The law also seeks to improve cooperation with social benefit agencies by providing customs with faster access to investigation data, enabling quicker detection of benefit fraud.

Finance Minister Lars Klingbeil emphasizes that strengthening the customs control agency (FKS) is crucial for fighting financial crimes and making enforcement more effective.

Under Chancellor Friedrich Merz, the German government is implementing stricter measures against illegal employment, particularly targeting small and medium-sized businesses like hair salons and beauty parlors.

The government’s new law extends controls to these sectors for the first time, aiming to intensify efforts against illegal employment and wage undercutting.

While the hairdressing industry broadly supports increased oversight, the cosmetics sector criticizes the extensive inspections as overly bureaucratic and suspicious, risking undue burdens on small businesses.

For the first time, hair salons and cosmetic businesses are classified as high-risk sectors for illegal employment, leading to stricter legal obligations such as carrying ID, reporting new hires immediately, and recording working hours.

These new regulations include mandatory ID presentation during work, prompt reporting of new employees to social insurance, and mandatory recording and storage of working hours, with increased inspections to enforce compliance.

The classification of hair salons and beauty parlors as high-risk sectors aims to combat Schwarzarbeit, or illegal employment, and is supported by parts of the industry, especially the hairdressing sector.

On August 6, 2025, the cabinet approved a law to modernize and digitalize efforts against illegal work, empowering customs authorities with expanded investigative powers, better data analysis, and streamlined enforcement procedures.

The new legislation aims to connect customs control with police systems to enhance inter-agency cooperation, speed up investigations, and combat tax evasion, money laundering, and financial crimes.

Reactions to the legislation are mixed: the hairdressing industry welcomes increased controls, but the beauty sector warns that broad inspections could be disproportionate and burdensome.

The legislation aims to make enforcement more targeted and effective by equipping the FKS with extended authority and improving cooperation with police and other agencies through digital integration.