No unemployment benefits or pension despite years of paying in?
by RA Dr. Johannes Fiala*
MUNICH – The legal system is becoming more complicated every year, including social security. The area of wage tax and social security is probably about 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.
Contributions paid, but still no benefit
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 1.5-1.8 million workers.
A typical case
S., a trained dental assistant, has been working in her husband’s practice for many years. When she gets divorced and thus unemployed, the employment agency denies her benefits. It stands without provision for the emergency of unemployment. She finds it astonishing that for years the contributions were collected and that even during audits everything was in order in practice.
Is the jurisdiction even social anymore?
The Federal Social Court has given the guideline by its decision of 28.4.1987 (Az. 12 RK 47/85), which the employee considers as not very caring: The social security then forms an opinion as to whether the employee was “properly” insured once the emergency has occurred – then the benefit can be denied. 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. Nor is the Social Security Administration bound by the findings of the tax audits that usually take place every 4 years. There is therefore no protection of confidence and no de facto hardship clause. In the event of a claim, the employee can easily get caught between two sides: it is conceivable that the statutory health insurance fund has a different legal opinion than the German Pension Insurance Association. This can be the case not only in general, but also with regard to the question of when an employee became or did not become subject to social security contributions. But that is not all, because if, for example, different periods of time have to be assessed due to a change in health insurance, different health insurance funds may also communicate different decisions on the obligation to contribute or on an application for reimbursement of contributions.
There is a lot of money at stake
In reimbursement cases, 100 to 300 TEUR of contributions already paid jointly by practice owner (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 legislator is called upon
The cases in practice raise the question of what formula of justice the legislator had in mind? In civil law, citizens would claim their money back if they did not receive benefits – the sometimes short statute of limitations of 4 years curtails these possibilities in social security. Practical tip: We recommend that you clarify the social security classification of the employment relationship as early as possible when it is established. Only written notices from the tax adviser and all the authorities involved can provide a safeguard for assisting relatives. The insurance status can change at any time. Therefore, a regular check is advisable to avoid disappointment later on.
(Dental Tribune 9+10/2007, 18)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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