Catholic bishops in Germany will no longer be dismissed from their positions if they enter into a second marriage or a same-sex relationship, in most cases.
The new employment guidelines will be applicable to nearly 800,000 employees within the Catholic Church and Caritas.
The news comes after a week of negotiations between the Vatican and all of Germany's bishops, who are in favour of a more lenient approach to homosexuality.
At the end of a week of talks, Bishop Georg Baetzing told a news conference that the Vatican's opinions on homosexuality and women priests are "closed", despite his wishes to "elaborate and discuss."
As the German bishops look to create a new employment framework for employees within their home country, the group says they're keen to allow everyone to represent "a church that serves the people."
They argue that they have no business dismissing people because of their personal choices or how they identify.
Making the announcement in Bonn on Tuesday, the group said: "The core area of private life is not subject to any legal assessment and is beyond the reach of the employer."
"This legally inviolable zone in particular covers the form of personal relationship and the private sphere," they continued.
Of the 27 German diocese, two-thirds of the bishops approved of the decision.