At the beginning of 2021, extensive changes in German employment law entered into force. In this newsletter, we would like to draw your attention to some of the changes that are particularly significant for employers. Likewise, we will provide insight into some restrictions on public life the German Federal Government decided on January 19, 2021 in order to contain the coronavirus pandemic that are of the utmost significancy for employers. We highly appreciate your interest in our publications and are happy to answer any questions you may have.

Amendment of § 56 IfSG (German Infection Protection Act): Loss of earnings due to childcare duties

The new provision of § 56 IfSG (German Infection Protection Act) provides for extended compensation for loss of earnings for parents who have to care for their children at home because school or company vacations have been extended or in-person school classes have been suspended for reasons of infection prevention.

The requirements for claiming compensation under § 56 (1a) IfSG (German Infection Protection Act) are:

  • Facilities for the care of children or schools have been closed for reasons of infection prevention, the responsible authority has announced or extended school or company vacations for reasons of infection prevention, or the compulsory attendance at a school has been lifted
  • the child to be cared for has not yet reached the age of 12 or is dependent on assistance due to a disability
  • supervision, care or nursing is now provided by a working parent because no other reasonable care can be provided (this must be evidenced)
  • the employee suffers a loss of earnings as a result.

There is no entitlement to compensation payment insofar as a closure would take place anyway due to the regular school vacations or vacation closing times of the daycare center.

The amount of compensation in such a case is 67% of the net loss of earnings incurred, but is limited to a maximum amount of EUR 2,016 per month. This compensation is now granted for a maximum of ten weeks per parent providing care (and thus affected by the loss of earnings). For single parents, there is the possibility of compensation for a period of up to 20 weeks (related to the duration of the measure, e.g. school closure). Generally, the compensation is calculated and paid by the employer. The employer claims the compensation from the competent authority.

Extension of entitlement to children’s sick pay until December 31, 2021.

In addition to the aforementioned expansion of compensation for parents’ loss of earnings under § 56 IfSG (Infection Protection Act), the entitlement to children’s sick pay has also been expanded retroactively as of January 5, 2021.

First of all, the entitlement period was extended for a limited time. In 2021, under the newly inserted § 45 (2a) SGB V (German Social Code, Book V), each parent is entitled to up to 20 working days (instead of 10) per child and up to 40 working days (instead of 20) for single parents. However, this entitlement is granted for a total of no more than 45 working days (regardless even if the number of children exceeds three), and for single parents for no more than 90 working days.

On the other hand, the legislator has included an additional extension in the new regulation. According to this, the entitlement to children’s sick pay in 2021 also exists if

  • facilities for the care of children, schools or facilities for persons with disabilities are temporarily closed by the competent authority to prevent the spread of infections or communicable diseases on the basis of the Infection Protection Act,
  • additional school vacations are ordered or existing vacations are extended,
  • the compulsory attendance in schools is abolished
  • childcare facilities or services are reduced, or
  • the child does not attend the facility due to an official recommendation.

Entitlement to children’s sick pay due to necessary care of a child exists even if the parent already works in the home office or could perform their work duties in the home office. Parents should not be required to care for their child/children in addition to their home office work. An entitlement only lapses if care is ensured by another person living in the household.

If an employee receives children’s sick pay, the employer must release that employee from work duties without pay. As proof, the employer should request a certificate from the school or other childcare facility. The employee receives the children’s sick pay directly from the health insurance.

New occupational health and safety regulation – obligation to send employees to the home office?

To contain the coronavirus pandemic, the federal and state governments agreed on January 19, 2021, to finalize a new SARS-CoV-2 Occupational Health and Safety Regulation, which is currently scheduled to go into effect as of January 27, 2021.

The draft of the new Occupational Health and Safety Regulation – whose effectiveness has for now been limited until March 15, 2021 – stipulates in particular that in the case of office work or comparable activities, employers must offer employees the opportunity to carry out these activities in their homes if there are no compelling operational reasons that would prevent that. Accordingly, the employer is now to be obligated to enable its employees to work at home to a large extent. This measure, which is drastic from the employer’s point of view, is intended to counteract the increased risk of infection through work contacts, but also to prevent employees from having to use public transport when commuting to or from their workplace.

The respective wording in the regulation goes very far. In particular, it is currently unclear what the legislator means by compelling operational reasons. Not all office work can be performed from home, so that, for example, activities such as processing physical mail must take place on site. In particular, it is currently unclear how to proceed if the activity as such could be performed outside the office, but the technical requirements are lacking.

Tax relief for employees working from home

For the calendar years 2020 and 2021, each day on which an employee worked exclusively at home can be claimed against tax at a home office flat rate of EUR 5 per day. This flat rate applies for a maximum of 120 days per calendar year. The maximum home office allowance per year that can be taken into account in the annual tax return is therefore EUR 600.

The flat rate is also granted if no extra room is set up for work in the home or if the stricter requirements for deducting home office expenses are not met. This is of particular benefit to employees who are currently working at home due to the Corona crisis.

Of course, the commuter allowance for the commute to and from the workplace cannot be claimed for the days on which work was performed exclusively in the home office. This is because working in a home office does not require commuting to the workplace.

In addition, the home office tax reduction is included in the income-related expenses, for which a flat rate of a maximum of EUR 1,000 has already been set. For this reason, tax relief is in fact only granted if the income-related expenses actually claimed in the tax return, including the home office flat rate, exceed the amount of EUR 1,000 for income-related expenses.

