The year 2019 will bring changes to social legislation in Germany. In essence, the following new regulations have entered into or will enter into force:
- Employer’s contribution for deferred compensation – see the Federal Ministry of Labour and Social Affairs’ press release from 16 October 2018
From 1 January 2019, employers are obliged in all cases of deferred compensation to pass on saved social security contributions (as a lump sum of 15%) to pension institutions/employees. However, this only applies if no deviating arrangement has been agreed via a collective wage agreement. With regard to deferred compensation agreed before 1 January 2019, the new regulation applies from 1 January 2022.
- Reduction of unemployment insurance contributions – see the Federal Government’s press release from 14 December 2018
From 1 January 2019, the unemployment insurance contribution will be reduced from 3.0% to 2.6%. The contribution will be reduced by a further 0.1% to 2.5% for a limited period until the end of 31 December 2022. This measure is being implemented by way of the Qualification Opportunities Act.
- Reduction of the social security flat rate – see the Federal Ministry of Labour and Social Affairs’ press release from 1 January 2019
“[T]he social insurance flat rate used to calculate unemployment benefit and other benefits under the Third Book of the Social Security Code is to be reduced from 21 per cent to 20 per cent“.
- Abolition of time limits for short-term employment free of social security contributions – see the Federal Ministry of Labour and Social Affairs’ press release from 1 January 2019
The previous time limit of three months or 70 working days for short-term employment has been abolished. This relieves the burden on companies that rely on seasonal workers.
- Equal Opportunities Act – see the Federal Ministry of Labour and Social Affairs’ press release from 8 January 2019
The Equal Opportunities Act came into force on 1 January 2019. The law is intended to offer the long-term unemployed fresh perspectives within the labour market (see the Federal Ministry of Labour and Social Affairs’ press release from 10 December 2018). The law is open to two target groups:
- People over the age of 25, who have been receiving benefits for at least six of the previous seven years under the Second Book of the German Social Security Code (unemployment benefit) and were not employed or only employed for a short period during this period.
- People who have been unemployed for at least two years.
Employers hiring workers, who have been receiving benefits in accordance with Second Book of the German Social Security Code for at least six years, will be supported with a subsidy. In the first two years, the subsidy amounts to 100% of the minimum wage (In the event of deviations where employers are obliged or intend to pay in line with collective wage agreements, the actual salary is taken into account). The subsidy is then reduced by 10% per annum until the end of the fifth year after it began, whereafter it is discontinued. For workers who have been unemployed for more than two years, a two-year subsidy is granted at 75% of the regular wage in the first year and 50% of the regular wage in the second.
In addition, so-called “coaches” will provide newly employed individuals with professional and personal support with their integration into the labour market.
- Increase of standard requirements in the basic security benefits for job seekers according to the Second Book of the German Social Security Code – see the Federal Ministry of Labour and Social Affairs’ press release from 19 September 2018
New standard requirements apply from 1 January 2018. Further details are regulated in the Standard Requirements Levels Update Ordinance 2019
- Act to Improve Benefits and Stabilise Statutory Pension Insurance (Pension Package) – see the Federal Government’s press release from 23 November 2018 as well as the Federal Ministry of Labour and Social Affairs’ press release from 29.08.2018
With the adoption of the pension package, the pension level will be kept stable at 48% until 2025 (“Stop Line I“). At the same time, the contribution rate to the statutory pension insurance will be capped at 25% until 2025 (“Stop Line II“). For parents of children born before 1992, the so-called “Maternity Pension II” will apply an additional half a year of upbringing towards their statutory pension. In addition, the reduced earning capacity pension is intended to provide better protection for people who can only work limited hours due to illness. At the same time, “in 2019, the imputation period for new pensioners is will be increased to 65 years and eight months in a single step. In accordance with the increase in the statutory retirement age […], it will subsequently be extended to 67 years [gradually from 2019 to 2031]“. If the reduced earning capacity pension begins in 2019, the imputation period ends upon reaching the age of 65 years and eight months.