7 January 2021

Changes to German employment law in 2021

  • Briefing


Recent changes to German employment law will require employers to respond to ensure that their compliance is compatible with the new legislation.

Higher minimum wage

Since January 1, 2021, the statutory minimum wage has increased to EUR 9.50 gross per working hour. A further increase to EUR 9.60 gross per working hour will take place from July 2021 on. Further increases will follow in 2022. Employers must therefore note that mini-jobbers may only work around 47 hours per month in order not to exceed the 450-euro limit.

Implementation of the whistle-blower directive

The European Directive 2019/1937/EU on the protection of whistle-blowers has to be implemented not later than December 2021 by the Federal Republic of Germany. This includes a mandatory reporting system for companies with 50 or more employees and protection and support measures for whistle-blowers. Close monitoring of status of implementation and current internal structure is required.

Special regulations for short-time allowance extended

The special regulations for short-time allowance established due to the COVID pandemic are now valid until the end of the year. This means in detail:

  • Increase in short-time allowance to 70% or 77% (starting from the fourth month of entitlement) and to 80% or 87% (starting from the seventh month of entitlement), provided that the claim arose by March 31, 2021.
  • Duration of short-time allowance extended to up to 24 months (i.e. maximum until the end of 2021); does also apply to temporary workers.
  • Easier eligibility (only at least 10% of the workforce affected by loss of pay; no obligation to build up negative working hours).
  • Reimbursement of social security contributions during short-time work (in full until the end of June 2021; then half until the end of the year; provided short-time work was started by June 30, 2021).
  • Reimbursement of costs for further training measures during short-time working to a greater extent than before; specific scope of reimbursement depending on the size of the company.

In contrast, the generous handling by the German Federal Employment Agency (“BA”) regarding the use of employees' vacation entitlements to avoid short-time working has been changed. Whereas the BA refrained from requesting employees to use their vacation entitlements until the end of 2020, from now on any remaining leave carried over from 2020 and leave from 2021 must be brought in as a precondition for applying for short-time allowance. However, employees' vacation wishes are to continue to take precedence.

Compensation for parents if unable to work due to supervising own children

Section 56 (1a) of the Infection Protection Act (Infektionsschutzgesetz – “IfSG”) grants a claim for compensation to employees who have to supervise, care for or nurse their child themselves due to an official closure or ban on entering care facilities (e.g. daycare center, school or facility for people with disabilities) or a segregation affecting the child personally and therefore suffer a loss of earnings. In the case of shared care, parents receive compensation for up to ten days of loss of earnings; in the case of sole supervision, care or nursing, up to 20 days. Compensation amounts to 67%of the loss of earnings incurred by the employed person concerned, up to a maximum of EUR 2.016 per month for a full month.

Brexit and consequence on employment of British Nationals in Germany

At the beginning of the year, the agreement between the EU and the United Kingdom came into force preliminarily. Under the agreement, British nationals entering Germany this year will enjoy easier access to the labour market. They will not need a visa to enter the country if they plan to stay in Germany for a longer period of time for work purposes.

Digital works council work also 2021

Due to COVID works councils were given the opportunity for the first time to make virtual decisions and hold virtual works meetings. The applicable section 129 of the Works Council Constitution Act (Betriebsverfassungsgesetz – “BetrVG”) was originally limited until December 31, 2020, but is now extended to June 30, 2021.

Solidarity surcharge abolished

The solidarity surcharge (Solidaritätszuschlag or Soli for short), a much-maligned tax supplement is set to be abolished for the majority of taxpayers as of January 2021. The Solidaritätszuschlag was introduced in the 1990s to contribute towards the cost of reunification. Single taxpayer will have to earn more than EUR 61.700 to be liable nonetheless. Parents with two or more children will only pay the tax if the combined gross annual income exceeds around EUR 151.000.

Platform work, crowd workers and newest case law

In November 2020, the German Federal Ministry of Labor and Social Affairs published a Key Issues Paper regarding platform work. At the core, the Ministry wants to improve the legal position of platform workers. In addition to other measures, they are to be given access to protection mechanisms under labour and social law. Platform operators, on the other hand, are to be held more accountable, for example by being obliged to pay pension and social security contributions for platform workers.

It remains to be seen whether the key issues paper will lead to changes in the law during this legislative period. In the mid-term at any rate, it is to be expected that the legislator will regulate platform work more than before. This applies not least against the background of a ruling by the Federal Labor Court (Bundesarbeitsgericht – “BAG”) in December 2020, according to which platform workers are not always to be regarded as self-employed, but also as employees, depending on the specific nature of the activity.
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