment and spend time together. Here, too, careful advance planning is needed, and social security, tax risks, as well as the Working Time Act have to be kept in mind.

4. “Your Choice”

It is important to understand that the interests of employees vary. While one employee puts more emphasis on work-life balance, a colleague may prefer a higher salary and be willing to work more hours to achieve it. In order to cater to the interests of all their employees, employers can simply say: “Your Choice.”

In many areas it is a good idea to give employees the choice: a pay rise or extra holiday? Compensatory time off or overtime pay? Provision of a company car, a Bahncard 100 (train card) or capitalization in a car allowance? Here it should be borne in mind that remuneration principles, working hours and holiday principles are covered by the works council’s co-determination rights. Legal provisions also set limits when it comes to increasing working hours or converting holiday into pay. Employers should also note that entitlements granted under collective agreements cannot be waived.

Further creative options such as holiday donations by employees for colleagues in private emergency situations, more flexible part-time work schemes for parents or gradual return options, subsidies for childcare costs, which are privileged under tax and social security law, or permission to use a certain number of working hours for social commitment are also conceivable.

Conclusion

All of these options enable employees to also pursue their own private interests or to cushion private hardships without having to give up their employment relationship. Many of these measures can be regulated through individual supplementary agreements, general undertakings to the workforce, or by means of a company agreement. To be able to react flexibly to future, possibly long-term changes, careful preparation and communication is needed here, especially if certain measures are only to be tested to begin with.

Of note: the legislature is increasingly imposing reporting obligations on companies, e.g., those regarding gender equality measures. The employment law measures discussed above can also be mentioned positively in the reports, which makes it possible for companies to position themselves much more attractively in the eyes of applicants.