Upcoming Changes to German Payroll in 2025: What You Need to Know
1. Digital Sick Notes
Starting in 2025, sick notes from foreign or private doctors will be sent digitally to employers. However, these digital sick notes will not specify the exact period of sickness coverage. Employees must still send sick notes from foreign or private doctors to Parakar’s Germany HR team for processing.
2. Annual Contribution Earning Limit for Health Insurance
In 2025, the values used to calculate health insurance contributions will be adjusted, along with the contribution earning ceiling. This change means that some employees may no longer be eligible for voluntary private insurance and will automatically transition to statutory health insurance. Although there will be no impact on their health coverage, this could affect the net salary paid out. We will only be able to assess the impact of this change once the payroll software has been updated in the new year.
3. East/West Divide in Health Insurance Contributions Removed
Until now, employees in eastern Germany paid different rates for pension and unemployment insurance compared to those in western Germany. From 2025, this geographical divide will be eliminated, and all employees, regardless of where they live in Germany, will contribute the same amount. This change could lead to higher contributions for employees in the eastern states, potentially lowering their net salary.
4. Tax-Free Inflation Bonus Up to €3,000 (Available Until End of 2024)
To help combat the effects of inflation, employers can pay employees a one-time bonus of up to €3,000, tax-free, through the end of 2024. This payment is exempt from both tax and social security contributions. If you would like to provide this bonus to your employees before the year ends, please contact the Parakar HR team for assistance.
5. Increase in Paid Child Sick Leave Days
Starting in 2025, parents will be eligible for up to 15 fully paid sick days per child to care for a sick child. This benefit is available to both parents, with single parents receiving 30 days per child. It’s important for employees to notify Parakar when taking child sick leave, as this information is essential for payroll processing and tax filings for both the employee and employer.
If you have any questions about how these changes may affect your payroll operations or need assistance with implementing these new rules, don’t hesitate to reach out to the Parakar HR team. We’re here to support you through these updates and ensure a smooth transition.
