FAQ

Yes, unless Section 616 of the German Civil Code (BGB) has been expressly excluded or limited in the employment contract or collective bargaining agreement, there is an entitlement to paid leave for a relatively short period to care for a sick child – even without a specific provision in the employment contract.

Legal situation at a glance:

• Employees have a right to leave from work to care for a sick child.
• Paid leave is based on Section 616 of the German Civil Code (BGB):
  • personal reason for absence, e.g., caring for a sick child,
  • through no fault of the employee,
  • for a “relatively short period of time” (in practice: approximately 3 days to 2 weeks, often up to 5 days as a guideline).

• Section 616 of the German Civil Code (BGB) can be contractually excluded or reduced. Only if such an exclusion exists is no payment required.
• If Section 616 of the German Civil Code (BGB) is not excluded, the entitlement to remuneration for this short period remains, even if the contract makes no mention of child illness/childcare.
• Important for payroll handling:

If Section 616 of the German Civil Code (BGB) applies: continued payment of wages by the employer, no child care sickness benefit for these days.

If Section 616 of the German Civil Code (BGB) does not apply: unpaid leave according to Section 45 of the German Social Code, Book V (SGB V), possibly child care sickness benefit from the health insurance fund.

At first glance, it may seem contradictory that businesses employing only men are also required to participate in the U2 scheme. In fact, this is precisely what the law provides. The U2 levy does not depend on the current composition of a company’s workforce, but on its status as an employer.

Legal framework

All employers participate in the U2 scheme, regardless of the size of the business and regardless of whether they employ women or not. The levy is calculated on the pension-insurable remuneration of all employees. This expressly includes the remuneration of male employees.

As a result, the obligation to pay the levy does not cease simply because a business currently employs only men. Even male-only businesses are included in the U2 scheme. This approach has long been recognised under German case law.

Why the system works this way

The U2 levy is not an additional charge for businesses employing women. Rather, it is part of a solidarity-based compensation system. The legislator’s objective is to ensure that the financial burden arising from maternity protection is not borne by individual employers or sectors alone, but distributed across all employers.

This is intended to prevent businesses with a higher proportion of female employees from being placed at a structural disadvantage. Maternity protection is not a private burden of certain employers; it is a responsibility of society as a whole. That is precisely why employers are included in the system even if they currently employ only men.

There is also a practical reason for this approach: the composition of a workforce is never fixed. A company that employs only men today may hire women tomorrow. The protective mechanism of the U2 scheme is therefore designed to apply from the outset. The obligation to participate arises with the first employment relationship, not with the first maternity case.

Practical implications for HR

There is no exemption from the U2 levy simply because a business has an all-male workforce. Participation is mandatory.

From an HR and business perspective, the U2 levy is best understood as a solidarity-based insurance mechanism: employers pay a comparatively small ongoing levy and, in return, are entitled to reimbursement in the event of maternity-related expenses. This applies regardless of whether the business has traditionally been seen as a male-dominated workplace.

Conclusion

Male-only businesses are also required to participate in the U2 scheme. This is not a contradiction in the law, but a direct expression of the solidarity principle. The costs associated with maternity protection are not intended to fall on individual employers alone, but to be shared reliably across all employers.

• Starting January 1, 2026, the Active Pension will take effect: Anyone who has reached the statutory standard retirement age (generally 67 years old, including a transitional provision for those born in or before 1963) may, as an employee subject to social insurance contributions, earn up to 2,000 EUR per month (24,000 EUR annually) tax-free.
• The tax-free monthly amount cannot be carried over to other months if it is not fully utilized.
• The tax exemption applies starting the month after reaching the standard retirement age.
• The income remains subject to social security contributions: contributions to health and long-term care insurance must still be paid. Pension contributions may be made on a voluntary basis.
• Earnings exceeding 2,000 EUR per month are subject to regular taxation.
• The active pension applies only to income from employment and only within a single employment relationship. It does not apply to mini-jobs, self-employed individuals, freelancers, farmers, foresters, or civil servants.
• The tax benefit is granted in addition to the basic allowance and is not subject to the progression clause.
• If an individual has multiple employment relationships, the allowance may only be used in one employment relationship. In tax class VI, written confirmation from the employee is required stating that the tax exemption is not already being applied in another employment relationship.
• The Active Pension does not affect the tax rate on other income. Old-age pensions that have already been paid out continue to be taxed as before.

The company must register a French permanent establishment and pay income tax (“Prélèvement à la source”) and social security contributions to the French authorities. FRADECO takes care of all these obligations as part of its client services.

Special rules apply to intra-Community services: services provided to French companies are usually tax-exempt under the reverse charge procedure, while services provided to private individuals in France are subject to TVA. FRADECO prepares and submits the relevant VAT/TVA returns for both countries.