Foundational

{{income-protection}}

Income Protection & Disability

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Key Features – How Does It Work?

In Germany, the most common policy is known as occupational disability insurance (Berufsunfähigkeitsversicherung). This is employer-funded protection for employees. When an employee becomes ill or suffers an injury, the cover provides them with a payment that ensures income for the period that they are unable to work. The cover continues until the employee is able to return to work, reaches the policy’s maximum benefit term, or an age limit.

Occupational disability insurance is a lump sum insurance (Summenversicherung) which means that the payout is for a specific amount as specified in the insurance contract, typically paid monthly. The amount received does not depend on the extent of the damage or loss.

Occupational disability insurance can be added to life insurance schemes or purchased as separate cover.

Cost and Funding

For private plans, premiums are normally paid monthly. The cost will depend on the size and risk profile of the workforce and the level of cover chosen. Employers can choose to fully fund the insurance, share the cost with employees, or offer it as a voluntary benefit with employees covering the cost of premiums themselves.

Taxation

Any contribution made by the employee is taken from gross salary, meaning it is tax-free and exempt from social security contributions. Employer-paid contributions are considered a benefit in kind, and the value of the premiums are subject to income tax.

Any benefits that are paid from the policy will be subject to tax.

Implementation and Administration

To implement income protection insurance, employers should select an insurance provider and agree on policy terms, including the level of coverage and deferred period.

Employers should communicate with their employees the option for joining the insurance and how the premiums are funded. There should be an internal process for managing enrolment and communicating with the insurer. When a claim is made, this is processed and paid by the insurer.

Other Considerations

The insurance is only viable during the period of employment. When leaving a company, some insurance providers may allow employees to continue the contract privately. While it may be on similarly favourable group terms, it will be paid from net income, which removes the tax and contribution savings.

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Life Insurance

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Key Features – How Does It Work?

In Germany, life insurance (Lebensversicherung) is a broad term referring to insurance contracts that cover a range of risks related to a person’s lifetime, including death, occupational disability, and retirement or pension benefits. Term life insurance (Risikolebensversicherung) is a lump sum payment to an employee’s beneficiaries if the insured employee dies. The amount is typically agreed in the contract. This is more affordable than other life insurance schemes as it does not include a savings or investment component.

In the event of an employee’s death, the policy provides a lump sum benefit to the designated beneficiaries. In Germany, this amount is normally an agreed fixed sum.

Cost and Funding

A group policy is organised by the employer, who is responsible for paying the premiums. This is normally done monthly. The cost of life insurance depends on the size and risk profile of the workforce and the level of cover chosen. As life insurance policies cover entire groups of employees, the cost per person is usually lower than individual income protection policies.

Taxation

Employer-paid contributions are considered a benefit in kind, and the value of the premiums are subject to income tax.

Benefits that are paid from the policy to the beneficiaries are exempt from income tax but may be subject to inheritance tax rules.

Implementation and Administration

To implement term life insurance, employers should select an insurance provider and agree on policy terms, including the level of coverage. Once set up, HR or payroll within a company typically manages enrolment and communication with the insurer.

Claims are processed and paid directly by the insurer.

Other Considerations

Some employers may have minimum criteria for employees to qualify for the insurance, such as the form of contract, working hours, or a probationary period.

The insurance is only viable during the period of employment. When leaving a company, some insurance providers may allow employees to continue the contract privately. While it may be on similarly favourable group terms, it will be paid from net income, which removes the tax and contribution savings.

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Private Health Insurance

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Key Features – How Does It Work?

In Germany, statutory health insurance (gesetzliche Krankenversicherung (GKV)) covers 90 per cent of the population. All employees whose gross income is above the marginal income (2025: EUR 556 per month) and below the annual wage limit (2025: EUR 73,800 per year) must use the statutory scheme. Employees earning more than this amount can be insured under the statutory scheme voluntarily or choose to switch to private health insurance.

Private health insurance (private Krankenversicherung (PKV)) is only available to people who are not subject to the statutory health insurance system. The employee can choose their preferred provider and organises the insurance independently of their employer. Eligible insurances will receive a subsidy from the employer but employees are responsible for paying the premiums. The patient normally receives an invoice after an appointment which they then submit to the insurer for reimbursement.

A third part of Germany’s insurance offering is company health insurance (betriebliche Krankenversicherung (bKV)). This is a supplemental offering from employers to cover health services above the standardised GKV offering. This may include additional outpatient treatment, alternative medicines, and dental and optical. Employers choose a level of cover, normally a set euro amount per employee, and employees can claim up to that maximum amount.

Cost and Funding

Unlike GKV where contributions are determined as a percentage of salary, the cost of PKV is determined by the scope of the insurance and the individual risk of the insured person. The employee is responsible for paying the premiums but is eligible to receive a reimbursement from the employer. The maximum contribution is the lower amount of either 50% of the premium paid, or the maximum contribution the employer would pay if the employee had GKV.

At the end of a benefit year, if the employee has not claimed on their insurance, they receive a contribution refund from the insurer. The employee keeps this amount and is not required to refund the employer for their contribution.

bKV is typically funded by the employer. Because insurance is provided in a group model, the premiums per person are low. The premium is considered a non-cash benefit and can be claimed as part of the €50 per month tax-free allowance.

Taxation

Health insurance premiums that are considered to cover basic health services are tax deductible. Private health insurance may cover more than this basic level and health insurance companies issue a letter each year which summarises the costs that can be deducted.

Implementation and Administration

If purchasing a PKV, the employee should get a certificate (arbeitgeberbescheinigung) from the insurance company which confirms that the insurance meets the requirements for subsidies. Employers should keep this document on file and organise disbursement of subsidy. Typically, employers process the subsidy on a monthly basis as part of payroll.

If companies choose to offer bKV, they should partner with an insurance provider that reflects their budget and workforce. HR should manage enrolment, including the process for adding dependants. Once set up, employees normally interact directly with the insurance provider. Most providers will have an online portal where employees can check their coverage, track claims, and access information about health care providers. The employer should clearly communicate to employees any annual cash limit on services.

Other Considerations

Anyone who has private health insurance must also take out private compulsory nursing care insurance.

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Retirement Funds

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Key Features – How Does It Work?

