Spotlight on Germany – A guide to implementing employee benefits technology

The next stop on our global benefits tour is Germany. This is another country that’s popular with Benefex customers who are rolling out global benefits programmes.

State provision is comprehensive, so German benefits tend to be limited in range and number, with core benefits such as pension, health Insurance and life/accident cover all state-mandated.

Employers in Germany usually provide employees with information on their fixed core benefits provision, as well as offering some additional online benefits, where employees can choose to flex or add to their existing provision. For example, they can update cover and add dependants (sometimes at their own expense).

A brief overview of German benefits

Employers typically provide pension, medical insurance, and life cover as core benefits.

Healthcare

• Healthcare in Germany is funded by statutory contributions, ensuring free access for all residents
• Employees can also take out private health insurance (Private Krankenversicherung or PKV) to replace or top up state cover at their own expense
• Employer provision of private medical insurance is very low in Germany

Pension

• In addition to state-mandated pension provision, employers must offer optional occupational pension plans to employees; these have tax efficiencies
• Employees can make additional pension contributions

Other benefits

With flexible and voluntary benefits, employees can select the benefits most relevant to them and often benefit from salary sacrifice or employer contributions. Typical flexible benefits include:

• Health assessments
• Kindergarten allowances
• Cycle schemes

Lunch vouchers

Where there are no subsidised catering facilities, lunch vouchers are usually provided through paper vouchers, monetary refunds or prepaid cards. At present, employees can receive a maximum of €7.23 per lunch voucher/meal. Of this, the employer pays €3.10 tax free, and the employee must pay the remaining €4.13 to be exempt from tax and social security contributions.

Car allowances

Car allowances typically include electric vehicles as organisations look to align their benefits provision with their corporate ESG goals and values; and support employees to make greener choices.

Wellness allowances

These are beginning to replace gym or sports membership and often have wider parameters in terms of what they can be used for, including online classes. These are usually tax free up to €600 if they can be shown to contribute to the health and wellbeing of the employee.

Three considerations for a benefits rollout in Germany

1. Local language

Organisations often prefer to communicate with their employees in German. Providing information in the local language means that the details of benefits are more easily understandable and makes the platform more appealing to employees.

2. Union influence

Unions and Work Councils heavily influence benefits in Germany. Any changes to benefits or the introduction of a platform must be agreed with them.

3. Administration

Without automation, administering benefits can be very resource intensive. A global benefits platform is essential for things like allowing employees to select their supplementary pension contributions and change contributions at any time.

Looking to the future

With employee expectations continuing to increase, and a growing demand for more flexibility and choice, core benefits such as life and accident present an opportunity for employers to offer flex cover. We are also seeing an increase in voluntary benefits that offer personalised options for individual employees’ situation and life stage.

Going global with benefits

Wherever your people are located, an exceptional employee benefits experience is foundational to your ability to attract and motivate the very best people; 79% of international employees are demanding more choice in benefits. Take a look at our Going global with benefits guide where we explore the benefits landscape in 12 key countries