Germany Payroll & HR Glossary
Clear explanations of the key payroll and HR terms in Germany, from Lohnsteuer (wage tax) and social insurance to tax classes, Minijob and Kurzarbeit (short-time work).
Lohnsteuer
The income tax on wages, which the employer withholds directly and pays to the tax office (Finanzamt).
Sozialversicherung
The statutory system of pension, health, long-term care and unemployment insurance, financed in equal parts by employee and employer.
Brutto und Netto
Brutto (gross) is pay before any deductions, netto (net) is the amount paid out after Lohnsteuer and social contributions; the Effektivlohn is the gross wage actually paid.
Steuerklasse
The tax class appears on the payslip and determines how much Lohnsteuer the employer withholds each month; there are classes I to VI.
Minijob
Marginal employment up to the monthly earnings limit (2026: €603), usually free of deductions for the employee.
Kurzarbeit
A temporary reduction of working hours in which the Federal Employment Agency (Agentur für Arbeit) replaces part of the lost pay as Kurzarbeitergeld.
Urlaubsanspruch
The statutory minimum paid annual leave guaranteed under the Federal Leave Act (Bundesurlaubsgesetz).
Kirchensteuer
A surcharge on Lohnsteuer (8-9%) paid by members of religious communities that levy a church tax.
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