Germany operates a three pillar retirement model. The first pillar is the statutory pension system, the second is company pension schemes (betriebliche Altersversorgung (bAV)), and the third is private pension schemes. Employers are responsible for social security withholdings as part of the first pillar and can choose to offer a bAV as an employee benefit. There are five different company pension schemes:

1. Direktzusage. The employer promises pension payments, often backed by internal reserves or external insurance. The employee then has a claim for payment directly with the employer.
2. Direktversicherung. Employers purchase life insurance for employees, combining risk coverage with pension savings.
3. Unterstützungskasse. Employer-funded benefit funds offering discretionary payouts.
4. Pensionsfonds. Market-linked investment vehicles, similar to the approach in anglo systems. Employees and employers both contribute and the fund increases with investment.
5. Pensionskasse. Employer-established pension funds managing collective investments. Similar to the pensionfonds, but controlled by the employer and invested at the group level.

The first three solutions are not attached to an investment market which means that purchasing power over a longer period may decline.

Since 2019, employers must offer a company pension if an employee requests it.

Cost and Funding

The cost and funding model depends on the bAV chosen by the employer. Increasingly, employers are moving towards a shared contributions model, with tax incentives to support this shift.

Since 2019, employers in Germany must pay a contribution of at least 15% of the deferred contribution to new company pension plans if they save on social security costs through salary conversion. This rule was extended to existing plans in 2022. Many companies now offer more than the required 15% to stay competitive and attract talent.

Taxation

Employee contributions are made via salary conversion (entgeltumwandlung) making them tax advantaged. Up to €322 per month is exempt from social security contributions and up to €644 per month is exempt from tax.

Employees pay income tax when receiving the pension.

Implementation and Administration

Companies should choose a bAV structure that matches the size and profile of their workforce. Once set up, HR or payroll within a company typically manage enrolment and internal communication, including automatic deductions. Many bAV providers also offer an online platform where employees can track their contributions.

Other Considerations

Employers should have processes in place to ensure portability of different bAV options when employees leave a company.

Family

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Assisted Reproduction

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Key Features – How Does It Work?

In Germany, some assisted reproduction support is covered under basic health insurance. Statutory insurance will cover 50% of costs related to IVF for married heterosexual couples where the woman is younger than 40 and the man younger than 50. Some states (Länder) extend this to unmarried and same-sex couples. Private health insurance may have more comprehensive cover, depending on the package. Employers can expand this offering by making it more inclusive, offering additional financial support, or offering other assisted reproduction benefits, such as Social Freezing. Employers can offer a financial reimbursement programme, set up internally, or partner with a provider that provides curated advice and support.

Cost and Funding

To provide specific assisted reproduction funding, most employers will offer a set subsidy that covers amounts that are additional to health insurance coverage. This is in addition to any subsidy or contribution that the employer already pays for health insurance. If partnering with a specific provider, this tends to operate on a package basis. The cheaper packages are based around resources, whereas the more comprehensive packages provide clinical services.

Taxation

Health benefits that are provided by the employer are tax exempt for employees up to €600 per year, if it is considered to prevent illness and promote health in companies. Depending on the type of treatment, this may apply to assisted reproduction.

Implementation and Administration

Employers can offer financial support through lump-sum allowances or through a reimbursement programme. In both cases, the offer should be integrated with payroll services. The employer should have clear policies on eligibility for these amounts. If partnering with a provider, employers should ensure employees can enrol and access these services. Employers should also promote other services they may be available to address the emotional aspect of fertility treatments, such as counselling services through an EAP.

Other Considerations

Legal and ethical constraints will influence how this benefit can be designed. Employers should ensure that they are aware of the Embryonenschutzgesetz (Embryo Protection Act).

Employers should seek to make this benefit inclusive and accessible to all employees. This includes same-sex couples, single parents, and individuals pursuing fertility treatments alone.

{{career-support}}

Carer's Support

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Key Features – How Does It Work?

In Germany, carer’s support primarily takes the form of government regulations which provide employees with statutory rights, such as protected leave or care subsidies, to balance caregiving responsibilities with employment. Because of this, individuals tend to organise care support directly with a provider rather than through an employer partnership. There are some larger companies which are taking this a step further by partnering with providers which offer direct support.

Cost and Funding

There is financial support for caring through the government. If an employer chooses to offer this benefit, the cost will depend on the level of support. Partnering with an information only service is low cost while providing subsidies is more costly.

Taxation

If an employer provides any service that is for the purpose of advising employees on the care of relatives or arranges caregivers for this purpose, this amount is not included in an employee’s income for tax purposes.

Implementation and Administration

Employers can either partner with a provider or provide direct subsidies. Employers should choose a partner based on the needs of their workforce and available budget. Employers should also check the details of any private health insurance policy to see what cover may be available to employees and clearly communicate any available support options. Even if not providing services directly to employees, it can be helpful for employers to signpost resources.

Other Considerations

Employers should ensure that any benefit they provide complements government support frameworks. They should also consider how carer’s support integrates with other policies, such as leave and flexible working, as well as mental health and wellbeing initiatives.

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Childcare Support

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Key Features – How Does It Work?

In Germany, the tax-exempt status of childcare support provides flexibility to employers to offer support. This may include on-site corporate kindergartens (Betriebskindergärten) or direct financial contributions to parents.

This is complemented by statutory support such as childcare leave and rights to request flexible working arrangements.

Cost and Funding

For employers, the cost of childcare support depends on the chosen model. Establishing an on-site childcare facility will have setup and maintenance costs. The ongoing running of such centres can be managed by third-party providers to minimise costs. The extent of direct subsidies can be determined by the budget of the employer. In most cases, the employee shares the cost of the service.

Taxation

Childcare services that are provided by the employer for employees’ children who are not of school age are exempt from income tax and social security contributions. There is no upper limit but the costs must directly cover the cost of childcare. Employees can separately claim childcare costs as a tax deduction.

Implementation and Administration

Subsidies related to childcare support tend to be integrated with payroll systems, making administration easy for both employer and employee. Employers should have a clear system for collecting receipts to ensure that any subsidies are being spent in line with tax regulations.

Other Considerations

Employers should consider the size and needs of their workforce when deciding the best childcare support scheme. Childcare support is most effective when complemented by other policies such as emergency care support.

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Emergency Carer's Support

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Key Features – How Does It Work?

