Work, social security and taxes
Arbeit, Soziales und Steuern
After this guide, you will understand the social market economy, social insurance and who pays for it, employee rights in case of dismissal, and what to do with problems about taxes and faulty goods.
The economy and work
The way a country organises its economy is called its economic system (Wirtschaftsform). In Germany it is the social market economy (soziale Marktwirtschaft). Prices and production are mostly decided by supply and demand (Angebot und Nachfrage).
The state does not leave everything to the market. It makes sure there is a social balance (sozialen Ausgleich), for example through social insurance, so that weaker people are not left behind. This is different from a planned economy (Planwirtschaft), where the state plans and controls everything.
Most working people in Germany are employees (Arbeitnehmer): they are employed by a company or by a public authority (Behörde). Only a smaller number are self-employed.
The best chance of a well-paid job belongs to people who are well trained (gut ausgebildet). Religion, gender or party membership do not give the best chances. Because the skills needed for jobs change very quickly, adults must keep learning after their training is finished.
If you look for a place to learn a trade, the career information centre (Berufsinformationszentrum) (BIZ) of the Federal Employment Agency (Bundesagentur für Arbeit) helps you find an apprenticeship place (Lehrstelle).
Social insurance
Social insurance (Sozialversicherung) protects people from the big risks in life, such as illness, job loss, old age or the need for care. This gives people social security (soziale Sicherheit). One example is health insurance (Krankenversicherung).
Statutory social insurance includes pension, unemployment, health, accident and long-term care insurance (Pflegeversicherung). Pension, unemployment and care insurance all belong to social insurance.
- Pension insurance (Rentenversicherung): a pension in old age.
- Unemployment insurance (Arbeitslosenversicherung): support when a person loses a job.
- Long-term care insurance (Pflegeversicherung): support when a person needs care.
Private policies such as life insurance (Lebensversicherung), car insurance, building insurance or personal liability insurance (Haftpflichtversicherung) are not part of statutory social insurance.
Employees in permanent employment (fest angestellt) pay into social insurance automatically. This money is called social contributions (Sozialabgaben), and it is how the state finances social insurance. Both employers (Arbeitgeber) and employees (Arbeitnehmer) pay, not just one side.
Employee rights
A trade union (Gewerkschaft) is an organisation that represents the interests of employees. It does not represent companies, the self-employed, young people or pensioners. Inside a company, the works council (Betriebsrat) helps employees when they have problems with their employer.
If you want to end your own employment, you must observe the notice period (Kündigungsfrist). This is the time between giving notice and the day the job really ends.
Not every reason for dismissal is allowed. Women who are pregnant or have just had a baby are specially protected: having a child, when the boss knows about it, must not be a reason for dismissal (Kündigung). Other reasons, such as repeated lateness or private business during working hours, are not excluded in this way.
If you are dismissed unfairly, you can file a protection against dismissal lawsuit (Kündigungsschutzklage). It is heard by the labour court (Arbeitsgericht). The labour court is the place for disputes about unjustified dismissal, not for disputes with neighbours, traffic accidents or the extra costs of a rental flat.
Taxes and consumer rights
Employees pay wage tax (Lohnsteuer) and contributions to pension, health and unemployment insurance directly from their salary. Value-added tax (Umsatzsteuer) is different: it is the tax you pay when you buy things, and it is not deducted from an employee's salary.
Germany has a church tax (Kirchensteuer) that is tied to income tax and wage tax. For this reason you must state in your tax return (Steuererklärung) whether you belong to a church or not.
If you do not agree with a tax assessment (Steuerbescheid) that you think is wrong, you must not ignore it. You must file an objection (Einspruch einlegen).
If you buy a defective item, for example a television that does not work, you have the right to complain about the goods (reklamieren). You tell the seller about the defect. You do not swap the item on your own without asking, and you do not go to the police.