Brief definition
The Social security is the statutory social security system in Germany. It protects employees in case of illness, need for care, unemployment, old age, and work accidents.
For payroll, social security is of central importance, as employers calculate, withhold, and remit contributions to the competent authorities.
The five branches of social insurance
- Statutory Health Insurance (GKV)
- Social Care Insurance
- Statutory Pension Insurance
- Unemployment insurance
- Statutory accident insurance
These branches are organised independently and regulated by law. They pursue different security objectives, but together they form the system of social insurance.
Financing
Social security is primarily financed through contributions. In health, long-term care, pension, and unemployment insurance, the contributions are generally borne jointly by employers and employees.
The statutory accident insurance is usually financed exclusively by the employer.
Meaning in payroll
In payroll, social security contributions are calculated based on the creditable earnings. The contributions are withheld by the employer and remitted together with the employer's share.
The correct classification of employment relationships, contribution groups, and remuneration components is crucial for proper payroll accounting.
Conclusion
Social security forms the central system of social protection in Germany. For companies, it is an essential part of payroll accounting and requires precise and up-to-date implementation of legal requirements.
Brasser Accounting Solutions GmbH is a specialised accounting service provider and part of a corporate group with Quint GmbH (tax consultancy/auditing) and Service Place Årjäng AB (Swedish tax office). BAS exclusively performs services according to § 6 No. 3 and 4 StBerG and does not provide tax or legal advice.