In Germany, emergency carer’s support is typically offered through a third-party provider which has partnered with the employer. These services allow employees to contact a temporary carer when back-up care is required. Most programmes operate through an online platform or app which allows employees to make arrangements directly.

The government also provides some support for back-up care through leave and other allowances. This includes up to 10 days of unpaid caregiving leave, with eligibility for government funding.

Cost and Funding

Employers can choose to fully cover the cost of back-up care, offer partial subsidies, or offer it as a voluntary employee benefit. It is common for companies to fund up to a set amount, such as two days per month. Providers tend to charge on an hourly basis.

Taxation

Employer contributions to emergency childcare would be covered under the income tax exemption for childcare if it is targeted towards children below school age. This exemption does not apply to similar eldercare services, and employer-paid subsidies would be considered additional income.

Implementation and Administration

Employers should partner with a caregiving service provider. Employees should sign up to relevant services so they are able to access emergency care at short notice. There should be clear policies on what is available via these platforms, and who is responsible for the cost of support, including any maximums set by the employer.

Alternatively, employers can offer subsidies directly to employees when they are required to pay for care. This is normally integrated directly with payroll systems.

Other Considerations

Employers should consider the size and needs of their workforce when choosing an emergency care model. They should ensure that any service is complementary to existing government offerings to maximise convenience to employees. This may include, for example, focusing on eldercare which has less support than childcare.

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Pet Insurance

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Key Features – How Does It Work?

Employers partner with an insurance provider that offers group rates for the pet insurance. In Germany, coverage tends to be limited to dogs and cats. Employees can then choose to opt in to this insurance. It is typically a voluntary benefit, with premiums deducted from an employee's salary. Claims are managed and processed directly with the insurance company.

Cost and Funding

The cost of pet insurance will vary depending on the level of coverage and the number of employees participating in the scheme. The employer typically chooses a standard level of coverage, with no allowance for individual adjustments.

Taxation

If the employer pays, pet insurance would be eligible as a benefit in kind (Sachbezug) and exempt up to a total of €50 per month. If the employee is responsible for premiums, this amount is deducted from payroll after tax and social security contributions.

Implementation and Administration

Implementing pet insurance involves partnering with a provider that offers a group policy. There is normally a minimum level of enrolment of five employees. Employers should ensure there is a sufficient level of interest before providing this benefit. Employers are responsible for communicating to the insurer which employees are covered. Employees then receive information directly from the insurance company on how to access the cover, and claims are managed directly. The employer is responsible for paying the premium directly to the insurance company each month.

Other Considerations

There is typically a maximum of two pets per employee under the group policy. Employers should communicate that this benefit will lapse if an employee leaves the company.

Pet liability insurance is compulsory in some federal states in Germany. Employees should arrange this insurance independently, with employers focusing on pet health insurance as a benefit.

Finance

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13th Month Pay

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Key Features – How Does It Work?

In Germany, Weihnachtsgeld is a Christmas bonus paid to employees at the end of the calendar year. This is most common in industries which are operating under collective agreements. Some companies do offer a 13th Month Pay, but it does not offer the same flexibility as a Christmas bonus. There is no legal requirement to offer a bonus, with entitlement instead stemming from collective agreements or individual company policy.

Cost and Funding

The cost of offering a bonus varies across industries and companies. In most cases, it is calculated as a percentage of monthly salary. This allows employers to adjust the bonus based on the budget available each year. Sectors covered by collective agreement may have prescribed levels of bonus.

A key difference between operating a Christmas bonus rather than 13th Month Pay is the discretion for the employer to choose the amount of the bonus.

Taxation

Christmas and other bonuses are subject to income tax and social security contributions. The tax is calculated differently than income tax as it is treated as a one-off, special payment.

Implementation and Administration

A Christmas bonus is organised internally and completed via payroll. It is usually paid in November, or in two instalments across November and December. For employees who work part-time, or have only been employed for part of the year, the payment may be pro-rata-ed.

Employers should ensure they comply with all legal requirements, including provisions in collective agreements and employment contracts.

Other Considerations

Germany has a principle of equal treatment which requires all employees to be treated equally. This applies to the bonus. If employers want to take a discretionary approach, there must be a clear and evidence-based reason for doing so.

There are strict legal rules governing Christmas bonuses and their role within an employment contract. If an employer has paid a bonus for three consecutive years, employees have a legal right to expect them. Employers should seek legal advice to ensure they understand the potential future binding nature of the offer, and possibly include terms on the voluntary nature of the benefit.

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Grocery Scheme

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Key Features – How Does It Work?

In Germany, vouchers for grocery stores are a common exercise of the Sachbezug benefit. Employers can provide up to €50 per month as a non-cash benefit that employees can use to purchase goods. Many employers choose to offer this via a voucher system which includes fuel and grocery stores. This is typically administered through a third party platform which curates vouchers and allows employees to choose the voucher most relevant to them.

Cost and Funding

Employers bear the cost of the vouchers, which equal up to €600 annually per employee. These amounts, however, do not incur tax or social security contributions. If using a provider, this will include additional set up and administration fees.

Taxation

Vouchers issued under the Sachbezug exemption are not subject to income tax or social security contributions. This includes employer contributions. If the voucher amount exceeds €50 per month, then the whole amount becomes taxable.

Implementation and Administration

Implementing grocery vouchers involves partnering with a provider that offers a selection of options, or working directly with supermarkets to purchase vouchers. The tax advantages are available specifically for non-cash benefits, and therefore any voucher must not be redeemable for cash. It is important that employers check the conditions of vouchers to ensure that they are compliant.

Other Considerations

Employers should partner with a variety of vendors to provide employees with the flexibility of choice. Employers should promote the availability of the benefit to raise awareness about the scheme, and create an accessible way to access the benefit, particularly within a mixed workforce.

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Personal Accident Cover

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Key Features – How Does It Work?

Germany has statutory cover for accidents that occur during work. Personal accident cover is an additional employee benefit offered by employers to protect employees during their leisure time. This insurance typically has worldwide cover. When an injury occurs, the compensation is calculated by reference to the severity of the injury on a Gliedertaxe. Some policies will also include additional assistance services such as therapy consultations or household assistance.

Cost and Funding

The cost of premiums will depend on the level of coverage, and the number and risk profile of employees. Typically, the cost of the premium is shared between the employer and employee. Taking out a group policy for all employees tends to be more cost-effective than individual plans, allowing employers to offer this benefit at a reduced cost.

