What are Germany's legislative reforms for 2023?

We examine the legal changes that have taken effect in 2023. These changes have an influence on the German labor market, and it is critical to be aware of them in order to ensure compliance. 

Contributions to society

In Germany, the social security system is funded through a combination of company and employee contributions, as well as government subsidies. It is intended to serve as a safety net for individuals and families, and it includes a wide range of benefits such as healthcare, unemployment insurance, and pension programs. The following changes occured in 2023:

• West Germany's pension and unemployment insurance ceilings rise to EUR 7.300 per month (2022: EUR 7.050). It rises to EUR 7.100 per month in East Germany (2022: EUR 6.750).
• Contributions to health insurance and the nursing insurance cap are raised to EUR 4.987,50 per month (2022: EUR 4837,50).
• The annual threshold for choosing private health insurance rises to EUR 66.600.
• The insolvency charge is reduced from 0.09 percent to 0.06 percent.
• The employer and employee contributions to unemployment insurance rise from 1.25% to 1.3%.

Immigration pay scales

The minimum wage criterion for a Blue Card for ordinary professions (or Blue Card Type 1), which is the only work permit supported by Xpandium, will be EUR 56.400,00 gross per year or EUR 4.700,00 gross per month in 2023.

The minimum wage

The legal minimum wage will rise to EUR 12 per hour. (2022: 10,45)

Bonus for Tax-Free Inflation

Employees can earn a maximum of EUR 3.000 tax-free inflation incentive from their employer beginning October 26th, 2022. Please keep in mind that the inflation bonus is governed by the Equal Treatment Act. The rule is in effect until December 31, 2024. A contract revision is required, and it must specifically declare that the bonus is being provided to offset inflationary costs. As an employer, you are under no duty to pay this tax-free inflation bonus.

Tax break for in-kind benefits

The tax allowance has increased from EUR 44,00 to EUR 50,00.

The 50-euro exemption limit states that rewards in kind for companies and employees are tax and social security-free if the entire value does not exceed 50 euros per month. As a result, if the 50-euro exemption maximum is not exceeded, this type of non-cash benefit is always tax-free.

If the value of an employee's in-kind benefits from his company exceeds the exemption limit of 50 euros, the entire amount is liable to payroll tax and social security. This is now taxed. Common in-kind perks include vouchers.

A doctor's note in electronic form

Employees are no longer required to submit a doctor's note to their employers in the event of illness beginning in January 2023. Employees must only notify their employer that they are ill. The doctor's note will then be electronically retrieved by the company from their employee's health insurance. This new procedure applies exclusively to employees who are covered by public insurance and who are sick on a regular basis. For example, if an employee is absent from work owing to the illness of a child, the employee must still send a copy of the doctor's note. Privately insured employees will be required to continue submitting a copy of the doctor's note. 

How can we assist you?

Are you curious about how rules and regulations will change in the various countries where we live? Or do you wish to learn more about a specific regulation? Our HR professionals in Germany will gladly assist you!