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Germany

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      Market Conditions Summary - GERMANY 2011                Market Conditions Summary - GERMANY
                                                          LAW


Recruitment and Contract
Probationary Period                                       3 to 6 months during which notice period is 2 weeks
Probationary Period
Extension                                                 Not possible to extend the probationary period over 6 months
                                                          4 weeks to the 15th or end of a month. After 2 years of service after age 25,
                                                          the legal notice periods are increased, as follows:
                                                          + 2 years: 1 month + 5 years: 2 months
                                                          + 8 years: 3 months +10 years: 4 months
                                                          +12 years: 5 months+15 years: 6 months,
                                                          +20 years: 7 months (each to the end of a month).
Notice Period
Fixed Term Contract
Regulations
                                                          Age 65 to 67 - if the birth date is before 31.12.1946 we have 65 years-then is
Retirement Age                                            goes up to finally 67 for all people born after 01.01.1964

Employment Conditions


                                                          Maximum 48 hours per week, based on a working week from Monday to
Working Hours                                             Saturday
                                                          24 working days based on a 6-day working week (4 weeks vacation), 20
Vacation                                                  working days based on a 5-day working week
Special Leave                                             No legal directive
Birth of Child
Death of Spouse or child
Death of Father or Mother
Marriage
Marriage of a child
others
                                                          Statutory holidays: 10 - 12 days depending on state/region the company is
                                                          located in. Statutory Public Holidays in all states/regions: New Years' Day,
                                                          Good Friday, Easter Monday, Labour Day, Whit Monday, Ascension Day, Day
Public Holidays                                           of German Reunification, Christmas Day, Boxing Day.
                                                          6 weeks before and 8 weeks after confinement. The employer is obliged to
                                                          balance the benefit from the State health insurance fund to 100% of net
                                                          salary for these 14 weeks. In case of a preterm birth the maternity leave is 12
Maternity leave                                           weeks after confinement, same for multiple birth




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        Market Conditions Summary - GERMANY 2011                Market Conditions Summary - GERMANY
                                                            LAW

                                                            A mother and/or father is entitled to an unpaid paternity leave of up to 3
                                                            years. The employment relationship must be continued, The mother/father is
                                                            entitled to an allowance paid by the State of Euro 67 % of his last net income
Paternity and Parental                                      per month for 1 year. Minimum 300 Euro net, maximum 1,800 Euro net per
Leave                                                       month.
Unpaid leave

Remuneration
Bonus




Months of salary
payment

Social Coverage




                                                            It is a legal requirement for the employer to continue 100% salary for the first
                                                            6 weeks of incapacity to work due to an accident or illness. The obligation to
                                                            continue full salary payments commences with the first day of sickness.
                                                            Starting with the 7th week a cash sickness benefit becomes payable from the
Payment of salary after                                     State Health Fund in the amount of 70% of gross salary up to the earnings
accident or sickness                                        ceiling for State Health Fund purposes for a maximum of another 72 weeks.


Life insurance
Military Service




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       Market Conditions Summary - GERMANY 2011                Market Conditions Summary - GERMANY
                                                           LAW




                                                           Total contribution rate: employers part: from 01.01.2011: 19,75 % of
                                                           earnings up to a ceiling of Euro 66,000 p.a. in West Germany and Euro
                                                           57,600 p.a. in East Germany; contributions are paid by employer and
                                                           employee on a 50:50 basis (additional 20,75% from the employee) The
                                                           employee has to pay an additional contribution for his legal health care
                                                           insurance of 0,9 %. The benefits provided by the German old age pension
                                                           insurance under Social Security ("Pension Insurance") provides old age
                                                           pensions, early retirement pensions, disability pensions, spouse's pensions,
Social Insurance                                           and children's pensions.
                                                           Early retirement is possible at age 63 (men) and age 60 (women). These
                                                           different ages will be equalized to age 62 in the next 12 years and a reduction
Early retirement                                           for each month of early retirement prior to age 65 is applied.




