Non-wage labor costs
Non-wage labor costs are indirect labor costs that are incurred by the employee through salary or wage payments. Social security contributions make up the largest share.
Who pays for them?
These costs are incurred by the employer due to the employment of staff. They must pay these in addition to the gross salary.
The non-wage labor costs are therefore not listed at all in the employee’s payslip. The employer, on the other hand, records the costs internally in its accounts.
These non-wage labor costs exist
There are 4 different types of non-wage labor costs:
- Social security contributions
- Occupational training & further education costs
- Other expenses (e.g. work clothing or relocation costs)
- Taxes on salary or payroll
Non-wage labor costs: amount & calculation
The current level of social security contributions is 21% of the employee’s gross salary.
These contributions are calculated as a percentage of the gross income, but cannot increase arbitrarily.
In Germany, contributions are usually split equally between the employee and the employer. Accordingly, the following information is relevant for the employer:
- Statutory health insurance: 7.3 %
- Pension insurance: 9.3 %
- Unemployment insurance: 1.2 %
- Long-term care insurance: 1.525 %
- Statutory accident insurance: 1.6 %
Important: Contribution assessment limits must be taken into account in the individual branches of social insurance. Accordingly, there is no room for maneuver in this area.
Voluntary social benefits from the employer
In addition to non-wage labor costs, there are also voluntary employer contributions to social insurance schemes. These are also counted as employer social security contributions. Some of these include company pension, health and long-term care insurance.
These voluntary social benefits also include subsidies for childcare and the financing of an external service provider to advise on caring for a close relative.
“Other expenses” also include reimbursed relocation costs, rent subsidies or costs for taking up employment.
Disclaimer
Please note that the texts on this website and the related contributions are provided for general informational purposes only and do not constitute tax or legal advice in the proper sense. For individual cases, we always recommend seeking specific legal advice tailored to the circumstances of the situation. The information is provided to the best of our knowledge and belief, without any guarantee of accuracy, completeness, or validity.
