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Parental Allowance - new regulations from 01.09.2021

05.10.2020

The Federal Ministry for Family Affairs, Senior Citizens, Women and Youth under Dr. Franziska Giffey introduced a draft law in the Federal Cabinet on September 16, 2020, which was passed on the same day. This article is dedicated to the contents of the bill and its implications for parents.

The regulations on parental allowance can be very complicated. Get professional advice. Here you can access our parental benefit advice service.

When do the new regulations apply?

The changes will only apply to parents whose children are born on/after September 01, 2021. The reason for this is that legislation and implementation/training in the authorities takes time before the changes can come into effect.

Due to the fact that this is currently still a draft law, individual regulations can still be changed. This article examines the draft law that was passed by the Federal Cabinet on September 16, 2020.

Note:
Parents whose children were born before September 01, 2021, are not affected by the new regulations. There is no option between the two legal situations.

new maximum working time of 32 hours per week

A basic condition for the reference period among other things is, that parents does not pursue a full gainful employment during the reference period. This was fulfilled so far, if parents were not employed more than 30 hours per week in the life month average.

By the law change this border is to be increased now to 32 weekly hours in the life month average. Reason for this is mainly an extended flexibility of the gainful employment during the reference period, because thereby now also a 4-day week becomes possible.

Introduction of a "premature month"

The new regulation in § 4 exp. 5 sentence 1 and sentence 2 BEEG standardizes a new legal right of parents to one further basic parental allowance month or to two further Parental AllowancePlus months, provided that the child concerned was born at least six weeks before the expected date of delivery. For the calculation the expected day of delivery is decisive, as it results from the medical certificate or the certificate of a midwife or a male midwife or a male midwife nurse analogous to § 3 paragraph 1 sentence 3 of the Maternity Protection Act.

Example:
expected date of delivery on 28.12.2021 / birth on 15.11.2021

The parents can apply in this case together 15 months basis parents money, the maximum division amounts to 13-2. A basis parents money purchase in the 15th life month becomes thereby possible.

Note:
Due to the birth of a child well before the calculated date, the maternity leave is usually extended. Mothers who receive maternity benefits in these cases (e.g. from their health insurance, employer, etc.) must apply for basic parental benefits for all months of the child's life during which they receive maternity benefits. The maternity allowance is deducted from the basic parental allowance.

Example:
expected date of delivery on 28.12.2021 / birth on 15.11.2021

The maternity protection of the legally compulsorily insured, employed mother lasts in this case until 21.03.2022 inclusive (provided that the premature baby weighed less than 2,500g).

Thus the mother receives maternity benefits until the 5th month of life (=15.03.2022 to 14.04.2022). This means that she has to choose basic parental allowance from her maximum 13 possible basic parental allowance months at least in the first five months of her life and may not receive any parental allowance for this time, since the maternity allowance is usually higher than the basic parental allowance.

Note:
Correctly in the bill due to the "premature month" also the excluding facts was extended in the law draft that in the cases concerned now also calendar months of the 15th life month are excludingable, if for older brother and sister children (which were "premature") parents allowance up to the 15th life month was referred, see § 2b exp. 1 sentence 2 No. 1 n.F.

The new partnership bonus months

One of the most media-effective suggestions for change concerns the partnership bonus months. That a change is necessary here is also shown by the parental allowance statistics, because in 2019 only 1.85% of the parents applied for the partnership bonus months 1.

In order to increase the attractiveness of the partnership bonus months, the German government intends to make the following changes:

Parents who now wish to apply for the partnership bonus months must

  • for at least 2, maximum 4 consecutive months of life
  • parallel (both parents at the same time)
  • have at least 24 and at most 32 hours per week as a life-month average of part-time employment.

Who fulfills these conditions, receives per life month of the bonus further Parental AllowancePlus months in addition.