                                                           The Social Security pension formula results in approximately 40% of final
                                                           average gross earnings up to the earnings ceiling after 45 years of coverage
                                                           or 70% of the corresponding net income. A modified pension adjustment
                                                           formula to be applied from 2001 on will decrease today's 70% of net income
Pension                                                    to 64% (67% of re-defined net income)


                                                           The Social Security Pension Insurance is a "pay-as-you-go-system". Effective
Principle of the pension                                   01.01.2002 the State began to sponsor the voluntary accumulation of
arrangements                                               additional funded retirement income by individuals.



                                                           9.95% of salary up to ceiling of Euro 66,000 in West Germany and Euro
Contributions                                              57,600 in East Germany




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       Market Conditions Summary - GERMANY 2011                Market Conditions Summary - GERMANY
                                                           LAW




                                                           Contributions to the statutory accident insurance (workmen compensation)
                                                           are to paid 100% by the employer. Amount of contributions depend on risk
                                                           involved with the employees' jobs and gross annual payroll. An average
Accident Insurance                                         contribution rate amounts to 1.36% of the gross annual payroll

                                                           Membership in one of the State Health Funds is mandatory for all employees
                                                           with earnings up to Euro 49,500 p.a. Employees, who earn more can stay in
                                                           the Fund on a voluntary basis or may opt out and conclude an individual
                                                           health insurance contract with an insurance company. Contributions to the
                                                           State Health Fund varies depending on the Fund the employee has chosen-
                                                           Some health insurance agency already raise an additional contribution of
                                                           max. 37,50 EUR per month. The average total contribution rate amounts from
                                                           01.01.2011: 15,5%. Contributions have to be paid by employer and employee
Health Insurance                                           on a 50:50 basis and 0,9 % additional contribution for the employee.
                                                           Total contribution rate: 1.95% of earnings up to a limit of Euro 44,550 p.a.
                                                           Contributions must be paid by employer and employee on a 50:50 basis
                                                           (0.975% each). In case that the employee has no children, he has to pay an
Long Term Care Insurance                                   additional contribution of 0,25 %.
                                                           100% of retirement pension is protected. Until age 55. An occupational
Disability Insurance                                       disability pays 66.7% of a total disability.

                                                           Euro 184 per month for 1st and 2nd child, up to Euro 190 per child for the
Child Allowance                                            third children and 215 for the fourths. Child allowances are paid by the State
SOCIAL INSURANCES
Unemployment
insurance
Unemployment                                               3,0 % of salary to a limit of Euro 66,000 in West Germany and Euro 57,600 in
insurance (cont)                                           East Germany
Professional and non-
professional accident
insurance
Loss of earnings                                           100% of salary to be paid by law for 6 weeks. Then between 60-70% of
insurance for sickness                                     earnings ceiling is paid from Health insurance fund
Health Insurance

Indemnities


Termination Indemnities                                    No legal requirement




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MARKET PRACTICE




3 to 6 months


Common practice for general staff is to follow the legal
minimum requirements. Common practice for key personnel,
executives, and management is a notice period of 3 to 6
months to the end of a calendar quarter. Note that notice has
to be a full calendar month. So 1 months notice given to an
employee on 5th January means he or she will leave 28
February.


Age 65 for both sexes. Employees can elect to carry on
working to 67 with a corresponding rise in pension.




Most industries adopt a 36 to 38-hour week for general staff
(basis: 5-day week). For executives a 40 hour-week is more
common, although the actual working time generally exceeds
40 hours.

26-30 working days based on a 5-day working week
At least a day for each event would be normal
At least a day for each event would be normal
At least a day for each event would be normal
At least a day for each event would be normal
At least a day for each event would be normal
At least a day for each event would be normal


All follow statutory practice with various state holidays added
.e.g. Corpus Christi/Assumption (Saarland)/Prayer Day
(Saxony)

Most companies follow staturory practice. The maximum state
contribution is Euro 13 per day so the employer has to
contribute enormously.