Taxation

If the premium is paid by the employer, this is considered taxable income. However, if employees are covered jointly by a group agreement and premiums are less than €100 per calendar year, then income tax is charged at a flat rate of 20%. A portion of the employer’s contribution may also be tax-free as a non-income travel expense if it covers accident risks on business trips.

Implementation and Administration

Implementing group personal accident insurance requires selecting an insurance provider and choosing an appropriate policy for the company’s workforce. Employers’ are responsible for collecting the premiums, typically via payroll, and paying the insurer each month. When employees make a claim, this is managed directly with the insurance provider.

Other Considerations

Employers should ensure that any policy provides comprehensive coverage, including scope for accidents that occur abroad. It is important to clearly communicate the terms and conditions of the policy, including any exclusions and limitations around illness.

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Workplace Loans

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Key Features – How Does It Work?

Employer loans (Arbeitgeberdarlehen) are contracts agreed between the employer and employee to borrow an amount of money. They offer financial support to employees on more favourable terms than standard bank loans. This operates as a contract alongside the employment contract. These loans are integrated with payroll systems with repayments taken directly from an employee’s salary.

Cost and Funding

Overall, offering employee loans can be a cost-neutral experience for employers as employers can set an interest rate that ensures any administrative costs are covered. The main impact is on an employer's cash flow while waiting for the loan to be repaid.

The cost to the employee is lower than what they are likely to receive from a traditional bank, resulting in cost savings over the term of the loan.

Taxation

For loans that exceed a total of €2,600 in a payroll period, the advantage that an employee receives from the lower-than-market interest rate is considered a benefit in kind and taxable as income. For loans that are less than €2,600, there is no benefit in kind calculation required. Similarly, if the loan is offered at the benchmark interest rate, there is no calculation required.

Implementation and Administration

Loan terms, duration, and amounts are all determined by the employer. An employer should have a clear policy on eligibility for loans, including if there are limited purposes for which money can be borrowed. HR teams typically handle the administration of loans, including receiving applications, facilitating employee enrolment, and managing payroll deductions.

Other Considerations

Companies may choose to offer loans that are less than the €2,600 amount to minimise tax administration.

Loan agreements should include a clear process for repayment if an employee leaves their job before the loan is fully repaid. This may involve deducting the outstanding balance from the employee’s final salary payment.

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Workplace Savings & Investment

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Key Features – How Does It Work?

The most popular form of workplace savings in Germany is capital-forming benefits (Vermögenswirksame Leistungen (VL)). These schemes allow employers to contribute towards an employee’s capital investment, a policy designed to encourage asset building. Employees choose where the amount is invested, with employers paying directly into the chosen investment. A set amount is then contributed to a limited access account each month. To benefit from the investment, these funds are locked for six years of contributions, followed by an additional seventh year of “rest”.

Cost and Funding

VL benefits can be employer- or employee-funded. The typical employer contribution is €40 per month, for a total of €480 per year. If employees choose to contribute, this is organised through payroll as a deduction from their net pay.

Taxation

VL benefits are considered a part of wages and subject to tax and social security contributions. Capital gains from these investments may also be taxable upon withdrawal of funds.

The government offers a savings bonus to encourage participation in the scheme. This amounts to an additional 20% for investment participation (on a maximum of €400) and an additional 9% for building society participation (on a maximum of €470) for those with an annual salary below €40,000. The employee applies for this bonus when lodging their annual tax return.

Implementation and Administration

Employers should partner with a third party provider to run the scheme. For participating employees, they must inform employers about their preferred investment option. It is best practice for employers to have a simple process to facilitate this selection. Contributions are then paid directly into the investment, with employee contributions deducted through payroll.

This benefit is normally prescribed as part of an industry collective agreement or within the contract of employment.

Other Considerations

Contracts for these investments are typically locked in for seven years. Employees should be made aware that they are not able to access their funds during this time.

Health

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Cancer Screening

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Key Features – How Does It Work?

In Germany, there are a number of statutory cancer screening programmes available based on age and gender. These are covered by health insurance.

In addition to the statutory offering, there are some private programmes which are available as an additional benefit under supplemental employer insurance (bKV). This allows employees to access early detection cancer testing. Depending on the level of insurance, if any abnormalities are found, the employee is redirected towards relevant care.

Cost and Funding

There is no additional cost to access care that is covered under statutory health funds. In the private market, the cost is typically on a per-employee basis. Employers may cover this cost or offer it as a voluntary employee-funded benefit.

Taxation

Health benefits that are focused on prevention of illness and promotion of health within companies are tax exempt for employees up to €600 per year.

Implementation and Administration

For screenings that are available through health insurance, employers play an important role in communicating with employees and encouraging them to access the service. If offering additional testing, employers should partner with a third party provider and inform employees of the enrolment process. Testing and results are managed directly between the provider and the employee.

Other Considerations

Employers should reassure employees of the confidentiality of their health data. They should ensure that they offer complementary services, such as mental health programmes and appropriate leave schemes, for employees that need support.

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Dental Insurance

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Key Features – How Does It Work?

Dental insurance (Zahnzusatzversicherung) is increasingly offered as an employee benefit in Germany as a supplement to the cover provided by statutory health insurance. This additional insurance covers co-payment and finances more expensive treatments, including cosmetic procedures.

Cost and Funding

The cost of a premium depends on the size and risk profile of the workforce. Employers can choose to fully fund dental insurance, share the cost with employees, or offer it as a voluntary benefit with employees covering the cost of premiums themselves.

Taxation

When paid for by the employer, dental insurance falls under the category of health benefits focused on illness prevention and health promotion within companies. These benefits are tax-exempt for employees up to €600 per year. If employee-funded, the premiums are tax deductible up to the maximum of €1,900 provided for insurances.

Implementation and Administration

Employers should partner with a provider that aligns with the company’s budget and employee needs. Premium contributions are typically managed through payroll, with employers responsible for paying the premiums to the insurance company. Once set up, claims are managed directly between the employee and the insurance company.

Other Considerations

When offering dental insurance, employers should assess the specific needs of their workforce, such as coverage for dependants, and whether the plan includes access to a wide network of dentists. It is important to communicate the details of the policy to employees, including what is covered and any exclusions or limits.

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Fitness Memberships

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Key Features – How Does It Work?

