In Germany, all employers are required to contribute to certain statutory social insurance schemes designed to support employees during periods of illness, maternity leave, or company insolvency. These contributions are known as U1, U2, and U3 levies. Understanding which contributions apply to your business is essential for compliance and accurate payroll processing.
What is the U1 Levy (Sick Pay)?
The U1 levy is a mandatory contribution that reimburses employers for continued wage payments made to employees during periods of sickness.
Who must pay it?
All employers with fewer than 30 employees are required to pay the U1 levy.When does it stop?
If a company grows to 30 or more employees, the obligation to pay U1 ceases starting January 1st of the following calendar year.
What is the U2 Levy (Maternity Pay)?
The U2 levy reimburses employers for wages paid to employees during maternity leave.
Who must pay it?
All employers, regardless of company size, are required to contribute to U2.
What is the U3 Levy (Insolvency Fund)?
The U3 levy funds the insolvency benefit scheme, which secures wage payments to employees if their employer becomes insolvent.
Who must pay it?
All employers are required to contribute to U3, regardless of size.
Summary Table
Contribution | Purpose | Mandatory For | Notes |
U1 | Sick pay reimbursement | Employers with < 30 employees | Ends Jan 1 of next year once ≥30 employees |
U2 | Maternity pay reimbursement | All employers | No exemption |
U3 | Insolvency protection fund | All employers | No exemption |