When discussing personnel costs, many people initially think of the gross salary that employees receive for their work. However, for employers, these salaries represent only a portion of the actual total costs. A significant additional portion consists of what's known as non-wage labor costs. These are a series of additional charges, mostly mandated by law or collective bargaining agreements, that employers must pay on top of the agreed gross salary. They are an integral part of personnel costs and finance essential aspects of our social security system as well as certain employer risks. These costs don't directly affect you as an employee in the sense that they're not deducted from your gross salary (those are your employee contributions), but rather they're additional expenses that the employer must pay on top. Understanding these costs is crucial for realistic budget planning and calculations in businesses.
The composition of non-wage labor costs is diverse and primarily includes the employer's contributions to social security. These contributions represent the largest component and include payments for:
- Statutory Health Insurance
- Statutory Pension Insurance
- Statutory unemployment insurance
- Statutory Long-term Care Insurance
The amount of these contributions is calculated as a percentage of employees' gross salary, though only up to specific contribution assessment ceilings. Additional costs include statutory accident insurance contributions (managed through professional associations), which vary based on the accident risk of the respective industry. Furthermore, employers pay levies under the Expenditure Compensation Act (AAG): the U1 levy to finance continued salary payments during illness (mandatory for businesses with up to 30 employees) and the U2 levy to finance maternity benefits (mandatory for all employers). The insolvency levy, which ensures that employees receive their outstanding wages in case their employer becomes insolvent, is also counted among the non-wage labor costs. Depending on the industry or specific regulations, additional contributions may apply.
The exact amount of payroll additional costs varies depending on salary level, industry, company size, and even the federal state (for example, in the case of U1/U2 allocation rates set by health insurance providers). For employers, it's crucial to know these costs precisely and incorporate them into their financial planning, as they constitute a significant portion of total personnel expenses – often adding 20% to 25% on top of the gross salary. As an employee, while these costs aren't directly visible on your payslip (except for the employer's total gross contribution), they finance the social security network that you'll rely on when needed. In the context of employee benefits, such as those offered by HelloBonnie, understanding these payroll additional costs is essential for employers to realistically assess the total compensation budget. Only after these mandatory expenses are accounted for can employers seriously plan what room is actually available for voluntary additional benefits – which enhance their attractiveness as an employer.