Germany
Increase of midi job limit
Impact date: 1 January 2026
With the increase in the income limit for mini jobs, the remuneration thresholds for midi jobs will also increase. The monthly maximum limit for employees in midi jobs will be raised from €1,600 to €2,000. Midi job income is permitted to range from €603.01 to €2,000 per month.
Employer implications/action needed Recalculation of working hours, contractual adjustments.
Employer risk Misclassification risk: violations may result in administrative fines, back‑pay obligations (retroactively, including ancillary charges), and in severe cases (intentional or systematic underpayment), criminal charges, in particular for withholding social security contributions, may apply.
Continued employment of pensioners (“Aktivrente”)
Impact date: 1 January 2026 Employees who have reached the statutory retirement age may earn up to €2,000 per month tax‑free from continued employment (“Aktivrente”), introducing a tax incentive to retain experienced workers in the labor market.
The statutory retirement age is reached once the applicable age threshold for the individual birth year is completed (para. 35 and 235 SGB VI). The retirement age has been gradually increased from 65 to 67 years. The following applies:
- birth cohorts born in 1946 or earlier: 65 years
- birth cohorts 1947–1963: Gradually increasing between 65 years + one month until 66 years + ten months, depending on year of birth
- birth cohorts born in 1964 or later: 67 years (uniformly applicable)
When determining the retirement age, the decisive factor is the completion of the relevant age (date of birth), not the actual commencement of pension payments. Legal consequences linked to the statutory retirement age (e.g. active retirement arrangements) take effect once this age threshold is reached.
Employer implications/action needed Employers may use the continued employment of pensioners as a tool for workforce retention, but must ensure correct payroll implementation, verify eligibility (statutory retirement age, social‑security‑liable employment) and align continued employment with existing age‑limit clauses and contract structures. Social security contributions generally continue to apply.
Employer risk Risk of incorrect application in payroll or eligibility assessment; misapplication may result in tax correction obligations and increased scrutiny, as the continued employment of pensioners provides tax relief only and does not simplify underlying labor‑ and social‑security law requirements.
Social security calculation parameters for 2026
Impact date: 1 January 2026 New social security calculation parameters apply in Germany pursuant to the 2026 Social Security Calculation Parameters Ordinance, reflecting income development in the prior year (based on average earnings in 2024).
Key changes include:
- increase of the general pension contribution assessment ceiling to €8,450 per month (2025: €8,050)
- increase of the miners’ pension contribution assessment ceiling to €10,400 per month (2025: €9,900)
- pension contribution rates remain unchanged:
- general statutory pension scheme: 18.6% (9.3% employer/ 9.3% employee)
- miners’ pension scheme: 24.7% (15.4% employer/ 9.3% employee)
- increase of the general annual earnings threshold in statutory health and long‑term care insurance to €77,400 (2025: €73,800)
- increase of the special annual earnings threshold to €69,750 (2025: €66,150)
- increase of the uniform reference value (“Bezugsgröße”) to €3,955 per month (2025: €3,745)
- unemployment insurance contribution rate remains unchanged at 2.6% (1.3% employer/ 1.3% employee)
- the following summarizes the (minimum) earnings limits applicable for an unreduced pension, effective for additional earnings:
- no earnings limits apply to old‑age pensions
- the annual earnings limit for the miners’ compensation benefit (KAL) is €20,763.75
- the annual earnings limit for disability pensions amounts to:
- €20,763.75 in cases of full disability, and
- at least €41,527.50 in cases of partial disability
Employer implications/action needed Employers must update payroll and reporting systems to reflect higher contribution ceilings, changed income limits, and the increased reference value. Although contribution rates remain stable, employers' total contributions may increase in absolute terms, particularly for higher-earning employees.
Employer risk Risk of incorrect social security contributions and subsequent back payments if updated calculation parameters, reference values, or thresholds are not implemented correctly.
Extension of short-time allowance (“Kurzarbeitergeld”)
Impact date: 1 January 2026 The maximum entitlement period for Germany’s short‑time allowance (“Kurzarbeitergeld”) has been extended to up to 24 months. The extension is implemented by the Fourth Regulation on the Duration of Short‑Time Work Allowance (“4. KugBeV”) and applies on a temporary basis until 31 December 2026, providing continued support for employers facing prolonged economic disruption, particularly in export‑oriented sectors. Companies that already used short‑time work in 2025 may continue to benefit from the extended duration, while new short‑time work arrangements starting in 2026 are again limited to the regular maximum entitlement period of 12 months.
Employer implications/action needed
- assess early whether a substantial loss of work is likely to occur in 2026
- employers may continue or extend existing short‑time work arrangements for up to 24 months, subject to meeting the statutory requirements; where short‑time work is already in place, a renewed notification to the Federal Employment Agency may be required to cover the extended period
- review and adjust remuneration and working‑time models, and ensure that internal agreements introducing short‑time work (works council agreements and/or individual employee agreements) are legally robust and up to date
- strengthen documentation by clearly evidencing the reasons, scope, and expected duration of the loss of work; general references to unfavorable economic conditions alone are insufficient
Employer risk Risk of loss or denial of entitlement to short‑time work allowance if formal and substantive requirements are not met.
In particular:
- failure to demonstrate a continuing substantial loss of work (generally affecting at least one‑third of the workforce with a loss of earnings exceeding 10%)
- inability to show that the loss of work is temporary and unavoidable, as general references to adverse economic conditions alone are insufficient
- failure to exhaust reasonable mitigation measures (e.g. reduction of positive working‑time balances or internal redeployment) or
- non‑compliance with procedural requirements, including timely notification and adequate documentation
In addition, the extension is time‑limited until the end of 2026. Establishments that had not exhausted the 24‑month maximum entitlement period by 31 December 2025 may continue to receive short‑time work allowance in 2026 only if the regular statutory entitlement period of 12 months has not yet been exhausted.
Upcoming works council elections in 2026 (“Betriebsratswahlen 2026”)
Impact date: 1 March – 31 May 2026 (statutory election period) The next regular works council elections will take place between 1 March and 31 May 2026. Despite political discussions around a “Works Constitution 2.0”, digital or online works council elections are not legally permissible for the 2026 election cycle and the elections will continue to be conducted as in‑person (“ballot box”) elections, with postal voting only as a limited exception. While future digital elections (potentially as early as 2030) remain under discussion, no statutory basis currently exists. In addition, the Federal Labor Court (decision of 22 May, 2025 – 7 ABR 28/24) clarified that (matrix) managers may be entitled to vote in more than one establishment, provided they are actually integrated into multiple operational organizations.
Employer implications/action needed
Employers should engage in early strategic planning for the 2026 works council elections, with a particular focus on:
- reviewing and validating voter lists, especially in matrix or cross‑functional organizational structures, to correctly reflect potential multiple voting rights
- careful planning of the election procedure, including the lawful use of postal voting, to ensure compliance with the Works Constitution Act and the Election Ordinance
- monitoring ongoing legislative discussions on digitalization of works council elections, while planning the 2026 elections strictly on the basis of existing law
Employer risk A defective works council election may result in contestability or nullity of the election, trigger court‑ordered re‑elections, cause significant costs and operational disruption, and create substantial legal uncertainty, particularly where voter lists are incorrect in matrix or multi‑site organizations.
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