Fed­er­al Tar­iff Loy­al­ty Act: Fed­er­al Coun­cil agrees — what applies now?

The Fed­er­al Col­lec­tive Bar­gain­ing Act (BTTG) has been passed. On March 27, 2026, the Fed­er­al Coun­cil approved the law in its 1063rd ses­sion. This con­cludes the par­lia­men­tary pro­ce­dure: The law can now be drawn up and pro­mul­gat­ed and will enter into force for the most part on the day after pro­mul­ga­tion.

We had already pre­sent­ed the project in detail on the occa­sion of the Bun­destag res­o­lu­tion of Feb­ru­ary 26, 2026. With the approval of the Bun­desrat, the ques­tion now aris­es as to what specif­i­cal­ly applies — and what clients and com­pa­nies need to pre­pare imme­di­ate­ly.

Back­ground: Why the law?

Col­lec­tive bar­gain­ing cov­er­age in Ger­many has declined con­sid­er­ably in recent decades: Where­as around three out of four work­places used to be cov­ered by col­lec­tive agree­ments, this now only applies to one in two. Com­pa­nies with­out col­lec­tive bar­gain­ing cov­er­age have been able to sub­mit more favor­able bids in the com­pe­ti­tion for pub­lic con­tracts because they have low­er per­son­nel costs. The BTTG is intend­ed to elim­i­nate this com­pet­i­tive dis­ad­van­tage for com­pa­nies bound by col­lec­tive agree­ments and cre­ate an incen­tive for col­lec­tive bar­gain­ing — financed with tax­pay­ers’ mon­ey, wage dump­ing should no longer be pos­si­ble in future.

Added to this is the polit­i­cal tim­ing: the spe­cial infra­struc­ture fund will be used to award numer­ous pub­lic con­tracts in the com­ing years — for bridges, hos­pi­tals and school build­ings. The fed­er­al gov­ern­ment is thus send­ing a clear sig­nal as to the con­di­tions under which these funds will flow into the mar­ket.

Scope of appli­ca­tion: To whom does the BTTG apply?

The law applies at fed­er­al lev­el to con­struc­tion and ser­vice con­tracts. It does not apply to sup­ply con­tracts. All Bun­deswehr con­tracts are also com­plete­ly exempt.

The thresh­old val­ues at a glance:

• Stan­dard case: Con­struc­tion and ser­vices with an esti­mat­ed con­tract val­ue of 50,000 euros or more
• Secu­ri­ty-relat­ed con­tracts: civ­il defense, inter­nal secu­ri­ty, civ­il pro­tec­tion, intel­li­gence ser­vices from 100,000 euros
• Bun­deswehr orders only from 2032
• Exclud­ed: Sup­ply con­tracts and orders to which Part 4 of the ARC does not apply.

The law there­fore only applies to pro­cure­ment at fed­er­al lev­el. Sev­er­al fed­er­al states already have their own col­lec­tive bar­gain­ing laws — these remain unaf­fect­ed, but do not apply to fed­er­al con­tract­ing author­i­ties.

The promise to com­ply with col­lec­tive agree­ments: What do con­trac­tors have to ful­fill?

The core of the law is not an auto­mat­ic com­mit­ment to col­lec­tive bar­gain­ing. Con­trac­tors must make a promise to adhere to col­lec­tive bar­gain­ing agree­ments: They under­take to grant the employ­ees deployed in the exe­cu­tion of the con­tract cer­tain min­i­mum work­ing con­di­tions in accor­dance with col­lec­tive bar­gain­ing agree­ments. This promise is includ­ed in the con­tract as a manda­to­ry per­for­mance con­di­tion.

The Fed­er­al Min­istry of Labor and Social Affairs (BMAS) deter­mines the spe­cif­ic con­di­tions to be com­plied with by sec­tor-spe­cif­ic statu­to­ry order — at the request of one or both par­ties to the col­lec­tive agree­ment. At least the fol­low­ing are reg­u­lat­ed:

• Remu­ner­a­tion
• Paid min­i­mum annu­al leave
• Max­i­mum work­ing hours
• Min­i­mum rest peri­ods and rest breaks

The promise to com­ply with col­lec­tive agree­ments can be made sim­ply and unbu­reau­crat­i­cal­ly dur­ing the award pro­ce­dure. Bureau­cra­cy, ver­i­fi­ca­tion require­ments and con­trols should be kept to a min­i­mum in accor­dance with the declared aim of the leg­is­la­tor.

