2024 German Labor Law Update: HR Needs to Pay Attention to This Part
Dear Human Resources (HR) professionals, as 2024 begins, Germany's labor law is undergoing a series of significant changes. These reforms have a direct impact on every organization and employee.
As an HR professional, understanding these new legal requirements and adapting your strategy accordingly is critical to ensuring that your company complies with regulations, protects employees, and maintains good employment relationships. Here's an in-depth look at some of Germany's key labor law changes in 2024, including an increase in sick benefits for children, an increase in the minimum wage, and an adjustment in social insurance premiums. Let's take a deep dive into these changes together and prepare for the challenges ahead.
1. Increase in sick leave benefits for children
In 2024, Germany** has made important changes to the sick leave benefits for children, which could have a profound impact on the German labor market. The new rules increase the number of sick days per parent per child from 10 to 15 working days, and to 30 working days for single parents. This change is intended to provide more support to employees who need to care for sick children, thereby improving their work-family balance.
The background is to consider the impact of family responsibilities on employees, especially when a child is sick. Expanding child sick leave benefits can help reduce stress on parents while ensuring that children are properly cared for. This initiative also reflects the importance that Germany** places on improving family well-being and employee satisfaction.
This new regulation will have a significant impact on employers and employees in Germany. Employers need to adjust their HR policies to ensure compliance with the new legal requirements. At the same time, employees need to be aware of the additional support and entitlements that this change may provide them.
Given the importance and wide-ranging impact of the increase in child sick leave benefits, both HR professionals and employers should keep a close eye on this development and be prepared to make the necessary adjustments. These adjustments may include updating employee benefits policies, improving employee communication channels, and considering how to provide additional employee support without burdening the business operations.
2. The increase in the minimum wage in Germany and its impact on the labor market
In 2024, Germany implemented an important labor law reform – an increase in the minimum wage. As of January 1, 2024, the minimum wage starts from 12 per hour00 euros raised to 1241 euros, while the income threshold for part-time jobs (mini-jobs) has been raised to 538 euros per month. This adjustment is aimed at improving the living standards of low-income workers while promoting the overall healthy development of the economy.
Background and purpose
The increase in the minimum wage is based on a combination of current economic conditions and the cost of living. As the cost of living rises, raising the minimum wage can help ensure that workers can earn enough to make ends meet. It also reflects Germany's commitment to improving workers' well-being and reducing poverty and inequality.
Impact on Employers and Employees
This change will have a significant impact on employers and employees in all sectors of the industry in Germany. Employers need to adjust their wage structure to ensure that all employees are paid no less than the new minimum wage per hour. This can lead to higher operating costs for businesses, especially for industries that rely on low-cost labor.
For employees, especially low-income groups, the increase in wages will directly improve their standard of living and may increase spending power, which will have a positive impact on the overall economy.
Coping strategies for HR professionals
Salary structure: HR departments need to re-evaluate the company's compensation system to ensure compliance with the new minimum wage.
Budget planning: Companies may need to replan their financial budgets to accommodate the increase in payroll costs.
Employee communication: HR should inform employees of salary adjustments in a timely manner to ensure transparency and understanding.
Performance and productivity assessments: Given the increased costs, companies may need to focus more on employee performance and productivity to stay competitive.
3. Adjustment of social insurance premiums
In 2024, Germany has implemented important adjustments to social insurance premiums. Total social insurance rates range from 4045% rose slightly to 409%。This adjustment reflects the need to maintain and develop the German social security system in response to the growing demand for social benefits, such as pensions, health insurance and unemployment insurance.
Background and purpose
The adjustment of social insurance premiums is a response to the current social welfare needs and economic situation. As the population ages and health care costs increase, increasing social insurance rates can help ensure that adequate funds are used to cover the basic needs of citizens. It's an investment in long-term sustainability and social well-being.
Impact on Employers and Employees
Employer Impact: Employers will face higher costs for social insurance contributions. This can impact their overall operating budgets and HR strategies, especially for companies with a large share of labor costs.
Employee impact: For employees, while this means that their social security deductions may increase slightly, in the long run, it helps ensure that they have more stable and adequate social security in the event of retirement, illness or unemployment.
Coping strategies for HR professionals
Finance and budget planning: HR departments need to work closely with finance departments to replan the company's financial budget to cope with increased social insurance costs.
Employee communication and education: It is important to ensure that employees understand the reasons for the adjustment of social insurance rates and their impact on their personal salaries. Transparent communication can help alleviate any doubts that may arise.
Compensation structure review: HR may need to review and adjust the compensation structure to ensure that the company's compensation is competitive, taking into account the increased social insurance costs.
