Effective 1 January 2013, the Act on Changes in the Area of Marginal Employment from 5 December 2012 (Federal Law Gazette I, p. 2474) raised the earnings threshold for marginal employment and low-paying jobs in private households (“mini jobs”) by 50 euros, based on the general wage trend. The wage threshold is now 450 euros per month.
In addition, individuals who are marginally employed (including persons in low-paying jobs in private households) and began their employment on 1 January 2013 or later are subject to compulsory pension insurance as a rule. For these workers, the concomitant full coverage by the pension insurance system usually increases their pension and is a prerequisite for entitlement to various benefits under pension law, such as in the case of reduced working capacity.
‘Mini-jobbers’ however have the option of being exempted upon application from the obligation to pay pension insurance contributions. However, when a person holding a mini-job is exempted from the obligation to pay pension insurance contributions he or she no longer enjoys full pension insurance coverage. Opting out of full coverage in the statutory pension insurance system requires the individual to consciously address the issue of making provisions for the possibility of reduced working capacity and for retirement.
Mini-jobbers who were already in the statutory pension insurance system prior to 1 January 2013 but were exempt from compulsory insurance continue to be exempt from compulsory insurance for that particular mini-job even after the new rules go into effect. These persons can, as in the past, waive their exemption from insurance contributions with effect for the future (transitional provision). However, the new law applies for these employees as well when their regular monthly earnings were raised to an amount between 400.01 to 450.00 euros after 31 December 2012. As a result these individuals are subject to compulsory insurance in the pension insurance system as a rule. They also have the option to have themselves exempted upon application from the obligation to pay pension insurance contributions.
The earnings threshold for employment with wages in the progressive contribution wage band (“midi jobs”) was also raised by 50 euros effective 1 January 2013 to a total of 850 euros per month so that the wage band within which the employee’s contribution to social insurance increases on a linear basis now extends from 450.01 to 850.00 euros per month.
In accordance with the previous wage-band rules, low-wage employees with monthly earnings in the wage band from 400.01 to 450.00 euros who took up their employment prior to 1 January 2013 and have been subject to statutory pension, health, long-term care and unemployment insurance will continue to be subject to insurance and the payment of contributions (transitional provision) until 31 December 2014. These individuals can however be exempted upon application from compulsory insurance (with the exception of pension insurance).
In a nutshell: The rules in effect since 1 January 2013
- The earnings threshold is set at 450 euros per month.
- Mini-jobbers are generally exempt from insurance with the exception of pension insurance: Mini-jobbers are subject to statutory pension insurance and pay a contribution equal to 3.9 per cent of their gross earnings. They can upon application be exempted from the obligation to pay pension insurance.
- Employers pay 30 per cent lump-sum contributions (15 per cent statutory pension insurance, 13 per cent statutory health insurance and 2 per cent tax), contributions to the insolvency fund and the levies stipulated by the Act on the Protection of Working Mothers and the Continuation of Wage Payments Act plus the respective contribution to the statutory occupational accident insurance system. The employer also has to pay the flat-rate pension insurance contribution equal to 15 per cent of the employee’s gross wages even when the mini-jobber has been exempted from the obligation to pay pension insurance.
- In the case of mini-jobs in private households, the employer pays flat-rate contributions of 12 per cent (five per cent each to statutory pension insurance and statutory health insurance plus 2 per cent tax), a standardised occupational accident insurance contribution of 1.6 per cent and the levies stipulated by the Act on the Protection of Working Mothers and the Continuation of Wage Payments Act. However the five per cent flat-rate health insurance contribution has to be paid only when the person holding the mini-job is insured through the statutory health insurance system.
- Persons who have a mini-job in a private household are required to have statutory pension insurance and pay contributions equal to 13.9 per cent of their gross wages. These persons can upon application be exempted from the obligation to pay pension insurance.
- When an individual holds several mini-jobs at the same time, the earnings from all of them will be added up. As a rule, when the total exceeds the marginal threshold of 450 euros, the obligation to pay contributions to the other branches of the social security system starts on the date that the marginal threshold is exceeded.
- It is possible to hold a mini-job that is subject only to pension insurance and is otherwise exempt from social insurance alongside having a primary job that is subject to social insurance. In such cases, each additional mini-job is calculated together with the primary job so that the second and all further mini-jobs are subject to mandatory insurance in all branches of the social insurance system.
- Short-term employment is given when it is limited to a maximum of two months or 50 working days in a calendar year according to its special nature or is limited in advance by contract, unless the activity is performed on a professional basis and the wages for it exceed 450 euros per month.
- Central mini-job register: Minijob-Zentrale of the Deutsche Rentenversicherung Knappschaft-Bahn-See (German Pension Insurance for Miners, Railway Workers and Seamen).
- The progressive contribution wage band covers monthly earnings ranging from 450.01 to 850.00 euros. When the earnings fall within this range, the individual is obligated to pay insurance contributions in all branches of the social insurance system; the amount of the employee contribution increases on a linear basis, from some 11 per cent up to the employee’s full share
- Mini-jobs that began prior to 1 January 2013 will as a rule continue to be governed by the legislation that was applicable up to 31 December 2012
- Transitional provisions apply until 31 December 2014 to the wage bands from 400.01 to 450.00 euros and from 800.01 to 850.00 euros (see the text above for details).
Further detailed information is available from:
The Minijob-Zentrale as the central collection agency for mini-jobs.
Tel.: (0355) 2902-70799
Monday to Friday 7 a.m. to 7 p.m.
Fax: (0201) 384-979797