Wife works in the company – in case of emergency no unemployment benefit and no pension
The legal system is becoming more and more complicated every year, also in social security. The area of wage tax and social security is probably as complex today as the taxation of the GmbH. Experts wonder whether the complexity has already taken the legal system to the limit of unconstitutionality. Those who pay social security contributions are neither secure from the risks for which contributions are paid, nor certain that benefits will be paid in an emergency. From the point of view of the citizen, it is often a duty to pay contributions – but the state does not protect the citizen from errors and disappointments. Experts estimate the “ineligible” contributors at 1.5 to 1.8 million workers. Example: The trained tax clerk S. works in the GmbH of her husband. When she becomes unemployed, the employment agency denies her benefits. It stands without provision for the emergency of unemployment. She finds it astonishing that the contributions were collected for years and that everything was in order even during tax audits.
Social jurisprudence?
In its decision of 28.04.1987 (file no. 12 RK 47/85), the Federal Social Court (Bundessozialgericht) set the guideline that the employee considers to be less than caring. – In practice, Social Security then forms an opinion as to whether the employee was “properly” insured once the emergency has occurred – in which case benefits may be denied. – The mere payment of contributions and the “inaccuracy” of an employee’s registration with the social security system, which was only discovered later, does not establish entitlement to social security benefits. – The employee then has (often only upon further application) at most a claim to reimbursement of contributions – but only for claims that are not already time-barred. – The social security system is also not bound by the results of the company audits, which usually take place every four years. There is therefore no protection of confidence and no de facto hardship clause. The employee is also easily caught between the two fronts when benefits are due. It is conceivable, for example, that the statutory health insurance fund takes a different view than the German Pension Insurance Federation. This may not only be the case in general, but also with regard to the question of when an employee is or was subject to social security contributions. And that’s not all: If, for example, different periods of time are to be assessed due to a change of health insurance, different health insurance companies can also communicate different decisions regarding the obligation to pay contributions or regarding an application for reimbursement of contributions. In reimbursement cases, 100,000 to 300,000 euros of contributions already paid jointly by employer and employee may well be at stake. Practitioners complain that the procedures sometimes take “forever”. There are numerous pitfalls for advisers, as circumstances can change during the year – in which case even the once-exempt employee may become liable for social security again. This has consequences for private pension provision, as there does not appear to be any real planning security for longer-term private capital accumulation. The cases in practice raise the question of what formula of justice the legislator had in mind? In civil law, the citizen would demand his money back if he did not receive a benefit – the sometimes short statute of limitations of four years curtails these possibilities in social security and places the tax advisor in a position of liability, although he too has difficulty guaranteeing legal certainty. For the employee, if he is one of the 1.5 to 1.8 million affected, the system of determining his social security liability is similar to a lottery system.
RA Johannes Fiala
(Der-Bau-Unternehmer Dec 2006)
Courtesy of www.der-bau-unternehmer.de.