What does the employer get when his employees are sickWhen employees are on sick leave, the employer is obligated to continue paying them wages. This can quickly become an enormous financial burden, especially for small companies, which is why the legislator has provided for continued pay insurance for small and medium-sized companies in the form of the U1 levy.
The most important facts in brief:
– Employers must pay employees for for six weeks in the event of incapacity for work through no fault of their own further wage resp. Pay salary. – Companies with fewer than 30 full-time employees must pay the Allocation U1 to the health insurance company, which then pays between 40 and 80 percent of the continued payment of wages. – Depending on the health insurance company and the chosen tariff, the contributions for the continued pay insurance amount to One to three percent of gross salary of the employees. – In the case of medically prescribed quarantine, for example if an infection with the coronavirus has occurred or there is a suspicion of infection, the authorities reimburse the wage costs in accordance with the Infection Protection Act.
That the enterprises can finance the legally obligatory continued payment of wages in the case of illness, there is the so-called Continued pay insurance. Business owners who choose the right option here can save money, says datev.de. An employee is on sick leave due to a slipped disc, another employee is going on maternity leave. Employers continue to pay wages and salary during this time as normal – a considerable cost factor, especially for small companies.
The employer must pay continued remuneration for a maximum of 42 days (six weeks). Pregnant women and new mothers must also be compensated for the lost income – as maternity protection pay and maternity benefit allowance. Continued pay insurance is intended to reduce the economic risks in the event of illness and during maternity leave for all small and medium-sized companies.
Levy U1 secures sickness risk for smaller companies
In principle, small and medium-sized companies are obliged to take out insurance cover. In the case of larger companies, the legislator ames that they can bear the economic burden in the event of illness even without insurance. But even for smaller companies, there are several insurance options – and thus design possibilities.
Companies that employ no more than 30 people must pay the U1 – the levy for continued payment of wages in the event of sickness. Part-time employees are taken into account on a pro-rata basis; trainees and interns are not included in the calculation. The employer pays the monthly contribution together with the social insurance contributions to the health insurance fund. In return, the statutory health insurance funds reimburse part of the continued payment of wages in the event of illness. So if an employee becomes ill, the entrepreneur submits an application to the health insurance company. The prerequisite for reimbursement is a medically confirmed inability to work. In many companies, however, it is customary not to provide a medical certificate for the first three days of illness.
Reimbursement rate of the U1 levy is between 40 and 80 percent
"In order for the tax consultant to be able to apply for reimbursement from the insurance company, he must be informed about the duration of the incapacity for work. That's why it's important to remember to inform your consultant even if you're on a three-day regimen, so they can take care of reimbursement," advises Dr. Robert Mayr, Chairman of the Board of DATEV.
The standard legal rate for reimbursement is 80 percent. However, health insurance companies may also offer lower reimbursement rates. They set the contribution and reimbursement rates individually – and each insurance company has several reimbursement rates to choose from. Lower reimbursement rates are available at correspondingly reduced premiums. If the entrepreneur does not make a choice, he is classified in the standard rate.
As a rule, the contributions for continued remuneration insurance are as follows between one and three percent of the employee gross salary. The range of reimbursement rates usually varies – depending on the contribution – between 40 and 80 percent. This gives companies more leeway to adjust the apportionment contributions to the individual situation in the company. The lowest possible reimbursement rate is set by law at 40%.
Companies can choose the reimbursement rate individually
The rates offered by the respective health insurance fund can be found on the fund's website. A change in the reimbursement rate is generally only possible at the end of the year. For this reason, companies should consult with their tax advisors to determine which reimbursement rate is likely to be the most favorable for the company in the coming year," recommends tax advisor Mayr. And further: "Of course, no one can predict with certainty the sick leave for the next calendar year. But the empirical values of the past years usually already allow an estimation for the future."
Attention: The health insurance funds only reimburse the amounts to which the employer is obligated by law. If, for example, the collective agreement provides for continued payment of wages for longer than six weeks, the employer must pay the additional amount out of his own pocket. If an employee only calls in sick during the course of a day, there is also no reimbursement for that day.