Fitness memberships involve partnering with a third party provider to give employees access to gym facilities. This may involve a direct partnership with a gym chain, or a provider that operates a network model, allowing employees to choose facilities and classes best suited to their lifestyle. Alternatively, some companies may operate a subsidy model through a wellbeing or similar budget.

Cost and Funding

The cost of a membership varies widely depending on the model chosen and the funding division between employer and employee. Individual fitness memberships are lower cost, whereas the network system is more costly. Some providers charge per membership, while others charge based on headcount. Employers should choose a provider that best aligns with their budget and workforce needs.

Taxation

If provided by the employer, fitness benefits fall under the €50 tax-free allowance for non-wage benefits. If operating a reimbursement or subsidy model, this would not qualify for the tax-free allowance as it is a cash benefit. If a fitness membership is paid for by the employee, the cost of the membership is taken from net pay.

Implementation and Administration

Employers should choose a provider based on the size and location of their workforce. Third party platforms handle member registration, onboarding, and ongoing access to facilities. This typically includes an online portal or app to book classes and access online resources.

Other Considerations

Employers should ensure that fitness programmes are inclusive, with options available in different locations and to different fitness levels.

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Mental Health Support

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Key Features – How Does It Work?

A mental health benefit may encompass a range of services designed to prevent and address mental health issues, including stress management programmes, counselling services, and mindfulness training. Employers typically provide this benefit through partnerships with third-party providers. Employees are granted access to an online platform or app where they can access support services.

Cost and Funding

A mental health benefit is typically covered by the employer for the support of the whole workforce. The cost of mental health support depends on the scope of the offer. More personalised services, such as one-on-one counselling, are more costly than a content library. Providers tend to operate a per-employee subscription model.

Taxation

Mental health funding is classified as a health benefit for illness prevention and health promotion. These benefits are tax-exempt for employees up to €600 per year.

Implementation and Administration

Implementing mental health support involves partnering with a provider. Employers should communicate the availability to employees and facilitate sign-up. Once connected to the platform, employees can access support and arrange any personalised services directly.

Other Considerations

Employers should ensure that mental health support is inclusive and accessible to all employees, regardless of their role or location. To foster a mental health-friendly workplace, companies should train managers to recognise signs of mental health challenges and encourage open conversations about mental health.

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Optical Care

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Key Features – How Does It Work?

A minimum level of vision care is covered under statutory insurance. Vision insurance, sometimes referred to as glasses insurance, can be purchased to supplement this cover. This additional insurance covers co-payments from statutory insurance, and covers additional expenses, such as glasses, contact lenses, and vision correction surgery. In Germany, this is normally purchased as private insurance by individuals rather than group cover by the employer.

Employers have a statutory obligation to offer health care for all employees whose role requires the use of a computer screen. While access to these appointments must be made available, the employee can choose whether to access the benefit. If such an assessment deems that glasses are required to use a computer, these must also be paid for by the employer.

Cost and Funding

While employers are required to cover the cost of computer glasses, this is normally limited to basic frames and lenses. This tends to cost between €100 to €150.

Taxation

The costs for providing glasses for the purposes of work are tax-deductible for the employer. They are tax-free for the employee if they are issued by a company doctor on the basis of an examination.

Implementation and Administration

Employers should have a process for employees to request an eye examination. This is most commonly done through a company doctor, or by referral to an ophthalmologist. Employees should request and arrange an appointment directly, with availability during working hours. The doctor should provide proper documentation that the employee needs computer glasses. Some companies have relationships with eyewear providers to facilitate the process, whereas others will operate on a reimbursement or subsidy basis.

Other Considerations

Employers should communicate any limits to the computer glass reimbursement. Companies offering flexible or remote work should extend this benefit to employees who work from home.

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Seasonal Vaccinations

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Key Features – How Does It Work?

In Germany, the flu vaccination is available under statutory health insurance for certain vulnerable groups. Employers may choose to offer vaccinations to their entire workforce. This can be done through the company doctor or through an external provider that visits the workplace.

Cost and Funding

The employer will typically fund flu vaccinations and cover associated fees. The company doctor can access vaccinations at cost price with a small overhead charge through pharmacies. This may be covered depending on the company’s health insurance. Billing can be organised through the Association of German Company and Factory Physicians (VDBW) or the German Society for Occupational and Environmental Medicine (DGAUM).

Taxation

Vaccinations fall under illness prevention and health promotion within companies, and their cost is tax-exempt for employees up to €600 per year.

Implementation and Administration

Flu vaccinations are sold in packs, so scheduling appointments in advance may help prevent waste. In most companies, the company doctor is able to administer the vaccine. Larger companies may prefer to arrange an external provider to administer doses.

Other Considerations

Employers should emphasise the voluntary nature of the vaccination. To maintain the privacy of medical records, only the company doctor should have access to appointment records. Employers should provide comprehensive information about the vaccination, including the benefits and the potential side effects. Any seasonal vaccination programme should be timed appropriately to ensure maximum effectiveness.

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Women's Health

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Key Features – How Does It Work?

In Germany, support for women’s health as a distinct employee benefit is gaining attention but remains rare. It typically takes the form of workplace training or tailored policies on topics such as menopause. This may be complemented by health insurance policies which offer above the statutory requirement for women’s health issues.

Cost and Funding

With this benefit offered at the company level, the cost is typically borne by the employer. Workplace training or policy consultations tend to be a one-off cost. Ongoing support through third-party platforms are more likely to operate on a subscription basis.

Taxation

The rules around taxation will depend on the benefit offered. If it is an individualised offering, it may be considered a taxable employee benefit.

Implementation and Administration

For many companies, implementing women’s health support starts with workplace training to help managers respond appropriately to employee needs. Policies around leave and remote working can also offer support. More advanced support includes partnering with third-party providers which have resources and information on these topics.

Other Considerations

As few companies offer women’s health as a separate benefit, it has become a key factor in employee attraction and retention.

Lifestyle

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Annual Leave Purchase Scheme

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Key Features – How Does It Work?

Annual leave purchase schemes (Urlaubstage kaufen oder verkaufen) are available for employees to either buy or sell days of leave. Payments for bought holidays are deducted from an employee’s salary and payment for sold holidays is added to an employee’s salary. These schemes provide flexibility to employees to adjust their leave entitlement to suit their needs and lifestyle.

