Low earners: information on the low-income earner, subsidies & taxes

According to the Federal Statistical Office, about 20 percent of all employees in Germany earn an income that is only just above the poverty line. However, there are some differences between low-wage earners and low-income earners. What exactly is a low-income earner? Do taxes have to be paid in this income class? What about side jobs and government grants? This guide provides all important information.

The importance of low income

The importance of low income

What is meant by a low earner?

The term low income is ambivalent, because it must be distinguished between the low-income earner in general parlance and the social security law aspects in the definition of the term. In everyday life, but also in the language of politicians and authorities, means low income employment, which is rewarded with less than 9.00 euros per hour . Often workers in the hairdressing or retail trade are affected by low earnings. As a result, around 20 percent of employees in Germany are low-income earners. Interns also belong to this group. Low-wage earners are by no means exclusively unskilled workers. Low income with no prospect of a salary increase also affects people who have completed their education or studies.

The social security law clearly defines low-income earners in. § 20 Abs. 3 SGB IV as: “insured persons, who are employed to their vocational training, to achieve a remuneration, which does not exceed 325 euros per month , or insured, which a voluntary social year or a Voluntary ecological year within the meaning of the Youth Voluntary Service Act or a Federal Voluntary Service under the Federal Voluntary Service Act. “

By law, a low-income earner is

  • Apprentices and trainees who receive a maximum of € 325 salary per month

These low earners are not to be confused with marginally employed in so-called mini jobs, which are paid a maximum of 450 euros per month.

The term low income is ambivalent, because it must be distinguished between the low-income earner in general parlance and the social security law aspects in the definition of the term.

The current earnings limit

The current earnings limit

Applying the definition of social security for low paid workers, the group leaves trainees and trainees who earn a maximum of 325 euros a month. They are thus exempt from their own social security contributions , which means for the trainee the simple equation gross = net. If the training allowance is higher, corresponding levies are paid.

What should low earners pay attention to in a side job?

What should low earners pay attention to in a side job?

Many trainees increase their apprenticeship through mini-jobs. A part-time job during the training is generally allowed, unless the employment contract specifies otherwise. The employer must be informed about the secondary activity and can prohibit it if he fears that the achievements of the trainee will be negatively affected. A side job with a rival company, the employer must also not tolerate for adults is the non-compete. The working time of the part-time job depends on the number of hours to be worked in the training occupation. If you are not yet 18, you can work 40 hours a week according to the Youth Protection Act. For adults, a maximum of 48 hours per week and six working days per week are allowed.

social security contributions

Below is an example of how the contributions are shaped when the low-income earner takes on a mini-job in addition to the training.

Example: A trainee with a mini job

A trainee earns 300 euros a month in the first year of apprenticeship. At the weekend, she also goes to waiters, for which she receives 250 euros a month. The training is considered as her main job requiring insurance. Training fee and mini-job are not added to a total salary. The mini-job as a waitress is insurance-free in all insurance branches. The lump-sum contributions to the pension and health insurance, which accrue for the Minijobber, must carry the employer of the mini jobs. For a longer-term loss of work special provisions apply to the receipt of sickness benefit.

Special payments for low earners: Where are the limits?

Special payments for low earners: Where are the limits?

Donations such as Christmas bonus or holiday pay quickly exceed the low-income threshold of 325 euros per month. Anything that exceeds € 325 will be used to contribute to social security. In this case, employers and employees alike have to pay. Since 2015, the legal basis for one-time special payments has been extended. In the case of a one-time special payment, an employer must pay the supplementary contribution to the statutory health insurance fund, regardless of which health insurance company is involved and whether it makes any contribution at all.

The low-income threshold is relevant for the period of the vocational training or internship. The employer has to pay the employee shares in this concept. He may not deduct or withhold these costs from the trainee’s wages. Those who are not in vocational training are not exempt from these levies. If the salary is € 325 or less a month, it is a mini job . Mini-jobbers remain non-contributory in employment and long-term care insurance, although they have been compulsorily insured in the pension insurance since 31.12.2012.

The low earner and his marital status

A change in marital status is of no importance to low earners during training . For the trainee, gross value = net even after the marriage. The only thing that changes with married people is the tax code. In tax class 1, which includes unmarried, childless apprentices, payroll taxes start from an annual income of 8,820 euros.

Grants by employers

What contributions does the employer have to make to low paid workers?

If the limit for low earners of 325 euros is not exceeded, the employer must take over his own share of the social security contribution and that of the trainee. Also to be paid by employers is the additional contribution in health insurance . Even with this low pay there is a compulsory insurance in one of the statutory health insurance. If the trainee is underage and thus insured for free through the parents, a separate membership in the health insurance is required.

Note Until 2014, the additional contribution in health insurance was set at 0.9%. In 2017, the additional contribution is 1.1% and for 2018 a slight decrease to 1.0%.

Under certain circumstances, the employer must additionally pay the supplementary contribution for childless persons in the social care insurance in the amount of 0.25% . In the “Law on the consideration of child raising in the contribution right of the social care insurance” , known as the Child Allowance Act, the contribution surcharge for childless persons amounting to 0.25% was introduced on 01.01.2005. Usually this is done by the worker alone.

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