There is no special law in Germany that covers the individual and collective rights and duties of employers and employees. Rather, labor law has developed from permanent discussions and negotiations between employer associations and labor unions. But a written employment contract is customary.

Most employment contracts are unlimited in time. But employment contracts that are limited in time are also possible. If a substantial reduction in personnel becomes necessary, a special social compensation plan is worked out by company management in cooperation with the works council, labor unions and, sometimes, local government authorities.