Cost and Funding

The cost of purchasing additional leave is calculated based on the employees earnings for the equivalent days, with their annual salary reduced proportionally. For example, purchasing an additional five days of annual leave would result in the annual salary being deducted by one week of pay. Likewise, when selling leave, an employee’s salary is increased by the equivalent amount.

Taxation

Annual leave purchase schemes are considered salary adjustments rather than treated as a separate employee benefit. This means they follow income tax rules. An employee is taxed based on their adjusted salary after the amount for selling or buying is calculated.

Implementation and Administration

To implement a scheme, employers should set clear guidelines on the number of days an employee may buy or sell. Many companies choose to have an enrolment period where these requests can be made. Following enrolment, HR teams handle the administration, including adjusting payroll and processing payments. It is best practice to have the adjustment in a clear written agreement, which includes information on the renewed leave entitlement and salary.

If selling days, employees cannot drop below the statutory minimum of 20 leave days per year. If purchasing leave, their salary cannot be adjusted below the minimum wage.

Other Considerations

Employers should carefully manage the scheme to ensure it does not negatively affect business operations, particularly if many employees buy extra leave during busy periods. This scheme may not be available if employees are covered under a collective agreement.

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Car Leasing

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Key Features – How Does It Work?

In Germany, car leasing is available through salary conversion (Gehaltsumwandlung). Employers partner with a provider which offers a fleet of options. Employees choose their preferred vehicle and sign a leasing contract, typically between two to four years in duration. This bundle includes associated costs such as maintenance, insurance, and road tax. The cost of the lease is deducted from the employee’s salary each month. There are tax incentives for electric vehicles.

Cost and Funding

The salary conversion model, combined with group rates, makes leasing schemes much cheaper than the private market. The cost of a lease is borne by the employee, though some employers may choose to subsidise a part of the scheme as an additional benefit.

Taxation

The value of the car is added to income as a benefit in kind. This is calculated as 1% of the gross listed price, per month. For hybrid models, the rate is 0.5%, and for electric models, the rate is 0.25%. The lower percentage results in significant savings in tax and other social security. Additionally, for each kilometre driven, taxable income increases by 0.03% of the list price, regardless of car type.

Implementation and Administration

Employers should partner with a third-party provider that facilitates the administration for car leasing. HR and payroll teams manage salary deductions and employee enrolment in coordination with the leasing provider. Providers typically provide a platform or consistent communication resources so employees can track payments.

Other Considerations

Leasing contracts should clearly define expectations upon termination of employment. Any solution should not place an unreasonable burden on the employee.

Employers should consider charging infrastructure when offering a car leasing scheme. Providing access to charging points at work or offering home charging solutions can enhance the appeal of the scheme.

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Commuter Scheme

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Key Features – How Does It Work?

In Germany, the most common employee benefit for commuting is the Deutschlandticket. This ticket allows unlimited travel on public transport nationwide, including buses, trams, U-Bahn, S-Bahn, and regional trains. If this is not offered, the commuter allowance (Pendlerpauschale) allows employees to deduct travel expenses from their taxable income.

Cost and Funding

The Deutschlandticket has a Job-Ticket arrangement for employers. This system gives a 5% discount on the ticket if the employer contributes at least 25% of the cost, making it more affordable for employees. The issue price in 2025 is €58, making the discounted rate €55.10, and the maximum contribution for employees €40.60.

Taxation

The employer-paid portion of the Deutschlandticket is tax-free for employees.

Employees cannot benefit from both the Deutschlandticket and the commuter allowance simultaneously. If an employee receives a tax-free Deutschlandticket, they cannot claim the commuter allowance. Alternatively, they may choose a 25% flat tax rate on the Deutschlandticket and then claim the commuter allowance.

Implementation and Administration

Employers should set up an arrangement with Deutsche Bahn. Once an arrangement is set up, employees can book a ticket online through the bahn.de portal. The ticket is tied to the specific employee and must match their identification. The employee portion of the payment is debited directly, and the employer portion is charged per the contract.

Other Considerations

For the Job-Ticket scheme, companies must have a minimum of five participating employees. Employers should communicate the benefits of the ticket scheme, including the potential for private use and the environmental benefits.

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Cycle Scheme

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Key Features – How Does It Work?

In Germany, bicycle leasing (Dienstrad-Leasing) has become one of the most popular employee benefits. Employees can lease bikes through partner providers for commuting and personal use. The lease is typically funded through salary conversion (Gehaltsumwandlung).

Cost and Funding

Employer costs for setting up a leasing scheme are relatively low as administration is managed by third-party providers. Employees pay for the bike via salary conversion, with deductions from gross pay, leading to tax and social security savings.

Taxation

The value of the bike is added to an employee’s income as a benefit in kind. This is calculated as 0.25% of the gross listed price, per month. If the employer contributes to the scheme, this portion is tax-free for employees.

Implementation and Administration

To set up a cycle scheme, an employer should partner with a third-party provider. Administration of the scheme, including bike leases, is managed by the provider. HR and payroll teams are responsible for communicating the scheme to employees, enrolling participants, and managing the payroll deductions. Many providers offer online platforms to streamline the selection and approval process, making it easy for employees to browse bike options and track their salary conversion payments. At the end of the lease, employees may have the option to purchase the bike for a fraction of its retail price.

Other Considerations

Employers should promote the health and environmental benefits of the scheme to encourage participation. Offering additional support, such as providing on-site bike storage and shower facilities, can increase uptake and enhance the programme’s effectiveness.

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Employee Assistance Programme

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Key Features – How Does It Work?

EAPs (Mitarbeiterunterstützungsprogramme (MUPs)) are third-party services that offer 24/7 support for employees facing personal and professional challenges. Providers typically operate an online portal that has a variety of resources, including self-help guides and articles that support wellbeing. Employees can also access a helpline to speak with a qualified professional. It serves as a first point of contact, offering referrals to more specialised services, such as counselling, if needed.

Cost and Funding

In Germany, EAP services are typically funded by employers, with costs determined on a per employee per month basis. The pricing structure will depend on the company size and the scope of the services included.

Taxation

If the support is available to all employees for the purposes of promoting health and reducing the risk of illness, this is likely to fall under an income tax exemption for employees.

