Changes to minimum wage, mini-jobs and midi-jobs as of October

In addition to an increase in the minimum wage to 12 euros, the mini-job limit will also rise to 520 euros on October 1, 2022.

On October 1, the statutory minimum wage will be raised to 12 euros. The German government is thus implementing one of the main election promises made by its grand coalition partner. The increase on October 1, 2022 means that the minimum wage will be raised a total of three times this year following the two regular increase steps on January 1 and July 1. Following this legislative intervention, the minimum wage is to be adjusted again on the basis of decisions by the Minimum Wage Commission, for the first time with effect from January 1, 2024.

However, the "Act on Increasing the Protection Provided by the Statutory Minimum Wage and on Changes in the Area of Marginal Employment" also increases the remuneration limit for mini-jobs to 520 euros per month. The new limit is based on a weekly working time of 10 hours at the minimum wage, which is not to change in the future. The remuneration limit will therefore be dynamic and will be calculated in future on the basis of the minimum wage applicable at the time by dividing it by three and multiplying it by 130. The result must then be rounded up to full euros. With the next increase in the minimum wage on January 1, 2024, the mini-job limit will therefore also increase further.

As before, in order to determine a mini-job at the start of employment, all wage components that can be expected with sufficient certainty within the assessment period of a maximum of 12 months must be added together and divided by the number of months of employment in the assessment period. If the calculated average monthly pay does not exceed the marginal earnings threshold, a mini-job is deemed to exist. However, the conditions and consequences of an "occasional unforeseen exceeding" of the marginal earnings limit have now been regulated by law. Previously, this was only specified in the social insurance institutions' guidelines on marginal earnings.

The new statutory regulation creates more legal certainty, but at the same time is also more stringent than the previous regulation of the social insurance institutions. Accordingly, an unforeseeable exceeding of the marginal earnings threshold will not change the mini-job status in the future if the marginal earnings threshold is exceeded by an amount up to the marginal earnings threshold in each of no more than two months within the time year to be formed for the respective payroll accounting period.

This means that a maximum annual income of 14 times the monthly marginal earnings limit is possible in a mini-job. However, the regulation only applies to unforeseeable payments that could not be expected with sufficient certainty. This can be additional pay due to limited overtime for an unforeseeable reason (illness of a colleague, etc.) or a one-time payment that depends on the reason and amount of the business result or an individual work performance of the previous year.

Until now, an unforeseen exceeding of the mini-job limit in up to three months and without a remuneration cap was harmless for the mini-job status. The new regulation is also explicitly intended to prevent the possible displacement of employees who are fully liable for social security contributions. The other changes to minijobs and midijobs are also intended to encourage people to take up employment that is subject to social insurance.

To this end, the maximum limit for employment in the transitional area (midi-job) will also be raised from 1,300 euros per month to 1,600 euros on October 1, 2022. As early as January 1, 2023, a further increase in the transitional area to €2,000 is planned as part of the latest relief package. In addition, employees within the transitional area will receive even greater relief and the jump in the burden when moving from marginal employment to employment subject to social insurance contributions will be smoothed out. Above the marginal earnings threshold, the employer's contribution will initially be adjusted to the flat-rate contributions of % 28 payable for a mini-job and then gradually reduced to the regular social security contribution as pay rises. Ultimately, this results in a higher burden for employers, particularly in the lower transitional area, while employees pay lower contributions.

Finally, there is a grandfathering provision for midijobbers whose monthly pay is between 450 and 520 euros when the marginal earnings threshold is raised. Provided that the average monthly pay does not increase and no application is made for exemption from compulsory insurance, i.e. a transition from a midijob to a minijob, the compulsory insurance and thus the midijob status will apply until December 31, 2023 at the latest.

The exemption from compulsory health and long-term care insurance can be applied for until the end of 2022 at the latest and will then apply retroactively from October 1, 2022 if no health insurance benefits were claimed after September 2022. Contributions for old midi-jobbers will continue to be calculated according to the old rules, but employers will have to deal with several collection agencies from October 1, 2022, because midi-jobbers covered by the grandfathering rule will be considered mini-jobbers for pension insurance purposes from October onwards, meaning that the Minijobzentrale will be responsible for collecting pension insurance contributions, while the respective health insurance fund will continue to be responsible for the other contributions.

Along with the law, the German government has also decided that the Federal Ministry of Labor and the Federal Ministry of Finance should jointly examine how electronic and tamper-proof working time records can further improve enforcement of the minimum wage. In particular, small and medium-sized enterprises should not be unduly burdened by the acquisition of time recording systems. To this end, the development of an app for time recording is to be examined, which can be made available to employers free of charge.