Legal changes in 2021
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Legal changes in 2021 – familiar with them already?
"Life has always more cases than the legislators can imagine", said Norbert Blüm, Germany's ex-Labour Minister, once. But it is precisely at the turn of the year – and particularly in times of the corona pandemic. which is making numerous legal changes and alleviations necessary – that things seem to me to be almost the other way round: 2021 will bring a host of legal changes and new regulations in its train. There will be new contribution assessments, annual remuneration limits, an extension to the refund of employers' contributions for short-time working, major changes to the minimum wage, new rules on payment for training, and...and...and... I really reckon it is high time for employers to get to know these new developments – here I am presenting you "hand-picked" with a few of the changes. Are you too affected by these changes in the law and can't get your head around them?
Minimum wage – increase in four stages
Following a resolution by the German Cabinet of 28 October 2020, the third Minimum Wage Increase Regulation will be coming into force. Under this Regulation the statutory minimum wage in Germany will rise in four stages until 1 July 2022. As of 1 January 2021 the hourly rate will be raised initially to € 9.50 gross per working hour. As of 1 July 2021 the hourly rate will be € 9.60 gross, and as of 1 January 2022 € 9.82 gross.
Statutory minimum wage for trainees
The statutory minimum wage for trainees is not governed by the German Minimum Wage Act (MiLoG) but by the Vocational Training Act (BBiG). Up till now this only stipulated that a trainee must be paid a suitable remuneration which, according to the age of the trainee with continuing vocational training, must be raised at least once a year. The new Vocational Training Act (BBiG), which came into force on 1 January 2020, stipulates under Section 17 both specific minimum payment levels and remuneration rights. Thus a monthly training payment (first apprenticeship year) must be at least € 550, providing the training is commenced in 2021. The law likewise regulates the increase in minimum payment, which must be made at least annually. Further, the minimum payment must be € 585 in the first year if the vocational training is begun in the period from 1 January 2022 to 31 December 2022, and € 620 if it is begun in the period from 1 January 2023 to 31 December 2023. For the second, third and fourth year of training the new Vocational Training Act stipulates rising supplements on the sum from the year when the training in question began. Under these rules a trainee will receive 18 percent, 35 percent and 40 percent respectively above each sum at commencement for the first year of training.
Temporary employment – maximum three months or 70 days
By means of temporary-employment appointments personnel departments can organise temporary support by additional staff in a flexible way. But looked at carefully – they are subject to strict rules! On 28 March 2020, the "Act governing simplified access to social security and on the deployment and protection of social-service providers due to Coronavirus SARS CoV" – the social-protection package, in short – came into force. Along with special regulations on Unemployment Benefit II, on income support and on children's allowance, this Act also regulates the time limits for temporary working within a full year: the increase to five months or 115 working days in force from 1 March to 31 October 2020 has not been extended after the end of the period. Consequently since November, and thus in 2021, the previous time limits of three months or 70 working days are in force again: should a temporary employee work full time, i.e. at least five days a week, his employment must be restricted to a maximum of three months at a stretch. Should he work regularly less than five days in the week, the temporary employment must not last longer than 70 working days in total.
Short-time working: refund of employers' contributions
Relief will also be extended to employers in 2021, e.g. by extending in stages the refund of the social-security contributions payable by themselves alone: thus up to 30 June 2021 the contributions due on short-time working allowance for health, pension and care insurance will be completely refunded.
Following this cut-off date, until 31 December 2021 inclusive, refund of employers' contributions will be reduced to 50 percent – this will apply to all businesses which have introduced short-time working as of 30 June 2021. Employers will receive a refund of 100 percent who carry out a qualification scheme with their employees during the short-time working period.
New regulations on short-time working allowance
As a result of the coronavirus pandemic, a large part of the workforce in Germany is on short-time work – with concomitant reduction in wage or salary. For this reason improvements to short-time working allowance have been decided. The new employment situation requires businesses to deal with the tax treatment of possible wage-replacement benefits.
Should statutory preconditions be fulfilled, it will be possible to claim short-time working allowance to the extent of 60 or 67 percent of the net remuneration lost. The option for short-time working allowance was already made easier as of 1 March 2020, by lowering the preconditions for the receipt of short-time working allowance, and the benefits were extended. Now the period of receipt has been extended to a maximum of 24 months, to 31 December 2021 at the latest.
At the same time, an increase in short-time working allowance – irrespective of the term of short-time working:
- For employees without children who are working at least 50 percent less: the short-time working allowance will increase from the fourth month of receipt to 70 percent, and from the seventh month to 80 percent of the sum in wages lost.
- For employees with children who are working at least 50 percent less: the short-time working allowance will increase from the fourth month of receipt to 77 percent, and from the seventh month to 87 percent.
Short-time working allowance is tax-free. The amount of short-time working allowance is governed by the (fiscally estimated) number of children. The employer's subsidy to the short-time working allowance has lately been tax-free.
Are you also affected by these changes in the law and can't get your head round them? Then I recommend B.I.P. – the service provider will put the changes into practice for you without delay.
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by Till Achim Lobenstein