[Germany] Digital payroll deadline looms as federal court narrows pay rise tactics

By January 1, 2027, every company in Germany will be required to switch to fully electronic payroll records under the country's social security contribution ordinance. Paper files and hybrid systems will no longer be permitted, Ad Hoc News reports.

Compliance will be checked by the German Pension Insurance (Deutsche Rentenversicherung) during its electronically supported audits (euBP).

Employers must reportedly ready their archiving systems for the 2026/2027 year-end transition. Electronic readability and completeness are non-negotiable.

Further pressure on the country’s employers has come from a recent ruling by Germany's Federal Labour Court (Bundesarbeitsgericht, BAG). The court tightened the limits on how employers can handle pay raises, finding it unlawful for a company to offer salary increases for 2022 and 2023 solely to workers who signed new employment contracts. 

According to the federal court, the employer effectively made wage adjustments contingent on acceptance of new terms. Judges deemed this a violation of the principle of equal treatment: distinguishing between old and new contracts solely for the purpose of pay adjustments is not permitted. 

In this specific case, a female claimant was awarded back pay since continuing with her existing contract should never have disqualified her from a wage increase.

Source: Ad Hoc News

By January 1, 2027, every company in Germany will be required to switch to fully electronic payroll records under the country's social security contribution ordinance. Paper files and hybrid systems will no longer be permitted, Ad Hoc News reports.

Compliance will be checked by the German Pension Insurance (Deutsche Rentenversicherung) during its electronically supported audits (euBP).

Employers must reportedly ready their archiving systems for the 2026/2027 year-end transition. Electronic readability and completeness are non-negotiable.

Further pressure on the country’s employers has come from a recent ruling by Germany's Federal Labour Court (Bundesarbeitsgericht, BAG). The court tightened the limits on how employers can handle pay raises, finding it unlawful for a company to offer salary increases for 2022 and 2023 solely to workers who signed new employment contracts. 

According to the federal court, the employer effectively made wage adjustments contingent on acceptance of new terms. Judges deemed this a violation of the principle of equal treatment: distinguishing between old and new contracts solely for the purpose of pay adjustments is not permitted. 

In this specific case, a female claimant was awarded back pay since continuing with her existing contract should never have disqualified her from a wage increase.

Source: Ad Hoc News