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Germany to relax employment rules to attract more banks post-Brexit

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German chancellor Angela Merkel. Photo: Reuters
German chancellor Angela Merkel. Photo: Reuters

Germany will relax its strict employment rules to attract more banks to move to the country post-Brexit, according to German media.

The government hopes to loosen dismissal protection rules, which make it difficult to fire senior bankers and are considered unattractive for international lenders in Germany.

A spokeswoman for the German finance minister Olaf Scholz of the Social Democrats (SDP) said deregulation could help lure financial institutions from the UK, according to German outlets Frankfurter Allgemeine Zeitung and Manager Magazin on Wednesday.

READ MORE: Why May’s Brexit trade deal wishlist falls short

A draft text from the finance ministry suggests it will become much easier for employers to lay off staff with a severance package than is currently possible. Employers will no longer need to provide a justification for lay-offs, according to the reports.

German employment rules are strict on dismissals by international standards, requiring exact reasons which can be challenged by courts. Senior employees who have worked for companies for several years are particularly difficult to dismiss.

READ MORE: Draft Brexit deal on the future UK-EU relationship ‘agreed’

Up to 5,000 bankers in Germany could be affected by the new ruling, according to the finance ministry’s estimates. Those would include CEOs, heads of legal, finance and other departments and high-volume traders, who contribute to their company’s risk.

Ahead of Brexit day on 29 March 2019, many international banks are stepping up their preparations for the end of cross-border banking licenses with London. Several lenders have announced plans to shift hundreds of billions of euros worth of balance-sheet assets to continental Europe hot spots such as Frankfurt or Paris.

During negotiations to form Germany’s current governing coalition earlier this year, the Christian Democrats (CDU) and SDP agreed on measures to increase the country’s attractiveness as a financial hub after the UK leaves the EU.

READ MORE: The crucial document leaked ahead of Brexit summit

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