6. April 2020

SI legal requirements

Introduction of social insurance law

The ” Act on the Social Protection of Flexible Working Time Regulations“ of 6 April 1998 (Civil law code I 1998, p. 688) introduced a provision according to which, even during periods of leave, employment for remuneration exists under certain conditions, even if there is no intention to continue further cooperation between the contracting parties after expiry of the period of leave. This ensured that both interruptions in working life (e.g. “sabbatical year”) and leisure phases, in particular at the end of working life, are regarded as periods of employment under social security law. Due to the new provision of § 7 para. 1a sentence 1 SGB (social security statute book) IV introduced at that time, employment existed (and continues to exist) even without actual performance of work, if the release takes place on the basis of a written agreement and pay is due in the release phase which is achieved with work performed before or after the release phase (credit balance).

The new version of Section 7 (1a) SGB IV, which has been in force since January 1, 2009 by the ” Act to Improve the Framework Conditions for the Safeguarding of Flexible Working Time Regulations and to Amend Other Acts” (“Flexi-G II”/BGBl. I 2008, p. 2940), also adheres to this “mandatory fiction of employment” described above. In the aforementioned standardisation, the legislator makes it clear that in the common provisions for social insurance in Social Code Book IV only those working time credits can be recorded which would normally trigger an immediate contribution of the underlying contributions to the responsible social insurance institutions. However, contrary to this “actual” provision, the payment of the respective total social insurance contribution is linked to the payment of the remuneration from the credit balance at a later point in time (possibly within the framework of a so-called exemption phase).

Requirements of “Flexi-G II” for the formation of credit balances in the context of working time account models

The “Flexi-G II” also stipulates that under certain conditions an employment for remuneration also exists during periods of leave. This means that both interruptions to working life (e.g. a “sabbatical year”) and periods of leave, particularly at the end of working life, are covered by social insurance. The accumulation of credit balances required in this context can, however, only take place if a so-called “credit balance agreement” has been concluded between the parties to the employment contract in conformity with the law.

The prerequisites for the existence of a legally effective credit agreement pursuant to § 7b SGB IV are met in detail if

  • the accumulation of the value credit takes place on the basis of a written agreement,
  • this agreement does not pursue the objective of flexible organisation of working time on working days or weeks or of balancing production and working time cycles in undertakings,
  • the amount of the remuneration is transferred to the credit balance in order to withdraw it for periods of release from work or reduction of the contractually agreed working time,
  • the remuneration due from the credit balance is achieved with work performed before or after the release from work or the reduction of the contractually agreed working time,
  • and the total pay due exceeds € 400 per month, unless the employment was carried out as minor employment before the leave.