Servus #26

June 2025

Table of Contents

• Employer’s Supplement to Sick Pay
• Social Security Reform: Immediate Program from the Federal Government
• Special Report from the European Court of Auditors on the Failure of the Pan-European Personal Pension Product (PEPP)
• Legal Ruling: Clarification on the Employer’s Supplement
• Occupational Safety in Germany: Responsibility, Legislation, and Practical Protection
• Key Changes in Labor Law from May 2025: Maternity Protection After Miscarriages and New Parental Leave Notification Rules

Employer’s Supplement to Sick Pay

In Germany, employers are legally obligated to continue paying wages to employees during periods of illness. This rule applies to all employees who have been in continuous employment for more than four weeks. In the event of illness, employers must continue to pay the employee’s salary for up to six weeks. But what happens after those six weeks?

Once the six weeks of continued payment end, statutory health insurance takes over. From this point on, employees receive what is known as Krankengeld (sick pay), which typically amounts to 70% of the gross salary, but no more than 90% of the net salary. This provision ensures that employees continue to have some income during longer periods of illness.

For privately insured employees, the amount of sick pay depends on their chosen insurance plan. Depending on the tariff, this benefit may be higher or lower than what statutory health insurance provides. In Germany, employees can opt for private health insurance if their regular annual income exceeds the current threshold of €73,800.

An employer’s supplement to sick pay can be agreed upon in the employment contract or apply collectively in certain industries. For affected employees, this can be a valuable benefit.

Privately insured individuals receiving an employer’s supplement must observe the so-called prohibition of enrichment. This rule states that employees may not end up financially better off due to sick pay and employer contributions than they would have been with regular income. Thus, privately insured employees must inform their insurer about any ongoing payments received from their employer so the insurance provider can assess and possibly adjust the sick pay.

Conclusion:

The employer’s supplement to sick pay is a valuable benefit for employees on long-term sick leave. It can be contractually or collectively agreed upon. Privately insured employees must observe the prohibition of enrichment if they receive such a supplement.

Social Security Reform: Immediate Program from the Federal Government

Pressure is mounting on the German federal government to reform the social security system. All three major branches—pension, health, and long-term care insurance—are facing increasingly deficit-ridden finances, raising the urgency for reform. Structural changes are being proposed to stabilize contributions, particularly for health and long-term care. However, the exact nature of these reforms remains unclear; coalition agreements currently call for the formation of reform commissions.

Similar commissions have been established in previous legislative periods, yet they failed to bring about any notable contribution stability—hence, further increases are expected. Current political debates focus on including more population groups (e.g., the self-employed and civil servants) and significantly raising income thresholds for contributions. There is considerable disagreement across parties, especially regarding the inclusion of civil servants and the self-employed in statutory pension, health, and care insurance systems.

The coalition agreement has already put several pension reform items on the agenda, which are now bundled under item 5 of the federal government’s “Immediate Program.” This includes:

• Maintaining the pension level at a minimum of 48% of the average income for all statutory pension insured persons until 2031
• Expanding the “mothers’ pension” (three points per child instead of two and a half for children born before 1992)
• Implementing the Second Occupational Pensions Strengthening Act (which didn’t pass due to the early end of the traffic light coalition)
• Introducing the Active Pension (tax-free income up to €2,000/month for those working voluntarily past retirement age)
• Introducing the Early Start Pension (monthly contributions of €10 to a private, capital-funded pension account for every child aged 6–18 enrolled in a German school)

It remains to be seen which proposals will hold up in the parliamentary process.

Special Report from the European Court of Auditors on the Failure of the Pan-European Personal Pension Product (PEPP)

The EU’s attempt to advance private retirement provision through a standardized “Pan-European Personal Pension Product” (PEPP) can now be considered a failure.

A brief history: PEPP was introduced in 2019 to establish a unified European market for private pension products. However, the substantial differences in private and occupational pension systems across EU member states were largely ignored. National framework conditions, lack of tax incentives, a strict cost cap, and the absence of integration into existing systems all contributed to the predictable failure.

