Show TOC

Legal Change: Processing Part-Time Employees and Low-Income Earners

Scope of Functions

A new law governing part-time employees came into effect as of April 01, 1999. The legal changes only affect part-time employees with a low wage (known as a 630 Mark job) and low-income earners.
The person group of temporary part-time employees is not affected by the new law.

New Laws:

The planned regulations cover the following points:

The threshold is DEM 630 (East and West). There are no longer exceptions for miners' pension insurance schemes.

Maintenance of Master Data

If a low-income earner submits the correct statement from the Tax Office, the remuneration is not subject to tax. When the statement is submitted, you must enter the indicator 5 (Part-time employee) in the Tax liability field of the Fiscal Data infotype (0012). This entry triggers the payment of tax-exempt remuneration for the low-income earner.

The tax-free payments must be transferred to the payroll account and are listed on the exemption certificate from the Tax Office. You enter the necessary data for this in the Exemption Certificate for Part-Time Employees infotype (0512). This infotype is displayed when you flag the employee as a part-time employee in the Tax liability field in the Fiscal Data infotype (0012).

Four cases can be identified:

Temporary Employees

Temporary employees are flagged as follows in the Social Insurance infotype (0013):

These entries mean that the employee is exempt from contributions in all four areas of social insurance.

In the DEUEV infotype, enter the key 110 (Temporary employees) in the Person group field.

Low-Income Earners with Main Employment Subject to Social Insurance

If the low-income earner also has main employment which is subject to social insurance contributions, the low income and the income from the main employment are added together.

The SI indicators for health, nursing, and pension insurance and the SI attribute are same as for the main employment.

The low-wage earner is not subject to unemployment insurance contributions.

In the DEUEV infotype (0020), enter the key 101 (Liable to SI) in the Person group key.

Low-Income Earners

Low-income earners are exempt from contributions to unemployment insurance and nursing insurance. The SI attribute 05 must be set:

In the DEUEV infotype (0020), enter the key 109 (Low-income earner) in the Person group key.

Health insurance:

For low-income earners, it is necessary to check whether the employee has statutory health insurance. If this is the case, a flat-rate contribution of 10% of the low income is deducted. If the employee is exempt from health insurance, no contribution is paid. The HI indicator must be set accordingly:

Pension insurance:

If the low-income earner has decided against payment of a voluntary supplementary amount, only the flat-rate employer contribution for pension insurance (12%) is paid.

The process is different depending on whether the employee is assigned to the contribution group for hourly-paid employees or salaried employees. The PI indicator must therefore be set accordingly:

NOTE:

You can maintain the Social Insurance infotype (0013) for low-income earners in a batch input session.

Low-Income Earners who Waiver PI Exemption

The SI indicators for health, nursing, and unemployment insurance in the Social Insurance infotype (0013) correspond to the SI indicators for a part-time employee without a pension insurance supplement:

In the DEUEV infotype (0020), enter the key 109 (Low-income earner) in the Person group key.

Pension insurance:

If the low-income earner chooses to pay a supplement, the contribution is increased to the full pension insurance contribution. The difference (currently 7.5%) is paid by the employee.

The process is different depending on whether the employee is assigned to the contribution group for hourly-paid employees or salaried employees. The PI indicator must be assigned accordingly:

CAUTION!

The supplement must be calculated so that a minimum contribution of DEM 58.50 is paid. The minimum contribution of DEM 58.50 corresponds to 19% of the PI employee share of DEM 300. If an employee earns less than DEM 300, the DEM 58.50 would not be reached. For this reason, the income for the PI calculation must be increased to DEM 300 for part-time employees who earn less than DEM 300. To do this, use wage type MU70 (PI supplement part-time EE). This wage type can be entered in the Recurring Payments and Deductions (0014) or Additional Payments (0015) infotypes.

Example:

A part-time employee earns DEM 250 per month. The employee is DEM 50 short of the DEM 300 needed for the minimum contribution amount of DEM 58.50.
In this case, enter wage type MU70 with the amount DEM 50 in the Recurring Payments and Deductions infotype (0014) for this employee. During the payroll run, a pension insurance contribution of DEM 9.70 is calculated on the DEM 50 (19.5& of DEM 50). The employee pays the PI contribution of DEM 9.75.

Batch Input for Low-Wage Earners

Master data for low-income earners can be maintained if they

CAUTION:
Part-time employees with main employment subject to social insurance and part-time employees who waiver pension insurance exemption cannot be converted by batch input. You must maintain the master data for this employee accordingly.

For more information, see the documentation on report RPISVGD0.

Effects on Customizing

New constants

Constant Name Status Value
KVGPG HI flat-rate cont. rate New 10%
RVGPG PI flat-rate cont. rate New 12%
RVGVD PI low-inc. earner thresh. Unchanged DEM 630.00
RVGOD PI low-inc. earner East Delimited DEM 0.00
RKGVD MMEI low-income threshold Delimited DEM 0.00
RKGOD MMEI low-income earner East Delimited DEM 0.00

New Wage Types

The following technical wage types have been created to deal with the new regulations:

For the following technical wage types, you must make sure that posting to Accounting takes place:

To do this, you must compare the Time Dependency of Wage Type Posting (V_T52EZ) and Wage Type Posting (V_T52EL) views in your live client with those in the delivery clients.
For more information, see the Implementation Guide for Payroll Germany under Posting to Accounting -> Maintain Wage Types -> Define Posting Characteristics of Wage Types .

The model wage type MU70 (PI supplement part-time EE) has also been included again. To copy this wage type from the delivery client to your live client, you must compare the following views:

Forms for Remuneration Statement, Payroll Account, and Payroll Journal

The standard forms for the remuneration statement, payroll account, and payroll journal have been enhanced to include the appropriate wage types for low-income earners.

If you use the standard SAP forms, you must copy the new standard forms to your live client. For more information, see the Implementation Guide for Payroll Germany under

Forms for Contribution Statement

The standard forms for the statutory statement of contributions and miners' insurance (individual statement lists and collective statements) have been modified. Copy these forms to your live clients. For more information, see the Implementation Guide for Payroll Germany -> Social Insurance -> SI Contribution Statement Forms for the Statutory Contribution Statement in the sections:

Dynamic Actions for the Fiscal Data Infotype

From the Fiscal Data infotype (0012), a dynamic action enables you to maintain the Exemption Certificate for Part-Time Employees infotype. The trigger for the dynamic action is the Tax liability field. The value 5 (part-time employee) must be entered as the value.
Copy the dynamic action to your live clients by comparing the Dynamic Actions view (T588Z).

For more information, see the Implementation Guide for Personnel Administration under Adjusting Procedures -> Dynamic Actions .