Servus #27

August 2025

Table of Contents

• Growth with Side Effects: Why Headcount Matters in German Employment Law
• Mental Health in the Current Zeitgeist – Modern Employee Assistance Programs (EAPs)
• Communication with Social Insurance Providers: What Employers Need to Know
• Closing Creditworthiness Gaps for International Employers in Germany
• Pension Reform in Germany: “Mütterrente” and the Stability Line
• Long-Term Care Insurance Under Pressure
• Restart of the Occupational Pensions Strengthening Act II

Growth with Side Effects: Why Headcount Matters in German Employment Law

In Germany, the rule is clear: the larger a company or establishment, the more extensive the employment law obligations. Unlike in many other countries, German labor law directly ties a wide range of statutory requirements to the number of employees—whether relating to dismissal protection, co-determination, or compliance obligations.

Depending on the specific regulation, the threshold is measured either at the company level (betriebsbezogen) or at the corporate level (unternehmensbezogen).

Maternity protection laws prohibit companies from employing pregnant women six weeks before and eight weeks after childbirth (§3(1); (2) MuSchG applies to companies with at least one employee. For companies with at least ten employees, the Dismissal Protection Act (§ 23 KSchG) is applicable.  For companies with at least 15 employees, staff members are entitled to part-time work (company-based; § TzBfG) as well as up to six months of care leave (establishment-based; § 3 PflegeZG).

In addition, there are numerous other legal requirements, depending on the number of employees. These are staggered and extend to regulations for companies with more than 2,000 employees.

Please feel free to contact us for a detailed overview of the most important employment law requirements by employee headcount!

Conclusion: Compliance Starts with Counting

For international companies—especially from the United States—this density of regulations is often unfamiliar. In Germany, growth does not only mean more staff, but also greater responsibility, stronger co-determination rights, and additional compliance obligations.

Mental Health in the Current Zeitgeist – Modern Employee Assistance Programs (EAPs)

Sick leave rates in Germany remain worryingly high, particularly when it comes to mental health conditions, which now account for 17.4%* of all absences and rank as the third most common cause. Studies and experience reports** indicate that the rise in psychological strain is often linked to new forms of work, such as remote working, virtual collaboration, and constant digital availability. Against this backdrop, EAPs are gaining increasing attention.

Holistic Support through Modern EAPs
Employee Assistance Programs (EAPs) are evolving—moving away from pure crisis management towards a holistic approach:

• Broader Scope: EAPs now address not only psychological health, but also physical, social, and financial wellbeing.
• Prevention & Resilience: Growing emphasis is placed on preventive measures, resilience-building, and strengthening long-term mental health.
• Tailored Solutions: Companies are increasingly implementing customized programs designed to meet the specific needs of their workforce.

Technology as the Key to Accessibility
Technological innovations are driving the further development of EAPs. Digital platforms, apps, AI-powered tools, and virtual formats make support services more accessible—offering low-threshold access to counseling and assistance, anytime and anywhere.

The Crucial Role of Leadership
Another key factor is the role of managers. They shape workplace culture, can identify stress factors early, and often serve as the first point of contact for employees. As a result, many EAPs now include leadership training and resources to foster supportive management practices.

Conclusion
Mental health is a critical driver of sustainable performance and employee retention. Modern EAPs provide a comprehensive response to the new challenges of today’s working world. We are happy to support you in implementing an EAP tailored to your organization’s needs—digital, preventive, sustainable, and effective.

Sources:
* DAK Psychreport 2025
** Techniker Krankenkasse: #whats­nex­t2022: Studie zeigt psychi­sche Belas­tungen auf der Über­hol­spur

Communication with Social Insurance Providers: What Employers Need to Know

In Germany, all employers are legally required to register their employees with social insurance providers. These institutions safeguard essential aspects of life such as health, retirement, and unemployment.

Even if you are not from Germany or do not speak German fluently, there are straightforward ways to meet these requirements—digitally and often also in English.

The 5 Pillars of Social Insurance
The German system consists of five key areas:

1. Health Insurance – e.g., doctor visits, medication
2. Long-Term Care Insurance – e.g., elderly care
3. Pension Insurance – e.g., retirement benefits, rehabilitation
4. Unemployment Insurance – e.g., support in case of job loss
5. Accident Insurance – e.g., workplace accidents, occupational diseases

Key Benefits for Employers and Employees
Social insurance protects both employers and employees.

Employers are required to register employees with all five pillars of the system before they begin work, submit regular contribution reports, and notify the authorities of any changes—such as termination or sick leave. In the case of a workplace accident, the relevant trade association (Berufsgenossenschaft) must also be informed.

While these obligations involve administrative effort, social insurance offers significant advantages. For example, health insurance providers cover financial support during extended sick leave and pay the majority of wage costs during maternity protection. Trade associations additionally provide support in workplace safety and accident prevention.

