> And because there has been an inflation in how complimentary these letters are, people started suing when their letter wasn't flowery enough, because that somehow could be read as an implicit criticism.

You got a source for this folktale?

The reality is that these letters are written in a kind of pseudolegalistic language, where a phrase like “the employee was punctual” means they were usually late. If they were actually punctual, you'd see something more like “the employee consistently demonstrated exceptional punctuality”.

You usually need the reference letter to be reviewed by the works council or by an employment lawyer.

I have no official source but know that this happens a lot. Also the arguments with the employer about the letters afterwards. Some are so fed up and let you write the first or final draft. There is also the hidden code. So instead of writing something negative which is forbidden you just use different words or leave out some intensifications. Like “zur größten Zufriedenheit” vs “zur allergrößten Zufriedenheit”. One means your work was Ok the other it was great. There is also intensification by adding time adjectives like “always” or “often” etc.

This code is known by people in the HR and hiring departments. It’s a very weird praxis. I have to explain this to my non German colleagues because for them even a mark F letter sounds awesome ;)

This is a very common practice in Germany. There were a few court cases won by employees whose recommendation letters were not positive enough, so employers now basically just write whatever you ask for.

I have written all my recommendation letters myself. The employers just put their letter head and sign it.

this is common practice in general no? People ask for references, or try to contact former bosses, when hiring critical profiles. Obviously nobody will say anything bad, so HR is trained, and giving trainings to the hiring managers, how to "grade" the level of positivity.

There's a difference in saying "Yes I confirm person X worked here, he did a good job on all the tasks that we have asked him to do" vs "Yes, he was amazing at his job, he was proactive and really drove innovation, we are sad to see him leave"

You can check out https://de.wikipedia.org/wiki/Arbeitszeugnis with the help of Google Translate.