This allowance is an important financial support that your employer can provide under certain conditions when you are unable to work for an extended period due to illness. In Germany, the employer's legal obligation to continue paying wages typically ends after six weeks of illness. After that, statutory health insurance takes over and pays sickness benefits. However, these sickness benefits are usually lower than your previous net income (often around 70 percent of gross income, but no more than 90 percent of net income). This is exactly where the allowance comes in: it aims to bridge this financial gap between sickness benefits and your previous net earnings, either partially or completely, helping you maintain your standard of living even during an extended period of illness. It's a benefit that reduces financial worries and shows that your employer cares about your well-being even during difficult times.
It's important to note that not all employees in Germany are automatically entitled to such a bonus. This is not a mandatory statutory benefit. The entitlement typically arises from:
- Collective bargaining agreementsThis supplementary payment is a fixed regulation, particularly in the public sector (for example, under TVöD or TV L collective agreements). Similar entitlements may also be provided for in collective bargaining agreements across other industries.
- Works/Company Agreements:Sometimes the subsidy is also regulated through agreements between the employer and the works council.
- Individual Employment ContractsIn some cases, an entitlement is directly specified in the employment contract.
- Voluntary Service/ContributionSome employers provide this allowance as a voluntary social benefit to enhance their attractiveness as employers and demonstrate their commitment to employee welfare.
The amount of the supplement and its payment duration are specified in the respective legal basis (e.g., collective bargaining agreement). It is often calculated as the difference between the net sickness benefit and a certain percentage (e.g., 100 percent or 90 percent) of the average net salary you received before falling ill. The benefit period is frequently tied to your length of service with the company. The longer you have been employed at the company, the longer the supplement can be paid. In the public sector, for example, the maximum benefit period can be up to 39 weeks (including continued salary payment). Therefore, it is advisable to thoroughly inform yourself about the regulations that apply to your employment relationship.
There are also special considerations from a tax and social security law perspective. The sickness benefit supplement itself is generally taxable and must be declared as income. However, it is often exempt from social security contributions as long as the supplement, combined with the sickness benefit, does not exceed the previous net salary. While the sickness benefit itself is tax-free, it is subject to the progression clause, which means it can increase your personal tax rate for other taxable income (including the supplement). Despite being taxable, the supplement represents significant financial relief for you. For employers, it's a sign of appreciation and care that can strengthen employee retention. Especially when offered voluntarily, it's a strong argument in employer branding. Even though it's a specific benefit, it fits into a comprehensive employee benefits strategy, like those enabled by companies like HelloBonnie, to promote workforce well-being and security.