Besides it is to be considered in the law that if later admits becomes that in one of the life months the conditions were not present, no more the entire bonus is not to be void, but only for the month concerned the Parental AllowancePlus must be paid back. Possibly thereby developing gaps in the parents money purchase remain then also for a following parents money purchase irrelevant.

Personal opinion:
The law change goes a step into the correct direction. Nevertheless, the regulations around the partnership bonus are still much too complex. By the treatment as Parental AllowancePlus months and not as independent reference kind develops still large error potential, which concerns the expectation over the height of the bonus. Besides the bonus is up-to-date still financially not really lucrative, because with a part-time income of 24 hours the Parental AllowancePlus is usually already substantially shortened. In particular parents, who refer the maximum amount of the parents allowance, remain by the cover of the prenatal parents money net with 2.770€ disadvantaged.

A spin-off of the bonus as an independent type of benefit with a higher minimum amount and a lifting of the "maximum amount cap" would be our recommendation to make the partnership bonus more lucrative. On the other hand, the exception that the subsequent elimination of the requirements does not lead to the complete loss of the bonus is very positive for the parents.

Waiver of the exclusion of non-independent

Employed parents, who stand by the obligation exclusion worse with the parents allowance there, than without the exclusion may do according to the law proposal again without the exclusion facts. This was already possible until the beginning of 2018 and was changed because of a change in the constant Federal Social Court jurisdiction to the disadvantage of parents.

The suggestion is to be welcomed, although it makes the parental allowance law somewhat more complicated, because more comparison calculations should be accomplished thereby.

Example:
Start of maternity leave 31.12.2021 / birth on 08.02.2022
The calendar months (December 2021 and January 2022) of the maternity protection of the legally compulsorily insured, employed mother would be excluded after old compellingly. Assuming that the mother's gross income relevant for parental allowance was €3,000 per month from December 2019 to June 2020. In July, the mother received a salary increase to 3,250€. Now she receives in December 2020 proportionately 3.145€ parental relevant gross income of 3.145€ (30/31).

If she renounces the exclusion of the calendar month December 2020, she receives a higher parental allowance. This effect is even more significant if the income would have been significantly lower at the beginning of the assessment period (e.g. if the mother was still a student or trainee).

Employed parents should therefore always check whether it would make more sense for them to waive any exclusion from the calculation period.

The regulations on parental allowance can be very complicated. Get professional advice. Here you can access our parental benefit advice service.

Favourable check for parents with mixed income should be introduced

Parents, who are employed and in "small extent" gain incomes by a side business, are to be able to select after the bill whether they would like to be treated for the computation of the parental allowance as excluding employees or as independent ones.

The following conditions must be fulfilled for this preferential treatment:

  • The income (= the profit) from self-employment, trade or agriculture and forestry in the calendar year before the birth and
  • in the calendar months of the year of birth until the birth

no more than 35€ per month (average, that is 410€ per calendar year).

Example:
birth on 08.10.2022 - mother is employed and self-employed

Normally their assessment period would be the calendar year 2021, but now the profit from self-employment in 2021 was "only" 400€ and in the period January to September 2022 "only" 200€.
The mother can now choose whether she chooses the calendar year 2021 (January to December 2021) or the 12-month period before the start of maternity leave or before the birth (i.e. October 2021 to September 2022) as the assessment period.

If she chooses the former variant, the employee income from January to December 2021 and the €400 profit in the calculation of parental allowance count. However, if she chooses the 12-month period before the birth, only her employee income counts. The independent incomes are so to speak ignored.

The parents concerned should thus examine in each case, which variant the higher parental allowance brings with itself.

Personal opinion:
We welcome the new favorable examination explicitly, because thereby many parents will obtain a higher parental allowance. Nevertheless the law change is an enormous complication of the parental allowance law. Parents will not be able without detailed consultation and concrete computation alone to determine the calculation period best for itself. The limit of 35€ on average per month does not go us beyond that also not far enough. It is comprehensible that one orients oneself at the fiscal harmlessness border, however in the sense of parents the border should be increased.

