German Employment Law: A Look at Important Changes for 2022
As usual, there are some important changes in German employment law that went into effect at the beginning of the new year. Below are eight of the most important new developments about which employers may want to be aware.
Statutory minimum wage
The statutory minimum wage was raised again as of January 1, 2022. The minimum gross hourly wage is now €9.82. The new German coalition government’s plan to increase the minimum hourly wage to €12 will also take effect soon, with regulations scheduled to be implemented sometime this year.
The exemption limit for noncash benefits that employers can pay their employees tax-free has increased from €44 to €50 per month beginning January 1, 2022. Another new aspect is that a cash card or voucher must meet the stricter requirements of Section 2(1) No. 10 of the Payment Services Oversight Act (Zahlungsdiensteaufsichtsgesetz or ZAG) beginning January 1, 2022, in order to remain tax-free. This means that only earmarked merchant and merchandise group cards and vouchers will be possible.
Short-time work allowances
The temporary special regulations for short-time work allowances due to the COVID-19 pandemic have been extended until June 30, 2022.
Electronic unemployment registration
As of January 1, 2022, unemployed persons are not only able to register in person at the relevant employment agency, but are also able to do so electronically. The new, legally secure electronic unemployment registration requires the use of an identification (ID) card with the so-called “online ID function.” Accordingly, employees should only be reminded of their obligation to register as jobseekers without delay in notices of termination and termination or settlement agreements rather than in person, as was previously the case.
Occupational pension provisions
Already in place for contracts since January 1, 2019, employers must provide a statutory subsidy for the company pension of their employees if the employees spend part of their salary on the company pension through a so-called deferred compensation. The amount of a statutory employer’s allowance is based on the social security contributions actually saved as a result of the deferred compensation, but caps at 15 percent of the converted amount. Beginning January 1, 2022, the employer’s obligation to pay this statutory allowance also applies to so-called old contracts (i.e., all contracts concluded before January 1, 2019).
It should be noted, however, that these regulations can be deviated from in collective bargaining agreements to the benefit or detriment of employees.
Status Determination Procedure
Important changes became effective for the Status Determination Procedure on April 1, 2022. 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
Works council elections
A number of legal changes also apply to the upcoming works council elections in 2022. For details, please see our article on this subject.