Employment Law07.10.2022 Newsletter
Current legislative proposals to combat the energy crisis
On both 14 and 29 September 2022, the Federal Cabinet passed a multitude of bills to combat the energy crisis and thus set them on their way through parliament. In addition, the Ordinance Amending the Ordinance on Access to Short-Time Work Benefit [Kurzarbeitergeldzugangsverordnung - KugZuV] and the Ordinance Making Short-Time Work Benefit Available to Temporary Agency Workers [Kurzarbeitergeldöffnungsverordnung - KugÖV] entered into force on 30 September 2022. The following article by Jörn Kuhn and Annabelle Marceau provides an overview of current legislative proposals.
1. Planned laws and ordinances
On both 14 and 29 September 2022, the Federal Cabinet passed a multitude of bills as well as formulation aids for bills, which were announced, among other things, as part of the so-called Third Relief Package of the Federal Government to Secure an Affordable Energy Supply and to Strengthen Incomes on 3 September 2022. The planned legislative proposals have thus been set on their way through parliament, which means that the subsequent laws can be expected to be passed in the next few weeks:
Inflation compensation premium
It was fundamentally established that the Federal Government is willing to exempt an amount of up to 3,000 euros from tax and social security contributions in the event that companies make additional payments to their employees. The basis for the inflation compensation premium will be the Act on the Temporary Reduction of VAT on Gas Supplies via the Natural Gas Network [Gesetz zur temporären Senkung des Umsatzsteuersatzes auf Gaslieferungen über das Erdgasnetz].
Before its final implementation, however, only key points have been agreed by the Cabinet so far:
- The compensation period is limited in time - from the day after the promulgation of the law until 31 December 2024.
- During this period, tax and social-security exempt payments by companies in an amount of up to 3,000 euros are possible.
- Payment can also be made in several instalments.
- The inflation compensation premium must be granted in addition to the wages owed in any event. All employers can use the tax and social-security exemption for such additional payments.
According to the formulation aid for a bill, pensioners are to receive a flatrate energy benefit as a one-off payment of 300 euros with the payment of their pension benefits in December 2022. A formulation aid for the corresponding bill was passed by the Cabinet on 05 October 2022.
In addition, an expansion of the transitional area, the so-called midijobs, is planned. The upper limit will increase to 2,000 euros as of 01 January 2023. Currently, the transitional area lies between 520.01 euros and 1,600 euros. Within this range, employees' social security contributions increase on a sliding scale from zero to the full contribution. The lower contributions, especially in the lower income range, increase the incentive to be employed beyond a mini-job.
Draft Act to Financially Stabilise Statutory Health Insurance (SHI Financial Stabilisation Act)
With the SHI Financial Stabilisation Act [Gesetz zur finanziellen Stabilisierung der gesetzlichen Krankenversicherung, GKV-Finanzstabilisierungsgesetz], the Federal Government is stabilising the finances of the statutory health insurance funds [gesetzliche Krankenkassen, GKV] in the coming year 2023. Among other things, the additional contribution for members of statutory health insurance funds will increase. Based on the findings of the GKV group of assessors [GKV-Schätzerkreis] in the autumn, the Federal Ministry of Health will stipulate the average additional contribution rate in the statutory health insurance system. An increase of the additional contribution by 0.3 percentage points is not unrealistic at present.
In view of these existing uncertainties on the energy and raw materials markets, the Federal Government wants to avoid pushing basically healthy companies into insolvency.
Under current law, over-indebtedness is considered to exist if it is not sufficiently likely that the company will be able to continue as a going concern for a period of twelve months. This period is now being temporarily reduced to four months. In addition, the deadline for filing for insolvency is being temporarily increased from the current six weeks to eight weeks. The regulations will come into force as soon as possible and will apply until 31 December 2023.
The Inflation Compensation Act [Inflationsausgleichsgesetz, InflAusG] is intended to curb the creeping tax increases associated with “cold progression”. In addition, families are to receive targeted tax support.
First, the intention is to update the income tax rate for the years 2023 and 2024 by offsetting the effects of cold progression in the course of the income tax rate and increasing the basic tax-free allowance. Similarly, the maximum amount of maintenance, which is based on the amount of the basic tax-free allowance, will be raised. In addition, the child allowance for 2023 and 2024 and the child benefit for the first, second and third child are to be raised to a uniform 237 euros per month as of 01 January 2023.
The draft law provides for a so-called grace period during the first two years of receipt of so-called “Bürgergeld” (citizens’ benefit): The costs for accommodation and heating will be acknowledged and paid for in the actual amount. Assets will not be taken into consideration "unless they are substantial." After the end of the grace period, a debureaucratised check of assets is to be carried out. Higher allowances will also apply. It is also planned to replace the previous integration agreement with a cooperation plan that will be drawn up jointly by the beneficiaries and the integration specialists.
Bill to temporarily reduce the VAT rate on gas supplies via the natural gas network
In order to alleviate the burden on citizens caused by the increase in gas prices, the bill provides for the reduction of the VAT rate on the supply of gas via the natural gas network to 7 percent from 01 October 2022 to 31 March 2024.
Draft bill for an act to increase the housing benefit (Housing Benefit Plus Act)
Due to rising energy costs, a historic housing benefit reform is to be implemented with the "Housing Benefit Plus Act” [Wohngeld-Plus-Gesetz]. The "Housing Benefit Plus" reform is made up of three components: housing benefit component, heating cost component and climate component.
The bill provides for a further heating costs subsidy for housing benefit recipients and vocational trainees.
2. Adopted ordinances on short-time work
As already announced by Federal Labour Minister Hubertus Heil, the Ordinance Amending the Ordinance on Access to Short-Time Work Benefit [Kurzarbeitergeldzugangsverordnung - KugZuV] and the Ordinance Making Short-Time Work Benefit Available to Temporary Agency Workers [Kurzarbeitergeldöffnungsverordnung - KugÖV] entered into force on 30 September 2022.
The KugZuV has been extended until 31 December 2022 as far as the simplified access requirements for short-time work benefit are concerned. The simplified access rules stipulate that short-time work benefit can still be paid if at least ten percent of employees are affected by a loss of pay as opposed to the regular one-third, and employees do not have to build up minus hours before receiving short-time work benefit.
The KugÖV enables the payment of short-time work benefit to temporary agency workers for a limited period from 01 October 2022 to 31 December 2022.
