Very often, employers operating in the construction industry who post workers to Germany are surprised by the need to pay contributions to SOKA-BAU. This is the German holiday pay fund for the construction industry. A similar institution doesn’t exist in the Polish legal system. Therefore, we will try to explain to you what SOKA-BAU is and what obligations are linked to it for the employer and benefits for the worker.
1. SOKA-BAU
“Sozialkassen der Bauwirtschaft”, i.e. SOKA-BAU, is the German holiday pay fund. However, SOKA-BAU applies only to companies operating in the construction industry in Germany. This concerns both enterprises based in Germany and these ones that post employees to Germany. Companies conducting economic activity in other industries, both German and foreign, posting employees to Germany, aren’t bound by the regulations in question.
The primary objective of SOKA-BAU is to protect the interests of employees engaged in the construction industry in Germany. It conducts the so-called “holiday proceedings” and finances employees’ holiday claims. This is related to the nature of work in the construction industry. Indeed, it involves frequent changes of employer and periods of downtime. This may result in significant difficulties for workers engaged in this industry in acquiring and using holiday leave.
2. Rules for acquiring holiday leave in Germany and amount of leave pay
Further considerations should be preceded by some information about holiday leave in Germany and the amount of leave pay.
In Germany, the number of days of holiday leave depends on the number of days of employment in this country. The employee acquires one day of leave after every 12 days of employment. The number of days of employment is calculated separately for each calendar year. When determining them, all days in the calendar year in which there is an employment relationship with an employer operating in the construction industry in Germany are taken into account, including Saturdays, Sundays and holidays. However, days of employment aren’t:
- these ones on which the employee worked on construction sites outside Germany for a construction company without its head office in Germany;
- these ones during which the employe was absent for work without justification and didn’t receive payment for them;
- these ones on which the worker took unpaid leave lasting longer than 14 days.
During the calendar year, a worker may acquire the right to 30 days of leave.
Leave is granted for working days. Therefore, it isn’t granted for Saturdays, Sundays and holidays that aren’t working days.
At the end of the year, unused leave is transferred to the following calendar year. Unused holiday leave is forfeited in the event that it isn’t taken in the year to which it has been transferred.
As in Poland, a worker is entitled to leave pay for the time he/she takes holiday leave. It amounts to 14.25% of gross salary. This is the remuneration due to the employee for the work performed. When determining it, the leave pay already paid is taken into account. It doesn’t include thirteenth month payments and benefits of a similar nature resulting from collective labour agreements, holiday compensation or severance grant paid at the end of employment.
The employer constitutes the entity obliged to pay leave pay.
3. Who is obliged to participate in the leave proceedings?
The basic condition for participation in the leave procedure is that the foreign entrepreneur concludes a construction contract in Germany and that the said entrepreneur executes this contract on his/her own responsibility.
German provisions also require the foreign employer to post his/her industrial workers for a fixed period to perform a construction contract. Industrial workers are employees who execute construction work on a building site using their own labour and/or construction machinery and technical equipment. This concept also includes workers employed in cleaning of office accommodation, as well as in maintenance and cleaning services. Employees entrusted with construction supervision aren’t considered to be industrial workers unless their physical work on the construction site is largely excluded, as well as employees performing work related to design, administration and office work.
The employer’s obligation to participate in leave proceedings materialises in the event that employees primarily perform construction work during working hours. This takes place if the employee performs construction work for at least 50% of the total working time. These include, for example, masonry work, grouting, reinforced concreto work, glass concreto reinforcement, steel bending and splicing.
An independent branch of a company is also considered to be an entrepreneur. An independent branch consists of, among others, a group of employees who mostly perform construction work outside the enterprise’s head office. A branch may also be a single construction project, even if the company doesn’t perform other construction works outside it.
4. Exemption from participation in leave proceedings
Exceptionally, a foreign employer may be exempted from participating in leave proceedings. This occurs in the event that, in the country where the employer has the head office, there is an institution similar to SOKA-BAU with which the German holiday pay fund has concluded mutual recognition agreements. However, the exemption isn’t automatic. SOKA-BAU may exempt the employer from participating in leave proceedings after he/she proves that he/she pays contributions to a similar institution during the secondment. Institutions similar to SOKA-BAU are:
- Bauarbeiter- Urlaubs- und Abfertigungskasse (BUAK) in Austria;
- Office National de la Sécurité Sociale (ONSS) and Office Patronal d’Organisation et Contrôle des Régimes de Sécurité d’Existence (OPOC) in Belgium;
- Styrelsen for Arbejdsmarked og Rekruttering (STAR) in Denmark;
- Congés Intempéries BTP Union des Caisses de France in France;
- Commissione Nazionale Paritetica per le Casse Edili – CNCE in Italy.
