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

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

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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

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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.

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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).

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Originally posted on the Ius Laboris Knowledge Base:
www.globalhrlaw.com
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