Implementation and Administration

Implementing an EAP requires partnering with a third-party provider. Employers should communicate the programme, including how to contact any support line, to employees. Administration is often managed via an online portal or app. Employees engage directly with the provider, ensuring privacy from the employer.

Other Considerations

Germany has traditionally focused on workplace-based health and mental health solutions. While EAPs are common in large multinational companies, they are less prevalent among local employers. Employers should ensure that an EAP complements any existing workplace-based support.

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Language Training

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Key Features – How Does It Work?

Language training has become an increasingly important benefit in a globalised market. The scope of providers means that there are options available for more intentional learning opportunities as well as casual engagement. Classes can be conducted in-house, at language schools, or online via platforms or apps.

Cost and Funding

The cost of language training varies widely depending on the format. In-person classes are the most expensive offer, while language learning apps are more affordable. Employers may also choose to offer this as a flexible benefit, with employees covering the cost.

Taxation

Language training that is in the employer’s interest and related to upskilling will not be subject to income tax. If it is for recreational purposes, this would be eligible for the €50 tax-free allowance under Sachbezug.

Implementation and Administration

Employers should choose a partner provider that fits their needs. For training-focused classes, this may include tailoring classes to corporate priorities. For casual language learning, employers can partner with a provider that offers app-based learning. Employers should consult with employees to properly understand interest and availability. If offering in-person classes, they should be scheduled during work hours when possible.

Other Considerations

Employers should create a supportive environment for language learning. This may include additional leave time or incentives to boost engagement.

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Long Service Award

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Key Features – How Does It Work?

In Germany, some companies offer a bonus as part of a service anniversary (Dienstjubiläum). This is often regulated by collective agreements. Companies are not obligated to offer a payment, but many choose to recognise long service. Eligibility for these bonuses is based on continuous tenure with a single company. The most common milestones are at 5-year frequencies beginning with 10 years.

Cost and Funding

Employers can choose the amount and frequency of the reward. This may be a set amount or based on a percentage of salary. For federal civil servants, the initial award is €350 after 25 years of service.

Taxation

When an anniversary award is offered as a cash bonus, this will constitute income for the employee and be subject to income tax and social security contributions. As a one-off amount, anniversary payments may be eligible for the “fifths rule” (Fünftelregelung) where the tax burden is spread evenly across five years. Employees can apply for this directly to the tax office when lodging their tax return.

Implementation and Administration

Companies should develop a clear policy on anniversary awards, including addressing how periods of leave are treated towards calculation. It should also detail the amount and frequency of anniversary awards. Employers may choose to offer awards in a different way, such as additional leave time. A clear policy helps employers budget for the additional expense while allowing employees to set expectations.

Other Considerations

Beyond financial benefits, anniversary awards offer an opportunity to reflect on loyalty and contribution. Best practice is to go beyond cash recognition and acknowledge employees across the company. With average tenure decreasing, employers may choose to reward employees at earlier milestones.

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Recognition Programme

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Key Features – How Does It Work?

Recognition programmes can take various forms, ranging from formal awards to informal recognition practices. In Germany, companies typically implement a mix of cash bonuses and gifts alongside public acknowledgement. This is increasingly administered through third-party platforms which facilitate recognition between employees.

Cost and Funding

Implementation costs include the direct expense of rewards and the administrative overhead (if using a provider). Employers have flexibility to set a recognition budget suited to their company and culture. Individual gifts and rewards can be small, or tiered up to higher offerings based on achievement level.

Taxation

Cash-based recognition bonuses constitute income for the employee and will be subject to income tax and social security contributions.

Gifts related to personal occasions like birthdays or weddings are exempt from tax up to €60, but this exemption does not extend to work-related achievements.

Implementation and Administration

Effective implementation involves clear communication about criteria for recognition, establishing transparent processes for nomination and selection, and ensuring all managers receive proper training on how to provide meaningful acknowledgment. This may be done through internal systems or by partnering with a platform which facilitates recognition. Platform providers typically handle most of the administration, including onboarding employees and maintaining the platform. Employers are responsible for communicating the benefit to employees and encouraging them to register and use the portal.

Other Considerations

Recognition platforms are only effective when widely used by employees. Companies should collaborate with staff to ensure any programme aligns with their goals. It must also be accessible and equitable for a diverse workforce.

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Retail Discounts

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Key Features – How Does It Work?

Retail discount benefits operate through digital platforms that give employees access to special pricing at retailers across Germany. Employees can use these platforms to purchase vouchers for use in stores or purchase items directly online. This can be used alongside offers under Sachbezug to ensure employees are maximising the €50 tax-free limit.

Cost and Funding

For employers, offering a retail discount scheme is a cost-effective benefit with high perceived value. Companies normally pay on a subscription basis, per employee per month. This can be scaled for larger companies, resulting in lower costs. Employees can then access savings with no cost to themselves.

Taxation

Discount portals are typically considered non-taxable benefits as they are designed to offer discounts rather than being a direct financial contribution from the employer. If the discount is an amount that would be offered to others, this is not considered additional income. When using a third-party platform, this will almost always be the case. There are more strict rules on discounts that are offered by companies on their own products.

Implementation and Administration

Employers should select a provider that suits their budget and has offers that are appropriate for their workforce. The employer can then direct the employee to the platform, with some providers offering integrated sign-on systems. Employees then access discounts directly through the provider platform.

Other Considerations

Employers should ensure the platform offers value to everyone, with deals across a range of categories, such as retail, travel, and entertainment. The offers should be diverse enough to appeal to different life stages, interests, and home locations. Adding local and industry-specific discounts can make the experience more relevant. Regular updates and promotions can keep employees engaged and aware of new discounts.

Leave & Remote Working

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Additional Leave

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Additional leave includes any paid or unpaid leave that is offered by employers for non-statutory purposes. Examples include company days, mental health days, volunteer leave, and birthday leave. These days typically stem from collective agreements or company policies.

Annual Leave

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Annual leave is paid time off work that all employees are entitled to, intended for personal activities.

In Germany, employees are entitled to 20 days of annual leave. It is common for employers to offer above this amount. Full entitlement to paid annual leave arises after six months of employment with a company. Generally, leave does not carry over into the next calendar year.

There are 9 nationwide public holidays that employees must receive as paid leave, in addition to annual leave provisions. Each state celebrates additional holidays, meaning most German employees receive between 10 and 14 days per year.

