The Skilled Immigration Act – Fachkräfteeinwanderungsgesetz (FEG) – was adopted by the German parliament in June 2018 and came into force on March 1, 2020. The FEG will bring new and amended immigration categories, changes to the immigration authority structures and additional compliance obligations for employers.
With the new rules coming into effect, it is high time to start adapting and preparing for the changes which will come with this new law. In the article below, we will discuss the three main impacts for German employers and the necessary steps which may result from this.
The FEG stipulates new obligations for obligations for employers and foreign employees in case of an early termination of employment.
“As of March 1, 2020, employers ar obliged to notify the early termination of an employment to the respective immigration office in charge of the employee within four weeks from the time of knowledge. This obligation for employers only applies if the employee holds a permit for the purpose of employment. For persons holding a permit type based on another purpose of stay, for example a family reunion, the employer does not need to submit a notification. Fines of up to EUR 30,000.00 apply in case the notification is submitted too late or not at all.
The employee will be obliged to notify the early termination of his employment within two weeks from the time of knowledge. The same applies to an early decision about a vocational training course or studies at a university. Fines of up to EUR 1,000.00 will apply in case the notification is submitted too late or not at all.
Because the employee has a shorter notification deadline than the employer, his notification could determine and trigger the notification deadline of the employer.
To give an example: if the employee files his notification on the last day of the two week timeframe, the employer has to notify German authorities at the latest two weeks afterwards to avoid fines arising from the failure to meet the four-week deadline.
The calculating of the timeframe within which the employer and the employee have to file the notification will be determined by the term “time of knowledge” as stated in the new law. However the law does not define this term in detail. “Time of knowledge” for the employer could mean the day it is confirmed in writing that the employment/vocational training will be terminated or even the day the possibility of the termination was discussed. “Time of knowledge” for the employee could mean the day he is informed by the employer in a conversation or even officially in writing or the day the employee submits his notice of termination to the employer.
Furthermore, it is not yet clear how the notification should be submitted or which documents are required to file the notification. With a strict approach, German authorities might want to see a written confirmation stating the end date of the employment/vocational training/studies together with a form that needs to be filled out by the employee and/or employer/university.
With a less strict approach a simple e-mail to the German authorities, stating the name of the employee and the end date of the employment/vocational training/studies might be sufficient to fulfil the notification obligation without having to hand in further written proof or forms.
Due to the above uncertainties, employers are strongly advised to install a “leaver tracker” to allow them to keep tabs on every early termination. Based on the “leaver tracker”, further required steps and process steps could then be implemented within the company to ensure the employer complies with the notification obligation of four weeks. Departments, leading executives and managers should be informed about the new requirements.
The FEG further implements increased documentation, report and transparency obligations for employers for work permit types that require the approval of the Federal Employment Agency (FEA).
As of March 1, 2020, the FEA is authorized to request corporate information from the employer that is relevant to the approval process, for example:
- Tax, social security, labor law compliance
- Insolvency review
- Economic activity review.
Based on the current practice of the FEA, the following questions need to be answered for ICT-Card approval applications:
- Is there a backlog in the payment of social security contributions or taxes?
- Have penalty/summary proceedings been initiated on the ground of violations of obligations in regard to social security law, tax law and labour law?
- Have insolvency proceedings been initiated within the past 5 years?
- Has the initiation of insolvency proceedings been denied for the lack of assets within the past 5 years?
This kind of information will no longer just be needed for ICT-Card approval application alone, but will also be applicable to all other permit types that require an approval from the FEA. We expect these questions to be only the minimum corporate information that will need to be provided.
In addition to this, the FEA might ask about
- the year of the foundation of the company
- the number of employees that have been employed in the last year with the company
- whether there is any family relationship between the employee and the owner/leading manager of the company
- the commercial register number
- other topics
The FEA also has the right to request any additional corporate information that is required for the processing of a specific approval application.
Incorrect information and failure to provide the requested information may lead to rejections. Furthermore, if any of the above questions is answered with “Yes”, the approval application may be rejected.
When calculating the approval application lead time or the overall processing time, the employer should consider that gathering this kind of information can take several days or even weeks.
Employers should therefore be prepared to provide this corporate information when filing approval applications with the FEA and also to receive ad-hoc requests for additional corporate information.
We expect approval applications to be delayed for a couple of months after March 1, 2019, as German authorities in general, and the FEA in particular, have to get used to the new requirements and might appeal for additional information or documents multiple times.
Extended Audit Option
In addition to the above, the FEA will as of March 1, 2019 have the right to review the employment conditions for all third country employees.
According to the current framework the FEA is permitted to review employment conditions only for permit types that require the approval of the FEA. In these cases, the FEA is reviewing the employment conditions based on German labor law for the specific employee, for example:
- Working hours per week
- Holiday entitlement
- Overtime work and compensation for overtime work
- Salary and components of the salary
As per German immigration law, foreign nationals working in Germany have to work under the same working conditions as employees in Germany and they are also subject to German labor law. In order to ensure that employers consider this requirement, the German government has decided to extend the audit responsibilities of the FEA to all work permit types.
With the implementation of the FEG, the FEA is now also able to review and audit the employment conditions for employees whose work permit type did not require an approval from the FEA, for example for EU Blue Cards. So far only the respective German embassy/consulate and the immigration office review the employment conditions during the application process.
The employer will be given one month to provide the FEA with requested information on the working conditions of the third country employee.
Employers therefore should expect to be contacted by the FEA at any time. A review of the working conditions can take place at any time throughout the duration of stay in Germany, not only at the beginning of the employee’s stay.
It is to be expected that the FEA will set up a new internal team which will be exclusively responsible for these reviews/audits.