Oblig­a­tion to pro­vide evi­dence and dis­clo­sure to sub­con­trac­tors

Con­trac­tors can obtain cer­ti­fi­ca­tion that they meet the require­ments of the col­lec­tive agree­ment. If this is not pos­si­ble, com­pre­hen­si­ble doc­u­men­ta­tion must be ensured — clean pay slips, pre­sen­ta­tions of struc­tur­al allowances, work records. The rel­e­vant doc­u­ments must be sub­mit­ted via the pen­sion insur­ance sys­tem.

Impor­tant: The oblig­a­tion to com­ply with col­lec­tive agree­ments must be passed on to sub­con­trac­tors and hir­ers. The con­trac­tor is liable for ensur­ing that the require­ments are also met at all fur­ther stages of ser­vice pro­vi­sion. Con­tract chains and doc­u­men­ta­tion process­es should be set up accord­ing­ly.

New author­i­ty: Fed­er­al Col­lec­tive Agree­ment Ver­i­fi­ca­tion Body

The BTTG cre­ates a new author­i­ty: the Fed­er­al Tar­iff Com­pli­ance Check­point. It mon­i­tors com­pli­ance with the oblig­a­tions under the Act and iden­ti­fies infringe­ments by admin­is­tra­tive act. Final admin­is­tra­tive acts are for­ward­ed to the reg­is­ter author­i­ty of the com­pe­ti­tion reg­is­ter (Fed­er­al Car­tel Office) and can lead to reg­is­tra­tion there.

The Enforce­ment Pan­el is autho­rized to request pay data from Deutsche Renten­ver­sicherung Knapp­schaft-Bahn-See. Checks are car­ried out on an ad hoc basis; ran­dom checks are not planned.

Sanc­tions: Con­trac­tu­al penal­ty, ter­mi­na­tion, exclu­sion

The BTTG pro­vides for a dif­fer­en­ti­at­ed sys­tem of sanc­tions:

• Con­trac­tu­al penal­ty reg­u­la­tion: The con­trac­tu­al penal­ty amounts to a max­i­mum of 1% of the con­tract val­ue per vio­la­tion and a max­i­mum total of 10% of the con­tract val­ue. It is for­feit­ed as soon as a vio­la­tion has been deter­mined by the Fed­er­al Office for Har­mo­niza­tion of Tar­iffs by admin­is­tra­tive act.
• Extra­or­di­nary right of ter­mi­na­tion: The client can ter­mi­nate the con­tract extra­or­di­nar­i­ly if the con­trac­tu­al penal­ty is for­feit­ed.
• Option­al rea­son for exclu­sion in accor­dance with Sec­tion 14 BTTG: Con­tract­ing author­i­ties should exclude a com­pa­ny from par­tic­i­pat­ing in award pro­ce­dures if a breach of col­lec­tive bar­gain­ing oblig­a­tions has been incon­testably estab­lished. This rea­son for exclu­sion applies irre­spec­tive of the con­tract val­ue. The self-clean­ing pro­ce­dure pur­suant to Sec­tion 125 GWB is applic­a­ble.

What does this mean in prac­tice?

Tips for pub­lic clients

• Check whether your order falls with­in the scope of the BTTG (see scope of appli­ca­tion).
• Include the promise to adhere to col­lec­tive agree­ments as a per­for­mance con­di­tion in your ten­der doc­u­ments and draft con­tracts.
• Pre­pare for com­pli­ance checks: What doc­u­men­ta­tion will you require from con­trac­tors?
• Please note that par­al­lel state col­lec­tive bar­gain­ing laws remain applic­a­ble.

Tips for com­pa­nies (bid­ders and con­trac­tors)

• Check whether and from when legal ordi­nances will be issued by the BMAS for your areas.
• Align inter­nal process­es with the sub­mis­sion and doc­u­men­ta­tion of the promise to com­ply with col­lec­tive agree­ments.
• Struc­ture your sub­con­trac­tor con­tracts in such a way that the com­pli­ance require­ments are bind­ing and ver­i­fi­able.
• Clar­i­fy at an ear­ly stage whether cer­ti­fi­ca­tion is pos­si­ble and sen­si­ble.

Con­tact us — we will advise you on the spe­cif­ic require­ments of the BTTG for your sit­u­a­tion.

Sources: Bun­desrat (bundesrat.de), com­mu­ni­ca­tion on the 1063rd ses­sion of 27.03.2026; Fed­er­al Min­istry of Labor and Social Affairs (bmas.de); Ger­man Bun­destag (bundestag.de); as of 27.03.2026.