An increasing number of companies employ temporary workers. This provides students with the opportunity to earn some money, and companies can avoid staff shortages during holiday periods. However, several legal and tax aspects must be considered.
Temporary Workers in Times of Skilled Labor Shortage
Staffing levels are tight in many companies. It is becoming increasingly difficult to find suitable skilled workers, leading to a high workload for employees. When holiday periods are approaching, and perhaps employees are also absent due to illness, companies must consider how operations can be maintained.
One option is to assign simpler tasks and work to temporary staff. During holiday periods, many students are looking for an opportunity to earn some extra money. This creates a win-win situation for both parties. However, companies must consider both legal and tax specificities when employing temporary workers:
Age of Temporary Workers
Generally, the temporary worker must be at least 15 years old. Although in exceptional cases, with parental consent, children between 13 and 15 years old can be employed, ‘provided the employment is light and suitable for children’ (e.g., simple errands). However, children may not be employed for more than two hours daily (in agricultural family businesses, not more than three hours daily), not between 6 PM and 8 AM, not before school, and not during school hours (cf. § 5 Youth Employment Protection Act).
Important: Minor temporary workers require parental consent. Companies must therefore ensure to verify the age of the temporary worker and obtain a declaration of consent from parents for minors. Furthermore, the regulations of the Youth Employment Protection Act must be observed for minors. This applies, for example, to working hours. An overview is provided by the Federal Ministry of Labor and Social Affairs in the leaflet “Clear Case – Youth Employment Protection and Child Labor Protection Ordinance” (as of April 2023).
Occupational Safety and Contracts
Especially for minor temporary staff, occupational safety requirements must also be observed. Not every activity is permissible here (e.g., dangerous work).
While temporary jobs are generally limited in duration, clear contractual regulations should also be established here. This includes, for example, the entitlement to vacation (if the temporary worker is employed for at least one month).
Note: The minimum wage must be observed for salaries – unless it is a minor temporary worker who does not yet have vocational training. However, adult students, for example, are entitled to the minimum wage!
Temporary Workers in Payroll Accounting
There are already numerous legal requirements that should be considered. The specific legal agreements are also crucial for accounting. In payroll accounting, all contracts, declarations of consent, and documents should be kept, and the accounting processing should be carried out.
How the Job Remains Social Security Exempt
Mini-Jobs (max. 520 Euros/month) are exempt from health, long-term care, and unemployment insurance. And, upon application, also from pension insurance.
Short-term employment does not exceed three months or 70 working days per year. In this case, the job is exempt from social security, regardless of how much the temporary worker earns during that period. Employers should not forget: Registration with the Mini-Job Center!
Attention: Working students are to be distinguished from these two forms of employment. They often work alongside their studies at a company. Learn more: https://www.minijob-zentrale.de/DE/die-minijobs/studenten/studenten_node.html
Tax Treatment
Temporary workers are generally also subject to wage tax. Taxation can be carried out at the individual tax rate. Here, the employer requires the electronic wage tax deduction characteristics. As a rule, students have little annual income. If wage tax was nevertheless paid, it can be reimbursed through a tax assessment.
However, there is a simple handling method: The employer can opt for flat-rate taxation (e.g., Mini-Job with 2% or 20%, but attention: short-term employment 25%). Here, the classification of employment is important so that flat-rate taxation is carried out correctly. Especially in these cases, expertise in payroll accounting is of great importance. This ensures that no errors are made in wage tax or social security for temporary workers either.
Image source: AdobeStock Photographer: rh2010
Author
Sylvia Meier
Guest Author
Sylvia Meier is a certified financial economist (FH) and has worked at the tax office, in consulting (Big Four firm), and for a specialized publisher. Today, as a freelance consultant, she supports companies and can demonstrate numerous publications, particularly on the topics of taxes, controlling, accounting, and finance.
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January 26, 2023
