What are the legislative changes for 2023 in Germany?
We take a closer look at the legislative changes that are set to take effect in 2023. These changes will impact the world of employment in Germany, and it’s important to be aware of them in order to ensure compliance. In this blog, we provide a summary of the key changes in employment law in Germany for 2023.
- Social contributions:
- How are pension and unemployment insurance ceilings, health insurance contributions, and the threshold for private health insurance changing in the German social security system for 2023?
- Immigration salary levels:
- What are the new minimum salary requirements for a Blue Card and regular professions in Germany for 2023, and how do these changes impact immigration policies?
- Minimum wage in Germany:
- How is the statutory minimum wage changing in Germany for 2023, and what are the implications for both workers and employers?
- Tax-free inflation bonus:
- What is the tax-free inflation bonus introduced in October 2022, and how does it benefit employees?
- Tax allowance for benefits in kind:
- How does the tax allowance for benefits in kind change in 2023 and what are the implications for employers and employees?
The social security system in Germany is funded through a combination of contributions from employers and employees, as well as government subsidies. It is designed to provide a safety net for individuals and families and covers a wide range of benefits including healthcare, unemployment insurance, and pension plans. For 2023, the following changes will take place:
- Pension insurance and unemployment insurance ceiling increase to EUR 7.300 a month (2022: EUR 7.050) in West Germany. In East Germany, it increases to EUR 7.100 EUR a month (2022: EUR 6.750).
- Health insurance contributions and nursing insurance ceiling increase to EUR 4.987,50 per month (2022: EUR 4837,50).
- The threshold allowing to opt for private health insurance increases to EUR 66.600 per year.
- Insolvency charge decreases from 0,09% to 0,06%.
- Employer and employee contribution to unemployment insurance increases from 1,2% to 1,3%.
Immigration salary levels
In 2023, the minimum salary requirement for a Blue Card for regular professions (or Blue Card Type 1), which is the only work permit Parakar can support, will be EUR 56.400,00 gross per year or EUR 4.700,00 gross per month.
Minimum wage Germany in 2023
The statutory minimum wage will increase to EUR 12 per hour. (2022: 10,45)
Tax free Inflation Bonus
Starting October 26th, 2022, employees can receive a maximum of EUR 3.000 tax-free inflation bonus from their employer. Please note that the inflation bonus is subject to the Equal Treatment Act.
The rule applies until December 31, 2024. A contract amendment is required and it must explicitly state that the bonus is being paid to mitigate the costs of inflation. There is no obligation as an employer to pay this tax-free inflation bonus.
Tax allowance for benefits in kind
The tax allowance increases from previously EUR 44,00 to EUR 50,00.
The exemption limit of 50 euros stipulates that benefits in kind for employers and employees are tax and social security free only if the total value does not exceed 50 euros per month. Therefore, this form of non-cash benefit always remains tax-free if the 50-euro exemption limit is not exceeded.
If the value of the benefits in kind that an employee receives from his employer exceeds the exemption limit of 50 euros, the entire amount must be subject to payroll tax and social security. This becomes taxable. Usual benefits in kind are, for example, vouchers or the Edenredcard.
Children’s sick days
During the pandemic, the number of additional days an employee can stay out of work to take care of his sick child has been increased to 30 days per parent. This will still be the case until April 7th, 2023. The entitlement covers working parents with statutory health insurance, who are entitled to sick pay themselves, and whose child is under the age of 12. If the child has a disability, the entitlement also applies above the age of 12.
Electronic doctor’s note
Starting January 2023, employees will no longer have to submit a doctor’s note to their employers in case of illness. Employees solely have to inform their employer that they are ill. The employer will then retrieve the doctor’s note electronically from their employee’s health insurance. This new process does only apply to employees who are publicly insured and in case of regular sickness of the employee. For example, in case of absence from work due to illness of the child of an employee, the employee will still have to send a copy of the doctor’s note. Also, privately insured employees will have to keep handing in a copy of the doctor’s note.
How can we help you?
Are you curious about what will change in terms of laws and regulations in the other countries we’re located in? Or want to know more about a specific regulation? Our HR experts in Germany will be happy to advise you!