Extension of the changes with regards to short-time work

The changes to short-time work allowance adopted a few months ago included easier access to short-time work allowance and an increase in the amounts paid. We addressed these changes in our post from April 24, 2020. The federal government has now extended these new regulations due to the ongoing restrictions of the coronavirus pandemic.

  • The access threshold, under which only at least 10% of the company’s employees (or a company department) must be affected by loss of pay (as opposed to the 30% of employees affected that would otherwise be required), now applies to all companies that began short-time work by March 31, 2021, and will be extended until December 31, 2021.
  • The increase in the short-time allowance amount to 70% of the gross monthly wage (or 77% for affected employees with children) from the 4th month of entitlement and to 80% of the gross monthly wage (or 87% for affected employees with children) from the 7th month of entitlement has now also been extended until December 31, 2021. It applies to all employees whose entitlement to short-time allowance arose by March 31, 2021.
  • The period of entitlement to short-time allowance for employees of companies that have started short-time work by December 31, 2020, has been extended from 12 months to up to 24 months, but currently no longer than December 31, 2021.
  • The amended regulations for supplementary earnings have also been extended. For example, remuneration from an employment relationship where income is less than EUR 450 a month (German: geringfügige Beschäftigung, Minijob), which is started while an employee is on short-time work, will remain tax-exempt until December 31, 2021.
  • For social security contributions, a full refund will be made until June 30, 2021, after which half of the contributions will continue to be refunded until December 31, 2021, for all companies that began short-time work by June 30, 2021.
  • The tax exemption for employer subsidies for short-time working was also extended until December 31, 2021.
  • Temporary employees may also receive short-time allowance if they are employed by a temporary employment agency that has started short-time work by March 31, 2021. This regulation also applies until December 31, 2021.

Extension of the special regulations on video conferences of the works council in accordance with § 129 BetrVG (Works Constitution Act)

The provision of § 129 BetrVG (Works Constitution Act), according to which meetings of the works council and other works constitutional bodies can be held in the form of video or telephone conferences, originally applied only until December 31, 2020. Its effectiveness has now been extended until June 30, 2021. Previously, such meetings could only be held in the form of face-to-face meetings, which was derived from § 33 (1) sentence 1 BetrVG (Works Constitution Act). The possibility of shifting meetings to the virtual realm takes into account the new everyday working life during the pandemic with distance regulations, home office and reduced physical contacts, in which the functioning of such bodies must nevertheless be ensured.

Immigration of workers

The so-called “Western Balkans regulation” was extended up to and including 2023. The original regulation applied from 2016 up to and including 2020 and gave workers from the Western Balkans region, i.e. from the states of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Northern Macedonia and Serbia, privileged access to the German labor market. Through the regulation, German employers can hire nationals from these countries as workers, regardless of formal qualifications for training or employment.

However, this access is limited. This is because any hiring under the Western Balkans regulation requires the approval of the Federal Employment Agency. The Federal Employment Agency checks whether the particular job to be filled could be filled by a German worker and whether the same employment conditions are granted as would be for German workers. However, the number of approvals that the Federal Agency can grant is now limited to 25,000 per year in order to prevent overloading the offices responsible for granting visas.

Since the implementation of the BREXIT, the conditions for British and Northern Irish citizens with regard to access to the German labor market have changed. As non-EU citizens, they will in future need a residence permit entitling them to work. However, such a residence permit will be granted under easier conditions for British and Northern Irish citizens, as the United Kingdom and Northern Ireland are on the list of privileged states. British nationals who already resided in Germany on December 31, 2020, are entitled to continue living here under the EU-UK Withdrawal Agreement. It is only necessary to notify the Immigration Office responsible for their place of residence of their residence until June 30, 2021, in order to then be able to receive the new residence document – a permanent residence of at least 5 to a maximum of 10 years. However, all British and Northern Irish citizens who have not lived in Germany prior to January 1, 2021 are not eligible under the EU-UK Withdrawal Agreement and can stay within the Schengen area for only up to 90 days with their passport. Future British employees can then apply for their residence title for the purpose of gainful employment in Germany at the respective Immigration Office responsible.

Extension of the period during which a so-called “corona bonus” may be paid

In 2020, in view of the burden of the coronavirus pandemic, the legislator created the possibility under which employers could grant their employees a one-time, tax- and social security-exempt bonus up to an amount of 1,500 euros through financial allowances or also in kind. This regulation has now been extended, cf. § 3 (11a) EStG (Income Taxt Act).

Covered are all special benefits and bonuses paid to employees after March 1, 2020 and until June 30, 2021. The special benefits must be paid in addition to the regular salary, i.e. it may not constitute deferred compensation, e.g. from vacation or Christmas pay or by offsetting against the employee’s salary.

In addition, there must be a link to the coronavirus pandemic. This means that employer benefits based on an agreement or legal obligation existing before March 1, 2020 cannot be granted as a tax-free Corona bonus. Higher payments are possible, but remain tax-free only up to EUR 1,500. The payment of a corona bonus is possible in all sectors and for part-time or marginal employees, as well as for mini-jobbers who work in employment relationships on a EUR 450 basis, without the employment relationship thereby becoming subject to social security contributions. This also applies regardless of whether and to what extent short-time allowance is paid.

It should be noted, however, that the extension until June 2021 does not mean that an additional bonus of up to EUR 1,500 may be paid tax-free again in that year. Only the period for granting this one-time Corona special payment is extended. If the employer has already exhausted the maximum tax-free amount of EUR 1,500 vis-à-vis an employee in 2020, the extension will not result in a raise of the amount of the tax-free bonus.



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