5. Obligations of the employer towards SOKA-BAU
A foreign employer operating in the construction industry is obliged to register workers posted to Germany with SOKA-BAU. This occurs by completing the appropriate forms and sending them to the holiday pay fund. Any change in data – of the employer or employees – must be immediately reported to SOKA-BAU.
The employer submits a monthly declaration to SOKA-BAU by the 15th day of the month following the month to which the notification relates. It includes information on the amount of gross remuneration paid to the worker, the holiday leave granted to the employee and the gross leave pay paid to him/her.
The monthly declaration is made electronically. However, the employer may request an exemption from the electronic reporting obligation. For this purpose, he/she must demonstrate that the electronic notification is economically or personnaly unjustified for him/her.
The data provided in the declaration are important for the employer. On its basis, SOKA-BAU calculates the amount of reimbursement due to the employer. Indeed, SOKA-BAU reimburses the employer for leave pay paid to employees. The refund is equal to 14.25% of gross remuneration. The condition for reimbursement is that there are no contribution arrears and that the employer has fulfilled its registration requirements.
The employer is also obliged to pay the contribution to SOKA-BAU. It is payable monthly by the 28th day of the month following that one to which it relates. The contribution is calculated on the gross salary and amounts to 15.20%.
In the event of a delay in payment of the contribution, SOKA-BAU will charge interest for each commenced month of delay. In addition, the holiday pay fund may initiate legal proceedings against the employer. The Labour Court in Wiesbaden is competent for disputes between foreign employers and SOKA-BAU.
6. Holiday compensation for the employee
The employee may apply to SOKA-BAU for payment of compensation for unused holiday leave. The deadline for submitting a request depends of the worker’s situation. In the event that the employee has resigned from a job in the construction industry and isn’t unemployed, he/she may request for the equivalent three months after the end of work. On the other hand, where the employee has changed to a white-collar job or taken up vocational training, the equivalent may be paid immediately after the end of work.
A worker submitting a claim to SOKA-BAU for payment of the equivalent must take into account that he/she may not obtain the full amount due. In the event that the employer hasn’t paid the full amount of contributions, the holiday pay fund is entitled to an appropriate reduction of the equivalent.
The equivalent is subject to contributions and taxation in Germany. However, the worker can apply for a tax refund at the German office in Wiesbaden.
The provisions provide for a special case of payment of the equivalent. An employee receiving a retirement pension or that one for incapacity for work may apply for payment of the equivalent to the last employer with whom he/she was employed in the construction industry. In this case, the equivalent paid to the worker by the employer will be refunded by SOKA-BAU.
7. Compensation for lost leave claims
The employee can pursue compensation for lost leave claims from SOKA-BAU. Damages are due in the event that the leave is lost and the worker hasn’t received an equivalent for it.
It should be emphasised that when claiming compensation, it doesn’t matter whether the worker is currently employed in Germany in the construction industry.
In order to claim compensation, it’s necessary to make a request to SOKA-BAU. The application must be submitted in the second calendar year after that year in which the leave claims arose. A request presented earlier or later will be ineffective.
In the event that the employer hasn’t paid the contributions in full, the amount of compensation will be reduced accordingly. However, if the employer pays the missing contributions later, the worker will receive a compensation surcharge from SOKA-BAU. This may occur within four calendar years after the loss of leave claims.
The holiday pay fund doesn’t collect social security contributions from the compensation. On the other hand, tax and solidarity surcharge are deducted. A worker who pays taxes in Poland may apply for a tax refund from the German office in Wiesbaden.
8. Employee’s account statement
After the end of each calendar year, the worker will receive a statement from SOKA-BAU indicating his/her holiday entitlements. The employee will also obtain an extract after each settlement of leave, equivalent and compensation.
This statement contains information from the worker’s last 2 years of service concerning: period of employment in Germany, days of leave earned, the amount of gross remuneration, the amount of leave pay. Unused claims are also included. The list shows the status at the end of the previous year.
The employee’s statement of account is necessary for the worker to claim equivalent and compensation. Indeed, it contains information concerning the scope of the employee’s claims and his/her individual number which shall be referred to in contacts with SOKA-BAU. Therefore, it should always be attached to the application for equivalent/compensation.
In the event that the statement of account contains error or is incomplete, the worker may ask the employer for a correction. The request can be made within two months of receipt of the extract. If the employer remains passive and doesn’t make a correction, the worker may apply for rectification to a german court.
The employer receives a general list containing information on the claims of all workers engaged by his/her company in Germany.
9. Death of an employee and leave claims
In the event of an employee’s death, his/her leave claims aren’t lost. The claim for leave pay, holiday equivalent and compensation are transferred to the heirs of the deceased worker. They should direct their claims to SOKA-BAU.
10. Legal notice
The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.
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