Current Changes in Employment and Social Security Law - a Selection

The new year is just around the corner. We would like to take this opportunity to point out selected new statutory amendments in labor and social law which took effect recently or will become effective in the 1st quarter of 2020. 

First of all, the statutory minimum wage will be adjusted again with the turn of the year. With effect from January 1st, 2020, this will increase from the current € 9.19 (gross) to € 9.35 (gross). 

Also effective from January 1st, 2020 a statutory minimum remuneration for apprentices is to be introduced. A monthly minimum salary for apprentices who begin their vocational training after January 1, 2020 is laid down in the German Law to Modernize and Strengthen Vocational Training [Gesetz zur Modernisierung und Stärkung der beruflichen Bildung] in section 17 of the German Vocational Training Act (Berufsbildungsgesetz BBiG). Under this law, the monthly minimum salary in the first year of training will be € 515 (gross). The entry-level salary will therefore increase each year. It will be € 550 in 2021, € 585 in 2022 and € 620 in 2023. The minimum pay for apprentices will also increase during training. It will increase by 18% in the second year of training, 35% in the third year of training and 40% in the fourth year of training. Downward deviations from the statutory minimum salary are also possible on a regional basis or in certain sectors by way of a collective agreement. 

As of January 1, 2020 all assessable income thresholds will also increase. The assessable income threshold for health and long-term care insurance contributions will increase from € 54,450 to € 56,250 per annum and from € 4,537.50 to € 4,687.50 per month respectively. The assessable income thresholds for pension and unemployment insurance will increase in the West from € 80,400 to € 82,800 per annum and from € 6,700 to € 6,900 per month respectively and in the East from € 73,800 to € 77,400 per annum and from € 6,150 to € 6,450 per month respectively. The average additional contribution rate for statutory health insurance will also slightly increase (from 0.9 % to 1.1 %). The remuneration in-kind values for free board and lodging have also experienced an increase. In 2020 the figure for food and board will be € 258 and the monthly value for rent and accommodation will be set at € 235. By contrast, the rate for unemployment insurance contributions will decrease in 2020 from the current 2.5 % to 2.4 %.

The Law Introducing Sub-Contractor Liability in the Courier, Express and Parcel Sector for the protection of employees of November 15, 2019, effective as of November 23, 2019, also known as the “Parcel Courier Protection Act” (Paketboten-Schutz-Gesetz), introduces – as the name suggests − a so-called sub-contractor liability in the parcel industry for the protection of the parcel delivery drivers. This liability contains an obligation on the part of any contractor using a subcontractor in order to fulfil their duties, to assume payment of the social security contributions for employees of said subcontractors, if the latter pays insufficient social security contributions or none at all. The German government estimates that about half the parcel services in the German labor market operate almost exclusively with subcontractors. The aim of the Parcel Courier Protection Act is to encourage honesty in paying contributions. This is to be achieved by the general contractor being increasingly encouraged, for fear of having to pay the minimum wage and social security contributions of its subcontractors, to check the reliability of these companies in wage payments and deduction of social security contributions. However, legislation provides for an exception in the event that the subcontractor commissioned has always paid their social security contributions properly in the past. Here, there is a facility for the general contractor to have a so-called clearance certificate issued by health insurance funds or professional organizations so that, as a result, any liability for the respective subcontractor is precluded, even if the latter were to violate its obligation to pay contributions during its activity for the general contractor.

The working conditions in the care sector should also see an improvement. The new Act for better wages in the care sector - the Care Wages Improvement Act (Pflegelöhneverbesserungsgesetz) serves this purpose. This opens up the possibility of introducing sector-wide collective agreements or higher minimum wages in the care sector through ordinances based on the recommendations of a standing care committee. The background to the legislation is the constantly increasing demand for care personnel in Germany, with simultaneous constant increase in unfilled vacancies. According to Germany's lawmakers, an improvement in working conditions should now be expedited more easily and quickly with the introduction of industry-wide minimum wages. According to the government bill, the collective agreement solution in the context of section 7a AentG (German Employee Secondment Act) is best suited for the expediting of perceptible improvements. To this end, the Federal Ministry of Labor and Social Affairs [Bundesministerium für Arbeit und Soziales) is being given the possibility of extending collective agreements to the entire care sector in consultation with the Federal Ministry of Health (Bundesministerium für Gesundheit) without the approval of the Federal Council (Bundesrat). A permanent care committee is being set up for this purpose which is able, in particular, to issue recommendations on minimum wages and length of vacation. Given the huge importance of the church institutions in the care sector, the committees hitherto appointed by the churches will be given the opportunity to express their opinion on the intended innovations of the standing care committee. The Bundesministerium für Arbeit und Soziales may then decide by statutory instrument via section 11 AentG, based on a recommendation by the care committee, without the approval of the Bundesrat, that the proposed reforms apply to all employment relationships in the care sector. In the event of a conflicting collective agreement based on section 7a AEntG and an ordinance pursuant to section 11 AentG, the collective agreement takes precedence. The Act came into effect on November 29, 2019.