Employee Benefits in Germany | Boundless (2024)

FAQs

What are the employee benefits in Germany? ›

Employee benefits are any forms of perks or compensation that are provided to employees in addition to their base salaries and wages. A complete employee benefits package may include a health insurance plan, life insurance, paid time off (PTO), profit sharing, retirement benefits, and more.

Most employees in Germany have statutory health insurance. As a person with statutory health insurance, you can choose the health insurance provider from a wide range of insurances and suits you eh best. Here is where you can find a list of all statutory health insurance providers.

What if the state pension isn't enough? Current figures from German Pension Insurance show that 61% of pensioners receive less than €1,200 net per month from their statutory state pension. One in three pensioners receive less than €750 net. Many women in Germany receive much lower pensions, or none at all.

Mandatory Employee Benefits in Germany

The welfare system in Germany covers a range of basic social security benefits. It is compulsory that employers insure every employee. Contributions are split evenly between employer and employee.

Lohn (wages) are calculated based on the actual hours worked. The final sum is usually calculated based on an hourly wage, which is why the amount of the wage can fluctuate and isn't necessarily the same every month. Gehalt (salary) is paid monthly as a fixed amount.

Basic tax-free allowance (Grundfreibetrag)

The Grundfreibetrag is the annual basic allowance, which is tax-free. So if you earned less than 10,908 euros after deduction of costs or lump sums, you do not pay income tax. Double the amounts apply to married couples. How do you get it?

Anyone who has worked for a German business for at least five years is eligible to receive a pension. If you have worked less than five years, you can get your social security contributions refunded. If you haven't made any contributions to the state pension fund, you might still be eligible for a German state pension.

How are employee benefits determined? ›

The simplest method is to total the actual employer contributions to benefits and retirement and divide by the actual salary.

Employee compensation, often referred to as total remuneration, is the value of everything the employee receives for the work they perform. This includes their base salary and any benefits and perks they receive, like healthcare, PTO, bonuses, student loan assistance, and retirement plans or pensions.

A good annual gross salary in Germany is between €64,000 to €81,000.

Costs of Public health insurance in Germany

Social security contributions for public healthcare insurance (GKV, Gesetzliche Krankenversicherung) is set at 14.6% of an employee's gross salary, made up of a 7.3% contribution from the employer and 7.3% contribution from the employee.

In Germany, healthcare is partially free due to the social contributions to the public healthcare system. This means that individuals can receive medical services free of charge for the most part. However, some low copayments apply, such as the €10 charge for a visit to the general practitioner (GP) every quarter.

According to the Federal Holidays Act, all employees in Germany with a 5-day week are entitled to a minimum of 20 vacation days per year. Most collective agreements, however, include entitlements to larger numbers of days.

In Germany, 13^th month pay is not required, but it is an expected standard. Are there more than 13th months of pay in Germany? Yes. In Germany there is a legal distinction between 13^th month pay and the Christmas bonus.

They contain the following contributions: Pension Insurance: 19.6 % of the gross wage will be paid by the employee and by the employer together, half and half. Unemployment Insurance: 3.0% of the gross wage; half will be paid by the employee and half by the employer. Health insurance: 15.5% of the gross wage.

Since October 26, 2022, employers have been permitted to award their employees a tax-free sum of up to EUR 3,000 in the form of an inflation compensation bonus. This was laid down by law as part of the German government's third relief package in response to the rise in energy prices. This is a voluntary payment.