German Employment and Social Security Law Update 2025
This article provides multinational employers with a concise overview of recent updates to German employment law, social security reforms, sick pay regulations, pension supplementation rules, and new provisions on maternity and parental leave for 2025. Employers will find essential details on compliance requirements and changes impacting HR, payroll, and employee benefits in Germany. The highlights are below, and you can read the full article from Profion here.
German Sick Pay and Employer Supplement Policies (2025)
- Mandatory Continued Salary: Under German law, employers are required to pay full salary for up to six weeks during employee illness, after an initial four-week period of employment.
- Health Insurance Sick Pay: Beyond the six weeks, statutory health insurance provides Krankengeld—typically 70% of gross earnings (subject to statutory caps).
- Private Insurance Provisions: Employees with annual earnings above €73,800 may choose private health insurance, with sick pay governed by the specifics of their private contracts.
- Employer Supplements: Additional sick pay beyond statutory benefits can be provided by contract or collective agreement, but regulations prohibit duplicate benefits for privately insured employees.
Social Security & Pension System Reforms (2025)
Urgency for Reform: Germany is confronting challenges in funding pensions, health care, and long-term care insurance, prompting immediate government action.
Reform Priorities: Planned reforms include the possible extension of statutory social security participation to self-employed individuals and civil servants, as well as increases to contribution ceilings.
Notable Measures:
- Guaranteeing the statutory pension level at a minimum of 48% of average income through 2031.
- Expanding eligibility for the mothers’ pension.
- A forthcoming Second Occupational Pensions Strengthening Act.
- Introduction of an “Active Pension” scheme allowing retirees to earn up to €2,000/month tax-free.
- Launch of an “Early Start Pension,” in which the government contributes to children’s private pension accounts.
Legal Precedent: Employer Pension Supplements
Federal Labor Court Ruling (March 11, 2025): The German Federal Labor Court has clarified that collective agreements finalized before 2018 can legally exclude the statutory employer pension supplement, even without an explicit exclusion clause. This confirms flexibility for employment terms established under legacy and current collective bargaining agreements.
May/June 2025 Labor Law Changes: Maternity & Parental Leave
- Expanded Maternity Protection: Effective June 2025, statutory maternity protections now cover miscarriages from the 13th week of pregnancy (previously the 24th week), with graduated protection periods depending on gestational age. Employers may receive reimbursement for additional expenses.
- Flexible Parental Leave Notification: From May 2025, parents can notify employers of parental leave using text form (email or electronic message), rather than by a signed physical letter. A lead time of seven weeks is still necessary for parental leave announcements.
Profion provided this information on German Employment and Social Security Law Update 2025. If you need support with your employee benefits in Germany, please contact Asinta, and we will put you in touch with the local experts at Profion.