Germany, officially the Federal Republic of Germany, is one of Europe’s largest countries. With a population of over 83 million people, it is the most populous country in the European Union (EU). Known for its highly skilled workforce and high levels of innovation, the German economy is the world’s fourth largest by GDP.
Employment relationships in Germany are governed and regulated by:
What to Know:
Higher minimum wage
The statutory minimum wage has increased to E EUR 10.45 gross per working hour from July 1, 2022. The new German coalition government plan to raise the minimum hourly wage to EUR 12. However, the effective date is currently unknown, but according to draft bill by German Labor Minister Hubertus Heil, the statutory minimum wage in German will take effect on October 1, 2022. Vocational trainees will also benefit in 2022, with the monthly minimum wage for trainees rising from EUR 550.00 gross in 2022 to EUR 585.00 gross
Implementation of the whistle-blower directive
The EU member states were given time until Dec, 2021 to implement the EU whistleblower directive into national law, but this has not yet been done. While the European Union has already initiated an infringement procedure against Germany, The ministry of justice published, on 13 April 2022, a draft Whistleblower protection Act (‘HinSchG’) to transpose the Directive on the protection of Whistle-blowers (Directive (EU) 2019/1937) into German law. The German legislator extended the scope and has included reports with regard to all kinds of criminal offences in the scope of HinSchG’.
Electronic sick notes
Since October 2021, doctors have been obliged to provide digital sick note to health insurance providers only. From July, 2022, the relevant health insurance providers are obliged to provide the digital sickness notifications to employers. Employees are still obliged to inform the employer about their incapacity to work.
Social security contribution thresholds in Germany 2022
Due to negative wage development in last year, the thresholds in 2022 remain relatively unchanged and in some instances it has been slightly reduced. As a result, from Jan 1, 2022, the income threshold for statutory health insurance and long-term care insurance will remain static at EUR 4,837.50 per month. The income threshold for contributions to the general pension insurance scheme in western Germany will actually drop from EUR 7,100 per month to EUR 7,050 per month. In the east, the threshold will rise slightly from EUR 6,700 per month to EUR 6,750 per month. ). And for miners’ pension insurance, the limit will drop in the west to EUR 8.650 per month and increase in the east to EUR 8.350 per month.
Development of the status determination procedure (Statusfeststellungsverfahren)
The German Pension Insurance Federation conducts then status determination procedure. From March 2022, The German pension Insurance Federation only determines whether an employee is In fact dependent employees or self-employed. Before, the German Pension Insurance Federation also determines whether an individual has an obligation to be insured in the statutory pension insurance scheme. In case of identical contracts, there is no longer a requirement for separate status determination procedures.
On April, 2022, new regulation came into force by which important changes became effective for the Status Determination Procedure. The legislature amended the German Social Code, Book IV during the previous legislative period to include new provisions under the Status Determination Procedure, which is intended to clarify whether there is an employment relationship subject to social security contributions between a customer and a person providing services.
New obligations regarding Mini-jobbers
In future, employers must provide the tax identification numbers along with the tax number of their mini-jobbers to the competent authority (Minijob-Zentrale) using the electronic reporting procedure.
As of January 1, 2022, in case of short term mini-jobs or short term employment, the information on the mini jobber’s insurance coverage must be provided in the social security notification. In the future, when registering short-term mini-jobbers, the competent authority (Minijob-Zentrale) will immediately provide the employer with feedback as to whether further short-term employment of the mini-jobbers currently exists or has existed in the current calendar year.
Occupational Pension Provision
Since Jan 2019, the employer must provide a statutory subsidy of 15% to the employee on their deferred compensation. From January 2022, the employer’s obligation to pay this statutory subsidy also applies to old contracts i.e., those concluded before 2019. The employers’ contribution savings with regard to social security contributions are thus now to be passed on to the employees (limited to the employer’s actual savings) regardless of the date on which the relevant contract was concluded.
In Germany, for employees, the right to have holidays is guaranteed in the federal law, which guarantees a minimum of 24 days of holiday per year. However, this law is based on working week of six (6) working days. The German system has given difference between the working days and office days. The minimum statutory vacation days an employee is entitled to are 20 days per year for a regular 5-day work week and 24 days of paid holiday for a 6 day work week.
In general, employees must take their annual holidays/vacation during the calendar year. Otherwise, it is forfeited. However, unused holiday can be carried forward until the 31st of March of the next calendar year if the employee was unable to take the holiday due to operational or personal reasons. If any holiday entitlement still remains at the end of the employment, employees can claim financial compensation for the days not taken.
Work Days and Hours
There are strict legal limits in Germany on working hours. The working week runs from Monday to Sunday. The employees are not entitled to work more than eight (8) hours per day or 48 hours per week. However, this can extended to 10 hours in certain circumstances. Work on Sundays and public holidays is prohibited, however, there is an exception for the workers working in the service industries. Work on Sundays has to be compensated by corresponding time off within the following two (2) weeks.