For employees, social insurance ensures vital protections: medical care, continued wage payments during illness, pension entitlements, unemployment benefits, and accident coverage. This builds trust and stability—within the company as well.

Registration & Contact Options for Employers

When establishing a company in Germany, various legal requirements and deadlines must be met.

Digital portals are available to help with business registration and communication with social insurance providers. Some providers even offer their services in English, making them accessible for non-German speakers.

If you would like an overview and more information about these digital tools and multilingual services, please feel free to contact us.  We will be happy to support you in working with the social insurance providers to ensure full compliance in Germany – get in touch!

Closing Creditworthiness Gaps for International Employers in Germany

When entering the German market, international employers may face challenges due to a lack of local credit history.

Even if a company is well-established in its home market with a strong reputation and solid credit rating, this standing is not automatically visible or recognized in Germany. The result: a gap in local creditworthiness, which can also affect HR-related matters.

One example is the provision of employee benefits in the area of mobility. Popular benefits such as bike or car leasing are often offered through cost-efficient leasing models. However, these typically require the employer—as the lessee—to demonstrate sufficient creditworthiness.

Especially in the early stages of market entry or when operating with limited local presence, it is therefore crucial for international companies to present their financial strength in a transparent and credible way. In many cases, it is sufficient to provide evidence of international credit standing in the appropriate format to relevant partners, such as leasing providers. Properly prepared and well-placed documentation can often resolve the issue without significant effort.

If this is not sufficient, any remaining gap can be partially or fully closed by an appropriate guarantee, depending on the company’s existing credit rating.

In cooperation with Südvers Kreditversicherungsmakler GmbH, Profion supports international employers in demonstrating their creditworthiness in Germany and in selecting suitable guarantee solutions.

For more information, please feel free to contact us.

Pension Reform in Germany: “Mütterrente” and the Stability Line

Despite the summer recess, the German government has passed a new pension package. Key components include the extension of the so-called Haltelinie (stability line) until 2031 and the expansion of the Mütterrente (mothers’ pension) within the statutory pension system.

The Haltelinie ensures that the pension level does not fall below 48% (net, relative to the average earnings of all insured persons, not to an individual’s last salary), based on the so-called “standard pensioner” (Eckrentner – 45 years of contributions at the average annual income). The stability line is twofold: not only must the pension level remain above 48%, but the contribution rate must also not exceed 20%.

The contribution rate will increase from the current 18.6% to 18.8% in 2027, with an additional 0.2% split between employees and employers. From 2028, it will rise to 20.0%, and gradually to 21.4% by 2040. The extension of the stability line alone is expected to cost €3.6 billion annually at first, increasing to €15.1 billion per year by 2040.

Another measure is the expansion of the Mütterrente: parents will receive three years instead of the previous two and a half years of pension credits for children born before 1992. This is to be implemented by 2028 at the latest, but retroactively effective from 2027. The increase amounts to roughly €20 more per child per month. The additional costs from this measure are estimated at around €5 billion annually.

In total, the measures adopted will cost approximately €5 billion in 2027, rising to €19.9 billion by 2040.

Long-Term Care Insurance Under Pressure

Germany’s statutory long-term care insurance system—chronically in deficit—is once again in the spotlight, facing a dual financing challenge. Not only is its funding insecure, but the benefits it provides are also inadequate.

According to a recent survey, the average personal contribution for nursing home care in the first year amounts to €3,000 per month nationwide—exceeding the retirement income of three-quarters of pensioners. At the same time, the system is heading toward a deficit of €3.5 billion in 2026, which, under current rules, is projected to rise to €12 billion annually by 2029.

A reform, most likely involving another increase in contribution rates, appears unavoidable.

Restart of the Occupational Pensions Strengthening Act II

A draft bill has now been presented for the Betriebsrentenstärkungsgesetz II (Occupational Pensions Strengthening Act II), which did not make it through the legislative process due to the early end of the previous government. The new draft does not differ significantly from its predecessor.

The key measures remain unchanged, including:

• Doubling of severance thresholds for pension entitlements under § 3 BetrAVG, provided that—with the employee’s consent—the severance amount is paid directly by the employer into the statutory pension scheme.
• Indexation of the income threshold for low-income support under § 100 EStG, set at 3% of the contribution assessment ceiling. However, this provision is now scheduled to take effect later than originally planned, on January 1, 2027.
• Early access to occupational pensions, e.g., in cases where a partial statutory pension is drawn, is also postponed and now expected to enter into force on July 1, 2026.

Overall, this legislative initiative offers little promise. It postpones certain measures but does not address the fundamental regulatory reforms needed to strengthen occupational pensions in Germany.

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