Carer's Leave

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Carer’s leave is paid or unpaid time off to provide personal care or support to a dependant.

Employees can be absent from work to attend an urgent care situation for up to 10 working days. The provision is designed for acute situations, meaning there is no required notice period to apply for such leave. This leave is unpaid, though employees can apply for a wage replacement benefit in the form of a care support allowance (Pflegeunterstützungsgeld). This is normally paid from long-term care insurance or the health insurance of the person requiring care. Some employers choose to offer paid leave during this time as an additional employee benefit.

Childcare Leave

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Childcare leave is paid time off to care for a child.

In Germany, employees are entitled to up to 15 days of child sick days (Kinderkrankentagen) per child up to the age of 12. This increases to 30 days for a single parent. This leave is unpaid, though employees can apply for a child sickness benefit (Kinderkrankengeld) via their health insurance company to cover their loss of wages.

Compassionate & Bereavement Leave

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Compassionate and bereavement leave is time off work for personal loss or other family emergencies.

There are no statutory regulations regarding compassionate and bereavement leave. However, civil servants are covered by a public service collective agreement and, in many cases, this is an additional employee benefit. The leave can range between 1 to 3 days, depending on the relationship between the employee and the death.

Flexible Working

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Flexible working means finding a way of working that suits an employee’s needs. This may include having flexible start and finish times, or working from home. Some examples of flexible working include job sharing, remote working, hybrid working, part time hours, compressed hours, flexitime, or staggered hours.

Germany has laws to encourage and protect flexible working arrangements, including part-time work and fixed-term contracts. This includes a right to request part-time hours after six months of work. Approximately 30% of Germany’s workforce are part-time, and 50% have some degree of flexibility around their working hours.

Long Service Leave

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Long service leave refers to extended paid or unpaid leave that is offered as a benefit for long-term employees. It may also be referred to as tenure leave or a sabbatical.

There is no statutory long service leave in Germany. Additional leave is a common benefit granted as part of a service anniversary (Dienstjubiläum). It tends to take the form of extended unpaid leave or additional short-term paid leave.

Maternity Leave

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Maternity leave is paid time off for mothers before and after childbirth.

In Germany, maternity leave (Mutterschutzfrist) usually begins 6 weeks before the expected due date and ends 8 weeks after the birth, extended to 12 weeks in case of a premature or multiple births. Maternity pay (Mutterschaftsgeld) for this period is covered by statutory health insurance, up to €13 per day. Any additional amount is covered by the employer.

Paternity Leave

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Paternity leave is paid time off for fathers after childbirth.

There is no statutory right paternity leave in Germany, though fathers can access parental leave. Some companies, particularly larger multinational companies, may choose to offer paternity leave as an employee benefit.

Remote Working

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Remote working policies provide employees with the flexibility to work from locations outside of the office, typically from their own homes. While these arrangements can fall within the definition of flexible working requests, many employers have begun to offer remote working as a standard practice.

A quarter of German workers have some form of remote working arrangement. This is most prevalent in industries where the majority of work is done at a desk.

Parental Leave

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Parental leave is a statutory leave entitlement that is available to all new parents in addition to traditional maternity and paternity leave policies. It is a single entitlement that is designed to be shared between caregivers.

After the period of maternity leave, parents can take up to three years of unpaid parental leave. This can be taken by either parent, separately or together. During this time, there is government support in the form of a parental allowance (Elterngeld) which lasts up to 14 months between the two parents.

Sick Leave

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Sick leave is time off for employees to recover from illness.

German employees receive up to 6 weeks of paid sick leave per year, paid for by the employer at the employee’s regular salary. A medical certificate is required after 3 days of continuous illness. After these 6 weeks, if the employee is still unfit to work, they are eligible for payments through statutory health insurance.

Special Leave

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Special leave is statutory leave for special occasions. This varies between countries based on social and cultural norms.

In Germany, employees are entitled to a temporary, paid leave of absence if it is for a short period for a reason outside of their control. This general allowance may include leave for the birth of a child, or death or illness of close relatives. Employers will tend to have clear policies on what will be covered.

Spending Allowances

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Commuter Allowance

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A commuter allowance is a benefit designed to offset employees’ daily travel costs between home and work, covering expenses such as public transport fares, fuel, parking, or ride-sharing services. This allowance helps ease the financial burden of commuting.

The German commuter allowance (Pendlerpauschale) allows employees to deduct travel expenses from their taxable income. Employees can deduct €0.30 per kilometre for the first 20km and €0.38 per kilometre thereafter.

Holiday Allowance

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A holiday allowance provides financial assistance for holiday-related costs, covering expenses such as travel, accommodation, and recreational activities. This benefit is often linked to paid leave to support employees in taking well-deserved breaks.

In Germany, holiday pay (Urlaubsgeld) is common under collective agreements, with many employers on the private market choosing to offer it as an additional employee benefit. The amount is normally a set amount.

Learning & Development Allowance

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A learning and development allowance is a budget to support employees’ professional growth and skills development. It can be used for training courses, workshops, certifications, or other educational opportunities that enhance the employee’s knowledge and abilities. This is sometimes complemented by additional leave days to support further education.

In Germany, learning and development allowances are becoming increasingly common among larger companies that are competing for talent. This is normally offered as an annual allowance with employees choosing how to spend it.

Meal Allowance

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A meal allowance is a payment or subsidy for meals that are eaten at work. This may take the form of a voucher, prepaid card, or reimbursement.

In Germany, a meal allowance (Verpflegungszuschuss) is a tax-advantaged benefit provided by employers. Employers give a set daily amount to employees to purchase a meal during their work hours. This can be done through a company canteen, vouchers, or on a prepaid card. It must not be redeemable for cash and should be limited in a way to ensure employees are purchasing food. In 2025, the total tax-advantaged amount is €7.23 per person.

Work from Home Allowance

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A work from home allowance is a budget which allows employees to buy equipment for their working from home set up. This tends to be offered by employers that operate a hybrid working policy. Employees can use this allowance for items such as desk, chairs, and display equipment.

In Germany, the most widespread form of this allowance is the Home Office Lump Sum. Employees are entitled to claim €6 for each day that they work from home as a deduction, to a limit of €1,260 per year. This is applied for when an employee lodges their tax return with the tax office.

Some employers additionally offer monthly subsidies to cover costs associated with working from home, such as internet and phone.