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Employment Law Review 2013/2014: Germany
Employment Law Review 2013/2014: Germany
Employment Law Review 2013/2014: Germany
Employment Law Review 2013/2014: Germany
Employment Law Review 2013/2014: Germany
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Employment Law Review 2013/2014: Germany

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What significant changes to employment law in Germany took effect in 2013? And what major reforms are in the pipeline for the year ahead? …

What significant changes to employment law in Germany took effect in 2013? And what major reforms are in the pipeline for the year ahead?

A range of legislative changes came into force in 2013, such as the reform for mini- and midi-jobs. For 2014, Germany’s new grand coalition is contemplating even more important changes. For example, a new minimum wage will apply and temporary employments will be limited to a maximum period of 18 months. Moreover, it is planned that employees who have paid pension contributions for 40 years may retire at the age of 63 without any pension deductions.

With thanks to our German member Kliemt & Vollstädt.
Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com

Published in: Law, Career
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  • 1. Employment Law Review 2013/2014: Germany Publication Date: 7 March 2014 Member Firm(s): Kliemt & Vollstädt Country: Germany What significant changes to employment law in Germany took effect in 2013? And what major reforms are in the pipeline for the year ahead? A range of legislative changes came into force in 2013, such as the reform for mini- and midi-jobs. For 2014, Germany’s new grand coalition is contemplating even more important changes. For example, a new minimum wage will apply and temporary employments will be limited to a maximum period of 18 months. Moreover, it is planned that employees who have paid pension contributions for 40 years may retire at the age of 63 without any pension deductions. I. Reforms implemented in 2013 Mini-jobs and Midi-jobs Until 2013, an employment was classified as “mini-job” if the income incurred did not exceed EUR 400 per month. For the employee, a mini-job was free of tax and social security contributions. The employer paid a reduced rate of taxes and contributions. An employment position was classified as a “midi-job” if the income was between EUR 400 and EUR 800. The employer paid the usual taxes and contributions while the employee paid a reduced rate. On January 1, 2013 the legislator increased the threshold for mini-jobs from EUR 400 to EUR 450 and for midi-jobs from EUR 800 to EUR 850. Since the reform, the “mini-jobbers” generally must pay into the pension system, too. However, they may be exempted upon written request. Compensation for Short-Time Work So-called short-time work enables companies to maintain trained staff during economically difficult times while a state allowance (so-called short- time work allowance) eases the burden of the continued salary payments. It is therefore often a pragmatic alternative to redundancies. In 2013, the duration of the state allowance payment was prolonged from six months to
  • 2. 2 a maximum of twelve month. The prolongation shall continue to apply until the end of 2014. Protection of employee data One of the most important topics on the German government’s agenda for 2013, however, failed. In February 2013, following wide range criticism from the opposition, the unions, and various data protection officials, the German coalition government withdrew its highly disputed draft bill for a new employee data protection regime in Germany. The bill was supposed to introduce new rules for the collection, processing and use of employee data prior to and during an employment relationship. Thus, this topic is on the new coalition government’s agenda for 2014. II. What's coming in 2014? Looking forward to the year ahead, the most significant reforms planned by the new grand coalition are outlined below. Protection of employee data The new grand coalition stated in the coalition agreement that the established German data protection standards will be maintained and that an even more extensive data protection level, which exceeds the EU standards, will be possible. Furthermore, the grand coalition awaits the implementation of the EU General Data Protection Regulation and intends to follow the EU statute in order to enact a German law on employee data protection. If the EU General Data Protection Regulation is not passed within an “appropriate period” (no indication is given as to how long that is), the German government will create a national statute before the implementation of the EU regulation. Also, the protection for whistleblowers will be reviewed to ensure its compliance with “international guidelines.” At this point, there is no special protection for whistleblowers. Minimum wage So far, in Germany, there is no general minimum wage. A minimum wage applies only for employees whose contract is governed by a collective agreement (Tarifvertrag) or who work in an industry sector where the collective agreement has been declared generally binding for all
  • 3. 3 employment in the sector, regardless of Union/Employer Association membership (such as the construction industry). According to the plans of the new grand coalition, as of January 1, 2015, a nationwide legal minimum wage amounting to EUR 8.50 shall apply. As far as existing collective agreements provide deviating minimum wages, these shall be applicable until December 31, 2016, at the latest. As of January 1, 2017, the nationwide minimum wage shall be observed without any exception. Afterwards, a commission – which shall be implemented for this purpose – shall determine the amount of the minimum wage periodically starting June 1, 2017. Binding applicability of collective agreements The grand coalition also plans to entitle the Federal Minister for Employment and Social Affairs to declare collective agreements to be generally binding for all employers of the industry sector, regardless of (employer association) membership if there is a special interest of the public in the binding applicability (for instance for the functionality of public funds). At this stage, a collective agreement could only be declared to be generally binding for employers if at least 50 percent of the employees in the employing company worked in the industry sector which is regulated by the collective agreement. This threshold was difficult to achieve in some sectors, such as retail/supermarkets. Abuse of contracts for services instead of observing the requirements of temporary employment The new government plans to prevent employers from evading the statute of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz) by concluding a contract for services (Werkvertrag), which is not subject to the German Temporary Employment Act. In order to distinguish between contracts for services and temporary employments, the criteria as developed by German case law shall be incorporated into law. According to German case law, the following applies: If a company which makes use of external employees integrates the external employees in its work organization and gives directions to the external employees, this is deemed as a “temporary employment” and the requirements of the German Temporary Employment Act must be complied with.
  • 4. 4 Temporary employment The new government further plans to limit temporary employment to a maximum period of 18 months unless collective agreements or works council agreements provide for a different (longer) maximum duration of a “temporary employment.” In principle, an employment of external employees which lasts longer than 18 months will not be considered “temporary” in the future and will not be allowed by law. Moreover, the new government coalition intends to enact a law which provides that an external employee who works temporarily for an employer shall be equated with the employer’s permanent workers (i.e. receive the same salary), after the external employee has been employed for nine months. Part-time Employment Part-time employees who have reduced their working time because of parenting or caring for family members shall be entitled to return to their full-time jobs. A title for a limited period of part-time work shall be implemented. Retirement Age/Mother’s Pension As of July 1, 2014, it is planned that persons who have paid pension contributions for 40 years may retire at the age of 63 without any pension deductions. Moreover, as of July 1, 2014, educational leave by parents (mostly mothers) whose children were born before 1992 shall be taken into account for the pension calculation (so-called mothers’ pension).
  • 5. 5 Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com About Ius Laboris Ius Laboris is an alliance of law firms offering employers cross-border employment and pensions law advice. It has 1,300 specialist HR lawyers in over 150 cities and 44 countries. Ius Laboris offers access to the best local HR law experts in one global team with 20% more ranked employment lawyers (Chambers & Partners, November 2013) than any other global HR legal services organisation. Further, Ius Laboris has 50% more recommended lawyers than its nearest rival in a recent survey in PLC's employment law guide. Clients include many household names as well as multinational companies in all sectors ranging from energy, retail and technology to pharmaceuticals. For more information on Ius Laboris, please visit iuslaboris.com.

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