Employee benefits and incentive strategies: Given higher social insurance costs, companies may need to rethink their employee benefits and incentive strategies to keep employees satisfied and loyal.
Although the adjustment of social insurance premiums has a direct economic impact on businesses and employees, it will help build a more stable and sustainable social security system in the long run. For HR professionals, the key is to manage this change effectively, ensuring that both businesses and employees can adapt to the new rates, while maintaining the financial health of the business and the well-being of employees. Through transparent communication and proper planning, HR can play a key role in this change, helping businesses and employees make a smooth transition.
4. New Law on Vocational Training and Further Education
In 2024, Germany has introduced an important legal reform, the new law on vocational training and further education. As of April 1, young people can receive subsidized career-oriented internships, including subsidies for travel and accommodation costs. This policy aims to promote vocational education and internship opportunities and to improve the employment readiness and vocational skills of young people.
Background and purpose
This new law was introduced in response to the challenges of rapid technological development and changes in the needs of the labor market. By providing more opportunities for vocational training and education, it aims to improve the employability of young people while alleviating skills shortages in certain industries.
Impact on businesses and employees
Business Impact: Businesses will have more opportunities to attract and develop promising young talent. This will not only help alleviate the skills shortage, but also promote long-term growth and innovation for businesses.
Employee impact: For existing employees, this means more career development opportunities and career paths. By participating in training and refresher courses, employees can improve their skills and become more competitive in the workplace.
Coping strategies for HR professionals
Develop training and development plans: HR departments should actively develop and implement the company's training and development plans to make the most of these new vocational education resources.
Partnership Building: Partnerships with educational institutions and training providers to provide employees with a wider range of training and further education options.
Internal Advocacy and Mobilization: Promote these new opportunities through internal communication channels and encourage employees to participate in training and refresher courses to improve overall productivity and innovation.
Track and evaluate effectiveness: Track the effectiveness of employee participation in training and refresher courses and evaluate the impact of these activities on business performance and employee satisfaction.
The implementation of the new Act on Vocational Training and Further Education is a positive boost for the German labour market. Not only does it help improve young people's job readiness and career skills, but it also provides a unique opportunity for businesses to attract, develop and retain talented talent. For HR professionals, this is an opportunity to optimize talent management strategies, promote employee development and improve organizational competitiveness. By making effective use of these new training and education resources, HR can play a key role in growing the business and advancing the careers of its employees.
5. Other important changes
In 2024, in addition to the previously mentioned changes, Germany will introduce a series of other important labor law reforms that will have a significant impact on business operations and employee rights.
Increase in the contribution evaluation cap
The contribution assessment ceiling for statutory health insurance has been raised to 62,100 euros per year, and the annual contribution ceiling for pension insurance is 90,600 euros in western Germany and 89,400 euros in eastern Germany. This change means that high-income employees may have to pay more social insurance contributions, while also increasing the burden on employers.
Extension of the integration subsidy for older employees
The integration subsidy for employees over 55 years old has been extended until the end of 2028. This policy aims to encourage companies to hire and retain older workers and increase the employment rate of this group.
Adjustment of the income limit for parental allowance
The income limit for parental allowance is reduced to €175,000 for couples and €150,000 for single parents. This adjustment may affect the receipt of benefits for many families.
**Adjustments to the Chain Due Diligence Act
Companies with more than 1,000 employees are now required to implement the **Chain Due Diligence Act, which stipulates specific due diligence obligations to protect the environment and human rights.
Introduction of electronic doctor's certificates
Employees will no longer need to submit a paper doctor's certificate to their employer when they are on sick leave, but the employer will electronically obtain this information from the employee's health insurance.
Digitization of work-related injury reports
From 1 January 2024, reports of injuries and occupational diseases must be reported to the statutory accident insurance** via electronic data transmission.
Electronic records of working hours
Employers are now obligated to electronically record the beginning, end, and duration of employees' daily working hours to improve transparency and compliance.
Increase in compensatory levies
If an employer does not employ the required number of severely disabled persons as required by law, it must pay a higher compensatory levy for each unfilled position with severe disabilities.
Changes to Skilled Worker Immigration Laws
The Skilled Worker Immigration Act aims to facilitate the recruitment of skilled workers from third world countries in response to the shortage of skilled workers. Some of the changes will take effect from November 2023, while others will be implemented in 2024.
As we take a closer look at the major updates to German labor law in 2024, we can see that these changes are marking an important shift in the labor market and the employment environment. As HR professionals, we must remain flexible and adaptable to ensure a smooth transition for our organization to operate under these new legal frameworks. This is not only about complying with the law, but also about maintaining a fair, transparent and competitive working environment that supports the continued development of our people and our business. Let's work together to embrace the new opportunities presented by these changes and thrive in this ever-evolving labor law environment.