As of 1 July 2019, there’s a new income bracket for midi-jobs: the upper limit was raised from a maximum salary of € 850 to € 1,300 per month, while the lower limit of € 450.01 remains unchanged.
Various income models in Germany: From “mini-job” to “midi-job”
In Germany, there are many jobs that are regarded as “minor employment”. This includes the so-called “mini-job”, also known as the “450 euro job”. The income for mini-jobs must not exceed € 450 euros per month – hence the name. Mini-jobs have the advantage that employees are exempt from social security contributions, except for pension insurance: they can decide whether they want to pay a small amount into the pension scheme in order to receive all the benefits. Alternatively, employees can be exempted from this pension scheme obligation, but they must first request an exemption from their employer.
“Midi-job” refers to the next stage between part-time and full-time employment. Midi-jobs fall into a transitional band with an income range of between € 450.01 and € 1,300 per month, as of 1 July 2019.
What’s the point of the midi-job?
The midi-job model is designed to prevent employers from having to bear the full burden of social security contributions as soon as they exceed the € 450 limit. This transition band, for which special regulations apply, was introduced for this purpose. Simply put, a midi-job gives the employee more rights than a mini-job, but more obligations as well.
In principle, midi-jobs are subject to full social security contributions. The calculation of the contributions is, however, based on the assumption that employees’ pay is lower and is thus subject to a lower level of contributions. This is calculated with a special formula for this transitional band, using the gross salary and the so-called “Factor F”(Source: BMAS). In this way, the employee saves a share of the contributions and ends up with a higher net income. Employers cannot benefit from this scheme as they have to pay the contribution on the full gross income.
Caution: If an employee is undergoing vocational training, the regulations for the transitional band do not apply.
How do midi-jobs help you start your career in Germany?
A major advantage of midi-jobs is that employees enjoy full social security coverage despite reduced contributions. So anyone who wants to start their professional life in Germany but who cannot (yet) accept a job that requires a school-leaving certificate or other qualifications recognised in Germany could well be in a transitional band with their income. Examples include jobs such as those of fitness trainer, cashier or cleaner. This category also includes jobs in call centres or cafes/restaurants, as well as sales activities in places like bakeries.
When starting your career in Germany, it is important to note the following rule: the less money workers earn, the less taxes they have to pay. On the other hand, they benefit less or not at all from social security benefits.
The most important question is therefore: Do I earn more with the midi-job than I have to pay for social security and taxes?
Is your income in the transitional band and would you like to test what you earn? The AOK mini-job and transition band calculator will help you here: https://www.aok-business.de/niedersachsen/tools-service/rechner/minijob-und-uebergangsbereichsrechner-2019/