The European Court of Auditors has now acknowledged this in its Special Report 14/2025, stating: “The PEPP proposed by the Commission has neither become a viable alternative for EU citizens’ retirement savings nor attracted interest from providers.”

To date, only a single PEPP product exists—offered in Slovakia—used by fewer than 5,000 individuals and managing less than €12 million in assets. Initial projections had anticipated a market volume of €700 billion. In Germany, the necessity of an additional product like PEPP is questionable, particularly as employer-sponsored support funds (Unterstützungskassen) already provide a well-established and legally sound solution.

Legal Ruling: Clarification on Employer’s Supplement

Germany’s Federal Labor Court (Bundesarbeitsgericht, BAG) has once again ruled on the long-contested issue of whether collective agreements predating the 2018 Occupational Pensions Strengthening Act can deviate from the statutory requirement for employer pension contributions.

In its decision from March 11, 2025 (Ref.: 3 AZR 53/24), the BAG clarified that collective agreements concluded before 2018 can override the obligation under §1a of the Occupational Pensions Act (BetrAVG), even if those agreements make no reference to employer contributions at all. This marks an extension of the Court’s previous decision from August 20, 2024, where such a waiver was upheld because the collective agreement already included a provision regarding employer contributions—thus excluding additional entitlements.

Now, even the mere absence of such provisions is sufficient to constitute a waiver. The BAG reasons that, under §19 BetrAVG, deviations from §1a are allowed, regardless of whether they are full or partial. Had the legislature intended to limit this flexibility, it would have specified such restrictions in §19 BetrAVG. Therefore, according to the BAG, a collective agreement with independent rules on salary conversion and no employer contribution can still validly exclude the statutory supplement.

Occupational Safety in Germany: Responsibility, Legislation, and Practical Protection

Workplace health and safety is a core concern in Germany—for employees, employers, and the state alike. A functioning safety culture not only protects lives and health but also boosts motivation, reduces absences due to illness, and increases productivity.

Who is responsible?

Responsibility for occupational safety is shared:

• Employers are legally obligated to ensure safe working conditions, perform risk assessments, implement safety measures, and regularly train employees.
• Employees must comply with safety measures and report hazards.
• Occupational safety professionals and company doctors advise on health and safety matters.
• Safety officers act as local points of contact, identifying risks and serving as a liaison between staff and management.
• Employers’ liability insurance associations and accident insurance funds monitor compliance and provide training and support.

Key legal foundations:

• Occupational Safety Act (ArbSchG): the overarching law mandating risk assessments and protection measures.
• Industrial Safety Ordinance (BetrSichV): governs the safe use of work equipment.
• Workplace Ordinance (ArbStättV): sets requirements for workplace design, including lighting, ventilation, and emergency exits.
• Additional laws cover youth employment, maternity protection, and industry-specific rules.

Conclusion:

Occupational safety is a continuous process—not a one-time project. Only through joint efforts can a safe and healthy working environment be achieved. We are happy to assist you in implementing your occupational safety strategy. Get in touch!

Key Changes in Labor Law from May 2025: Maternity Protection After Miscarriages and New Parental Leave Notification Rules

Here is an overview of upcoming changes in labor law:

Maternity Protection After Miscarriages (effective June 2025)

Women who experience a miscarriage from the 13th week of pregnancy will now be entitled to maternity protection (prohibition of work and maternity benefits). Previously, this only applied to stillbirths from the 24th week.

New protection periods:

• Miscarriage from week 13: up to 2 weeks of protection
• Miscarriage from week 17: up to 6 weeks
• Miscarriage from week 20: up to 8 weeks

Affected women may voluntarily choose to continue working. Any associated costs may be reimbursed to the employer via the U2 reimbursement system.

Parental Leave Notification from May 2025 Acceptable in Text Form

Employees must still notify their employer of their intended parental leave at least seven weeks in advance. However, beginning in May 2025, written form is no longer required—notification in text form (e.g., by email or unsigned letter) is now sufficient.

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