Firstly, there's a time limit to this payment, as it is part of the third relief package provided by the federal government and is available until the end of 2024. This is specified in the law on the temporary reduction of the VAT rate on gas deliveries via the natural gas network. The rationale behind this relief is primarily the rising cost of living and high energy prices.
Summary of the Inflation Bonus Regulation
In summary, the payment of this bonus is possible from October 26, 2022, to December 31, 2024. During this period, the amount of €3,000 per employee can be paid out tax and social security-free.
The payment can also be made in several installments if necessary. The crucial point is that the payment is clearly indicated with an appropriate note. And the €3,000 limit must not be exceeded over the entire eligible period.
Another aspect is that employers can grant the bonus both in cash and as benefits such as in the form of vouchers.
Employers can pay their employees a tax-free inflation compensation of €1,000 each in the years 2022, 2023, and 2024 as part of the inflation compensation. Alternatively, they can pay €750 in the first year, €1,000 in the second year, and €1,250 in the third year, following an increasing pattern. The crucial point is that the total maximum amount of €3,000 is not exceeded.
Who is Eligible for Inflation Compensation?
Below is an exemplary list of employees who can generally receive such a bonus. What many may not know is that even side jobs, such as part-time jobs or mini-jobs, fall within the scope of eligibility for the inflation compensation.
- Full-time or part-time employees
- Seasonal workers
- Temporary agricultural and forestry workers
- Interns and apprentices
- Employees on short-time work or parental leave
- Employees receiving sick pay
- Individuals with disabilities working in a corresponding arrangement
It's important to note that the inflation compensation bonus is always paid in addition to the regular salary. In other words, it does not affect the €520 limit in mini-jobs or the €2,000 monthly earnings limit in midi-jobs. Additionally, the start and duration of the employment relationship are irrelevant to whether you can receive an inflation compensation bonus.
Is the Employer Obligated to Pay the Bonus?
This is a voluntary contribution by employers that can be granted in addition to the monthly salary. In essence, employees do not have a legal entitlement to the inflation compensation bonus.
Inflation Compensation Instead of Christmas Bonus?
Especially towards the end of the year, the question arises whether employers can pay the inflation compensation instead of a Christmas bonus. Here, the basic rule applies again: the bonus payment must be directly related to inflation. If, instead, terminology like a Christmas bonus or holiday bonus is suddenly included in the payment, the inflation connection cannot be proven.
Of course, it can be paid out in addition to the Christmas bonus. However, the payments must still be made in two separate transactions and should be clearly distinguished in the payroll.
By the way, a Christmas bonuses is considered a special payment as a general rule of thumb. This means it is subject to tax and social security contributions and can lead to exceeding the allowed earning limit for marginal employment. Also, unless the Christmas bonus is explicitly regulated in the employment contract, it is a voluntary contribution depending on the business situation.