Problems we see in the fact that the conditions can be proven already finally by provisional profit determinations, even if in the later tax assessment a deviating result is met (§ 2b exp. 4 S. 4 n.F.). The administrative simplification is obvious, but the doors are open to manipulation. Conversely, later changes to assessments will probably not be possible if parents assumed that they were above the limit, but fall below the limit with the year-end postings. To what extent a change is then still possible is not yet clear from the law, and the restriction regulation suggests that a correction of the parental allowance should no longer be made. What on the one hand is supposed to give parents legal security, on the other hand gives a considerable amount of legal uncertainty.

In addition, it is not comprehensible to us why vertical loss compensation should be possible. For example, negative income from a business enterprise should be able to be offset against positive income from self-employment or from agriculture and forestry to get below the limit of 410€. Since there is no vertical loss compensation otherwise also in the parents money right, this represents in our opinion a system break and results in the consequence logic errors in the parents money right.

So here all parents, especially those with several types of income and losses in individual companies, will have to check carefully and precisely which assessment period is the best for them.

Reduction of the reference months with Parental AllowancePlus

What the media did not take up at all around the law novella, is the now legal limitation of the parents money purchase up to 32. life month of the child.

So far parents can receive parental allowance up to maximally 46. life month, this however only if they begin only starting from life month 15 and apply for the partnership bonus months.

In the completely again seized § 4 BEEG, here in the paragraph 1 sentence 4 explicitly a maximum reference period for Parental AllowancePlus is introduced, which can be in our opinion a disadvantage for parents, although the actual cases, in which parents so long parental allowance refer, will be quite visible.

Personal opinion:
The law change represents a substantial degradation of the parents allowance. We ask ourselves whether this is an editorial mistake.

Facilitation with obligations to provide evidence

The new Section 8 (3) Sentence 1 No. 4 BEEG (new version) is intended to regulate that subsequent proof of the amount of working time worked during the reference period need not be submitted subsequently.

The main reason is that the parents have an obligation to notify under Section 68 No. 15 in conjunction with Section 60 (1) sentence 1 No. 2 of Book One of the German Social Security Code anyway, which means that there is no need for a separate, subsequent check. Anyone who violates his or her duty of notification must in any case expect the corresponding consequences, which may be illegal.

According to all this, the draft serves to streamline the law, the formal requirements for parental allowance and the preparation of a completely digital application system for parental allowance.

Parents with above average income

According to current law, the taxable income in the calendar year preceding the birth of the child may not exceed €500,000 for parent couples. This limit is to be reduced to 300.00€ in the current amendment. The Ministry of Family Affairs explains in the draft that the limit would be just under ten times the average taxable income of taxpayers with positive income. With such a high taxable income it can be assumed that parental allowance is irrelevant for the decision to what extent gainful employment should be waived in favor of the care of the child. Before this background a reduction of the border amount for pairs with a common parents money requirement is appropriate.

Other

Many other changes were made, but their content was not law changing, but editorially clarifying.

The following points are not taken into account in the current draft and we still consider them to be centrally in need of improvement:

  • Increase of the minimum and maximum amounts, at least by the inflation rate since 2007
  • Expansion of exclusion and postponement criteria (inclusion of pure parental leave months, months with unindebted losses of earnings - in addition to Covid-19-based losses of earnings)
  • Partnership bonus months as an independent subscription type
  • further favorable examinations with the choice of the calculation period
  • Non-deduction of fictitious social insurance contributions from actual social insurance-free income from parents with mixed income
  • Consideration of other and one-off payments for salaried employees
  • Bonification of Parental AllowancePlus (who goes for a longer Parental AllowancePlus reference, should get "extra months")

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1 Source: Federal Statistical Office, parental benefit payments by federal states, annual results, 2019 (https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Soziales/Elterngeld/Tabellen/liste-leistungsbezuege-elterngeld-jahre.html) - Status: 01.10.2020

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