Higher compensatory levy for non-employment of severely disabled persons
On May 12, 2023, the German Bundesrat has approved the law on the promotion of an inclusive labor market. In provides, inter alia, for an increase in the compensatory levy to be paid by employers.
The law aims to bring more disabled or health-impaired people into or keep them in regular gainful employment. In addition, the law is intended to provide for a more targeted support of severely disabled persons and to require companies to employ more disabled people in future. These amendments have largely financial effects for employers.
What does the law comprise?
1. Increase of compensatory levy
Pursuant to Art. 154 SGB IX (German Social Code, Book IX), private and public employers with an annual average of at least 20 jobs are obliged to fill at least 5 % of the jobs with severely disabled persons. For every compulsory job not occupied by a severely disabled person, the employer must pay a compensatory levy the amount of which is based on the number of compulsory jobs occupied.
The compensatory levy is staggered and amounts, per unoccupied compulsory job per month, to
- EUR 140.00 in case of an annual average occupation rate of 3 to 5 %,
- EUR 245.00 in case of an annual average occupation rate of 2 % to less than 3 %, and
- EUR 360.00 in case of an annual average occupation rate of less than 2 %,
The law now provides for another stage: In case of an occupancy rate of 0 %, i.e., if no severely disabled persons are occupied despite a corresponding obligation to do so, the compensatory levy amounts to EUR 720.00 per month. For employers with less than 60 or less than 40 jobs to be taken into account, lower compensatory levies apply if these employers do not fulfill their employment obligation at all (EUR 410.00 and EUR 210.00, respectively).
Such other stage will come into effect from January 1, 2024. It applies to jobs remaining unfilled as of such date. Such compensatory levy is to be paid initially as of March 31, 2025, if the compensatory levy becomes due for 2024.
2. Use of resources from the compensatory fund
In future, the funds from the compensatory levy are to be concentrated on promoting the employment of severely disabled people in the general labor market and are to be used exclusively to promote their employment. The previous option of using funds from the compensatory levy on a subordinate basis for facilities for the participation of severely disabled people in working life (in particular workshops for disabled people) will no longer apply.
3. Deemed approval for benefits of the Inclusion Office
In order to improve the Inclusion Offices’ approval procedures, the law also introduces a deemed approval for the Inclusion Office’s benefits after expiry of six weeks (e.g., work assistance and occupational support as part of supported employment). If the Integration Office has discretion in its decision, the deemed approval does not apply.
4. Wage cost subsidy no longer capped
The wage cost subsidy to be reimbursed by the German Employment Agency is currently capped at 40 % of the reference amount. The abolition of the cap is intended to ensure that even with the increase in the minimum wage to EUR 12, the maximum wage subsidy can be granted throughout Germany – to the extent necessary under the circumstances of the individual case. This will make it more attractive for employers to hire people with disabilities.
5. Abolition of fine for non-employment
The fine of up to EUR 10,000.00 which could previously be imposed by the German Employment Agency on employers subject to an employment obligation in order to sanction the non-employment of severely disabled persons will be deleted (deletion of Art. 238 (1) No. 1 SGB IX).
What do employers have to observe?
The law will now be submitted to the German Federal President for execution and can then be promulgated in the Federal Law Gazette. Most of the law will come into force on January 1, 2024. Individual provisions will already apply at an earlier date.
For employers with at least 60 jobs, the following will apply in future: for each unoccupied mandatory job, they will have to pay EUR 720.00 each month if they do not meet their obligation to employ severely disabled persons. For employers with less than 60 or 40 jobs to be taken into account, lower amounts will apply.