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MARKET PRACTICE




Most companies follow statutory practice.




A 13th month payment is common practice for managerial
employees. Typical practice for general staff is 12 months pay
plus half month salary in June or July ("vacation pay") and an
additional month in November ("Christmas bonus"). Practice is
strongly influenced by trade unions. If no collective bargaining
agreement is applicable, no requirement to follow this policy
and other companies often provide 13 months salary to
general staff too.




It is feasible but not common that companies provide further
salary continuation beyond the legal 6-week period in the form
of a subsidy to the cash sickness benefit from the State Health
Fund. The subsidy amounts to the difference between 100% of
net salary and cash sickness benefit, so that 100% of net
salary is ensured for a longer period than 6 weeks. This
subsidy is especially common for executives and managerial
employees but many companies do also provide it to all
employees either because it is stipulated in the collective
bargaining agreement, if any, or on a voluntary basis. The
payment term of this subsidy sometimes depends on years of
service or status of employee (3 to 6 months for general staff,
6 to 12 months for executives)
Separate life insurance is uncommon in Germany. If death in
service benefits are provided they are typically provided as
part of the retirement benefits plan ("pension plan").




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MARKET PRACTICE


Company pension plans to supplement the benefits under the
Pension Insurance are quite widespread in Germany. These
company pension plans typically provide the same benefits as
the Pension Insurance: old age pensions, early retirement
pensions, disability pensions, pre-and post retirement
spouse's pensions, and pre- and post-retirement children's
pensions. Most company pension plans are non-contributory
for the employees. The implementation of company-financed
pension plans is absolutely voluntary for employers. Every
employee has a legal right to claim that up to 4% of his/her
cash earnings up to the Social Security Ceiling are converted
into company benefits (employee-financed plan).
Early retirement benefits from a company pension plan, if any,
become payable upon receipt of the Socal Security early
retirement pension.
 In one case a company plan added a small percentage
contribution up to the social security ceiling seen as
supplementing the SS income, and a larger one after the
social security ceiling on the basis that this is the sole
provision of post retirement income for employee salaries at
this level. An example could be: ......+ 2.5% of salaries up to
the social security limit: ........+ 9% of the next E25k on the
basis that there is no social security coverage for this level of
income but the employee still cannot spare much for his own
pension provision......+5% thereafter. Alternatively one can
simply ask an insurance company to set a pension
contribution to hit a particular target pension. The insurer then
takes the risk should the pension fund not perform as
expected.
Common market practice with regard to company pension
plans is still to provide defined benefit plans. However, mainly
driven by increasing cost and cost control concerns of
employers in Germany the trend is towards defined
contribution (orientated) plans.
A recent survey indicated that 52 % of small companies have
company pension plans in addition to the state
one.Commonly, a company pension plan, if any, is non-
contributory for the employee. However, there is a trend to
have employees participate in the cost of the plan




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MARKET PRACTICE

The statutory accident insurance only covers accident at work
or accidents on the way between home and work place.
Providing an additional accidental death and disability
insurance is common practice in Germany. Some companies
cover only exectuives. Multinational companies often cover all
employees. Typically, the insurance arrangements provides
coverage for private and work-related accidents on a 24-hour
basis worldwide.




Companies do not generally provide any additional health care
benefits. They follow statutory practice which is to pay half of
the applicable contribution rate (irrespective of whether an
employee is mandatorily covered under the State Health Fund,
voluntarily covered under the State Health Fund or privately
insured)



Companies do not provide additional benefits
100% of retirement pension is protected. Until age 55. An
occupational disability pays 66.7% of a total disability.


Companies do not provide additional benefits




Employers offer self insured program supplemening sickness
benefit to 100% of income paid for 3 to 12 months




To avoid court cases employers sometimes offer severance
pay upon termination of employment. Amount of severance
pay depends on individual situation but commonly is in the
range of 0.5 to 1.0 of monthly salary times years of service.




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