By the way, all companies, regardless of their size, must contribute to the U2 levy on continued pay. This U2 ensures the allowance for maternity pay, a possible continuation of pay in the case of employment prohibitions and the employer's contributions to social insurance. Even companies that do not employ women at all have to pay the levy. This is intended to prevent discrimination against women in the hiring process from the outset due to possible higher costs.
Choose from the content on continued payment of wages and continued payment of wages insurance
When must the employer pay continued remuneration?
The continued payment of wages takes effect in accordance with the Continuation of Remuneration Act (EFZG) in the event of illness. Accordingly, wages or. salary must continue to be paid for a maximum period of six weeks if the employee has been written off by a doctor as unfit for work and this incapacity for work is not the fault of the employee. Continued payment of wages is mandatory for all employees whose employment lasts more than four weeks (including trainees). After six weeks, the health insurance fund pays the employee sick pay (up to a maximum of 90 percent of net pay for a maximum of 72 weeks).
Get our best accounting tips! When is an inability to work through no fault of one's own?. Thus, the obligation to continue payment of remuneration before?All illnesses or injuries that the employee has not contracted through gross negligence or even intent are considered non-culpable. This also includes sports accidents that are not due to carelessness. In addition, continued payment applies in the event of the removal of donor organs or tie, blood donation for the separation of blood stem cells, non-illegal sterilization and lawful abortion.
If, on the other hand, the employee causes an accident through gross negligence or while drunk, this is considered to be self-inflicted and the employer does not have to continue paying wages.
Do I also have to pay the continued remuneration if my employee has to be quarantined, as for example in the case of the coronavirus??
Even in the event of a medically prescribed quarantine, such as occurred in many cases during the coronavirus pandemic, employers must pay their employees their wages or salaries. continue to pay the salary. However, in accordance with Section 56 of the Infection Protection Act (IfSG), the employer can have the full amount of the paid remuneration reimbursed by the competent authority.
Do I have to pay my employees their full wages or salary in the event of illness?. continue to pay the full salary?
The Continuation of Remuneration Act (Entgeltfortzahlungsgesetz) provides in § 4 para. 1a that the employee receives the gross salary he would have received if he had not been unable to work. The remuneration must therefore continue to be paid in full. This includes, for example, benefits in kind. However, overtime, reimbursement of expenses, allowances, travel allowances and one-time payments such as Christmas bonuses or vacation pay do not have to be paid.
Are non-full-time employees also entitled to continued payment of remuneration in the event of illness??
Yes, the continued payment of wages must also be paid to, for example, part-time employees, temporary employees, trainees, mini-jobbers and student assistants.
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Who is legally obligated to pay into the Entgeltfortzahlungsversicherung in the form of the levy U1?
All employers who do not employ more than 30 full-time employees must participate in the pay-as-you-go system. Apprentices are not counted. Severely disabled persons who are not fully employed. Employees with a maximum weekly working time of ten hours are considered as 0.25 employees, with a maximum of 20 hours per week as 0.50 employees and with a maximum of 30 hours per week as 0.75 employees.
How much is the reimbursement of the continued pay insurance?
The statutory standard rate for reimbursement of continued pay through the U1 levy is 80 percent. However, health insurance companies are allowed to set individual contribution and reimbursement rates. The lower the contribution rate, the lower the reimbursement rate. This allows entrepreneurs to take into account their individual business situation. However, health insurance companies must at least reimburse 40 percent of the continued payment.
This means that with 80 percent reimbursement, employers still have to pay 20 percent of continued pay out of their own pockets. A lower contribution is bought with a higher deductible rate.
Is it permissible to deviate from the statutory regulation on continued payment of wages in collective agreements??
As far as both the duration and the amount of continued payment of wages in the event of illness are concerned, collective agreements pursuant to § 4 para. 4 EFZG, deviating regulations may be made. However, these must always be more favorable for the employee than the requirements of the legislature. A worse position is inadmissible.
What do I have to do now?
1. Find a reliable software so you can do your payroll yourself! 2. Or find a good tax advisor!
Torsten Montag has been the editor-in-chief of the Grunderlexikon since 2004. He is a regular interview partner as well as guest author of specialist articles in external media on the subject of start-ups and self-employment. Before he gruenderlexikon.de, he worked as a tax clerk and business economist, among other things. Working for PwC and a tax firm in Thuringia.
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