Mobility Matters May 2019 Issue

Authors: Dr. Sebastian Klaus and Kim Hammer, KPMG Law Rechtsanwaltsgesellschaft mbH, Germany

Germany’s recent draft law reforming the country’s immigration rules, Fachkraefteeinwanderungsgesetz (hereafter, “FEG”) is indeed a “tongue twister”. But it has very simple goals:

• Increase opportunities for skilled foreign labor to enter Germany to work; 
• Simplify the rules and processes for employers seeking to bring in skilled foreign labor; and 
• Address the issues around a shrinking domestic German workforce.

Germany has a need to attract foreign workers, in particular skilled migrants, due to demographic changes. In the next 10 to 20 years, the German labor-force will shrink significantly¹ and this will have implications for the future of Germany’s social security system. The social security system is based on the principle of current income financing current expenses. If fewer workers contribute to the social security system, less revenue accrues to the social security coffers. To maintain sufficient levels of financing, higher contributions must be asked of the remaining workforce. It is hoped the FEG can help address this situation.

The FEG entails one of the most important reforms of Germany’s immigration system in years. As a result, it is important that immigration counsel and advisers, global mobility professionals charged with the immigration affairs of their employees going overseas, and the employees themselves, understand what the FEG means for them.

This article addresses the:

• Current state of play of the law-making process, 
• Main changes to be introduced, 
• Opportunities that may be possible for skilled foreign workers coming to work in Germany, and 
• Potential benefits for companies/employers (assuming the suggested changes will come into force as per the current draft version of the FEG).

Nature of FEG and main changes 

The FEG is called an “omnibus law,” because it is a law that would change an array of existing regulations related to other laws. The new regulations that an omnibus law like the FEG introduces are incorporated into the existing legal framework in Germany—in the FEG’s case, the existing framework of immigration law. With regard to non-European Union (EU)/European Economic Area (EEA) nationals, this framework consists of three main parts: a parliamentary law, the Aufenthaltsgesetz (“AufenthG”), and two administrative decrees, Beschaeftigungsverordnung (“BeschV”) and Aufenthaltsverordnung (“AufenthV”), which are based on the AufenthG. 

The focus of this article will be on the main changes:

• Definition of the term “skilled migrant” and the applicable framework; 
• Category of foreigners with significant practical work experience; 
• Expedited visa application process and central immigration authorities; and
• Increased reporting obligations and potential fines for employers and foreign workers.

State of play

Before we get to the four topics noted above, it is important to understand where things stand with the FEG at this time. The German government has communicated its intent to finalize the law-making process for the FEG  in the first half of 2019, so that the law can become effective, at the latest, by January 1, 2020. 

The stakeholders in the law-making process have different opinions on the contents of the draft as well as the extent of their involvement. This has contributed to an interesting and at times challenging “path” for the FEG. There had been no action by the Federal Parliament for several weeks; but then, on May 9, 2019, things got moving again. With each passing day, especially where no significant progress had been made (see the table below), the government’s timing was becoming more urgent. The below overview illustrates the current status of the law-making process.²

Following the above-noted steps, Germany’s President executes the law and then it has to be published in the federal law gazette (Bundesgesetzblatt) to become enacted. All steps need to be completed by June 30, 2019, if the planned effective date is to be achieved. 

It is important to note that the FEG will not become entirely effective immediately; rather, it will be enacted with a transition period of six months.⁸

Definition of the term “Skilled Migrant” and applicable framework

At this stage, German immigration law does not contain a legal definition of “skilled migrant”; however, Sec. 18 (3) AufenthG-E⁹ would change that and stipulate a new type of permit for skilled migrants. Not only will holders of a German or comparable foreign university degree be considered as skilled migrants, but so too will holders of a German or comparable foreign vocational training.10 Such vocational training¹⁰ needs to encompass a training period of two years.

Sections 18a and 18b (1) AufenthG-E will become the main regulations for skilled migrants. They will define the requirements for obtaining a national visa for entering Germany and a long-term residence permit¹¹ for work purposes. The EU¹² Blue Card (a special type of combined residence permit and work authorization) will continue to exist and will be regulated in Sec. 18b (2) AufenthG-E.

The below table encapsulates the future permit categories for skilled migrants in terms of Sec. 18 (3) AufenthG-E, requirements for their issuance, and procedural aspects.

Furthermore, foreigners holding residence permits under Sec. 18a or Sec. 18b (1) AufenthG-E will be entitled to obtain a “settlement permit”³⁰, which is a permission for permanent residence under German law and grants unrestricted labor market access³¹, after four years under the following conditions³²:

• Possession of a permit based on Sec. 18a or Sec. 18 (1) AufenthG-E for four years;
• Having worked in Germany during that period and made contributions to the German statutory pension fund, or to a comparable pension scheme, for that period;
• Possessing German language skills at level B1 of CEFR (Common European Framework of Reference for Languages) and knowledge of German society and legal system;
• Being able to secure his/her livelihood as well as having sufficient living space;
• Not being a threat to public order or security.

If the foreigner graduated from a university or completed vocational training in Germany, the qualification period will be reduced from four years to two years.³³

A further privilege will apply to EU Blue Card holders. If they have been continuously in possession of an EU Blue Card for 21 months and can prove German language skills at level B1 they will be able to obtain a settlement permit within this significantly shorter timeframe.³⁴ The aforementioned other requirements (under the second and sixth bullet points above) will need to be met as well. If the EU Blue Card holder is (only) able to prove German language skills at level A1, he/she will become eligible for a settlement permit after 33 months instead of 21 months.³⁵

Future landscape for skilled migrants beyond existing framework

As noted earlier, there will be a new permission category for skilled migrants. Nonetheless, the FEG will leave other permit categories—mainly those for intra-corporate transfers—as they are. The existing regulations will be renumbered. The below table includes a “compass” for the future landscape for skilled migrants—it indicates the direction these rules and policies will take.

A new regulation will be included in BeschV so that IT professionals may be granted a residence permit because of their professional experience even if they do not have a university degree.³⁷ While the Federal Council criticized the exclusion of other occupations,³⁸ the Federal Government intends to uphold it.³⁹

Nonetheless, an extension to other professions is possible.⁴⁰ Requirements for the above-noted residence permit for foreigners with significant practical work experience, regulated by Sec. 19c (2) AufenthG-E in conjunction with BeschV, will be:

• Skills and knowledge of the foreigner are at a level usually obtained at the time of completion of vocational training or graduation from university;
• Five years of professional experiences as an IT professional during the last seven years; 
• Possession of German language skills at level B1.⁴¹

Increased obligations of employers and foreigners

The FEG introduces new and increased obligations for foreigners and employers. For example, in the event that employment or an assignment ends early, an administrative fine of up to EUR 1,000 could apply. The employee would be liable for this fine if he/she does not notify the responsible central immigration office within two weeks’ knowledge of the termination.⁴⁸

Furthermore, the employer will become subject to notification requirements. The employer will have to report to the responsible central immigration office when there is a sooner-than-expected end of employment or assignment.⁴⁹ Not complying with this obligation could lead to an administrative fine of up to EUR 30,000. In the FEG’s first draft, the suggested deadline for the notification was in line with the employee’s obligation, i.e., two weeks counted from the day on which the employer is aware of the sooner-than-expected end of employment or assignment. ⁵⁰ However, following criticism from the Federal Council, the Federal Government reconsidered and ultimately revised this provision by extending the deadline from two weeks to four weeks.⁵¹