Mobility Matters: Germany’s Fachkraefteeinwanderungsgesetz

May 2019

Bob Mischler

Bob Mischler

National Principal-In-Charge, GMS, KPMG US

+1 212-872-3174

 

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.

 

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Germany’s Fachkraefteeinwanderungsgesetz: Not Just a Tongue Twister but a Quantum Leap in Immigration


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

 

Initiator Related action Completed? Date of completion
Federal Government3 Drafts law and sends it to Federal Council4 for initial feedback Yes January 4, 2019
Federal Council Comments on draft and can make suggestion for changes and amendments within six weeks Yes February 15, 2019
Federal Government Provides responses to comments and suggestions from Federal Council; drafted law is sent to Federal Parliament5 Yes March 13, 2019
Federal Parliament 

Decides on the drafted law and passes it on to Federal Council for final decision

ISSUE: Federal Council has the point of view that its approval is required; while Federal Government only thinks a veto is possible and the veto can be over-ridden by a vote in the Federal Parliament7

No Process started on May 9, 20196
Federal Council Makes final decision, whereas effects from a dissent can be contentious  No Stage not reached 

 

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.

Permission category Residence permit for skilled migrants with vocational training Residence permit for skilled migrants with university degree EU Blue Card 
Applicable regulations  Sec. 18 and 18a AufenthG-E Sec. 18 and 18b (1) AufenthG-E Sec. 18b (2) AufenthG 
Internal approval from Federal Employment Agency required Yes Yes Not required, if higher minimum salary level is attained13
Conditions for internal approval from Federal Employment Agency Local employment contract, 14 comparable working conditions to those of a local employee in a comparable position, 15 education must be adequate compared with the job role16 Local employment contract17, comparable working conditions to those of a local employee in a comparable position, 18 education must be adequate compared with the job role19 Local employment contract20, comparable working conditions to those of a local employee in a comparable position, 21 19 education must be adequate compared with the job role22
Further requirements Confirmation on comparability of foreign vocational training, 23 permission to practice in a restricted occupation24 Confirmation on comparability of foreign university25; permission to practice in a restricted occupation Confirmation on comparability of foreign university26; permission to practice in a restricted occupation; attaining the applicable minimum salary for the occupation27
Initial validity period28 4 years 4 years 4 years
Expedited visa application process applicable29 Yes Yes Yes


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.

Regulation Short description Further comments 
Sec. 19 AufenthG-E Issuance of ICT Card for intra-corporate transfers (usually over 90 days) Implements the so-called ICT Directive36 and will correlate to the existing regulation of Sec. 19b AufenthG; it is designed for the purpose of intra-corporate transfers from a non-EU member state to Germany 
Sec. 19a AufenthG-E Short-term intra-corporate mobility scheme with notification requirement

Implements the short-term intra-corporate mobility scheme under the ICT Directive, which requires a notification to Bundesamt für Migration und Fluechtinge (BAMF) 

for utilization

Sec. 19b AufenthG-E

Long-term intra-corporate mobility scheme with requirement of obtaining an additional permit for Germany 

(Mobile-ICT-Card)

Implementation of the long-term 

intra-corporate mobility scheme under the ICT Directive, which requires an additional permit for Germany—the application needs to be filed with the local immigration office directly or via BAMF that forwards it to the immigration office

Sec. 18d AufenthG-E Issuance of a residence permit for researchers Correlates mostly to the existing regulation of Sec. 20 AufenthG with only minor changes 
Sec. 19c (1) AufenthG-E Regulation has the function of an interface to various special employment forms regulated in BeschV. For example, for sportsmen, journalists, staff posted in Germany in order to fulfill obligations from a contract for work and materials. Summarizes different reasons for residence permit issuance to employed foreigners
Sec. 19c (2) AufenthG-E in conjunction with BeschV Regulation allows issuance of residence permits for foreigners with significant practical work experience See further information below

 

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

Expedited visa applications process and central immigration offices

With a view to the country’s need to attract foreign workers, the German government appears keen to accelerate visa application and grant procedures for foreign workers. Thus, an expedited procedure for skilled foreign workers will be established.42

Based on a pre-approval decision from the responsible German immigration office, the German diplomatic missions will have to grant an appointment to the visa applicant within three weeks. The three-week period is counted from the submission of the pre-approval decision by the applicant to the diplomatic mission. Spouses or registered same-sex partners and minors will also qualify for the expedited procedure, if they file their visa applications within a period of three months from the principal visa applicant’s application date. The decision-making process at the diplomatic mission will take up to an additional three weeks after the interview. 

Especially for visa applications filed at German diplomatic missions in countries with long waiting periods for appointments (e.g., Iran or western Balkan countries), the guaranteed processing times illustrate why it can be considered as “fast track.” 

There will be a supplementary regulation regarding jurisdiction and address in each German federal state where at least one central immigration office can be established.43 In states with higher needs of skilled workers—for example Hessen or Bayern—up to four central immigration authorities are expected to be established.44

The applicant for the pre-approval process is the employer in Germany. The expedited visa application procedure will only be applicable if a local German employment contract has been concluded. 45 Thus, it will not apply to intra-corporate transfers based on an active foreign employment contract supplemented by an assignment agreement. The responsible central immigration office and the employer must conclude a special agreement with respect to the expedited immigration procedure that, for example, has to contain a list of documents, as well as other pertinent information needed, for the pre-approval process.46

An additional governmental fee of EUR 411 shall apply, but it is currently not clear if the visa applicant or the applicant’s employer is required to pay it. 47 The additional fee is imposed as a result of the coordination role of the central immigration office and the additional efforts generated.

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

 

 

Conclusion - Tongue twister or quantum leap or both?

The draft of FEG aims to address the need to attract skilled foreign workers to Germany. The various aspects of the draft legislation, defining terms, conditions for labor market access, modified settlement and residence permits rules, new requirements for foreign workers and employers vis-à-vis the immigration authorities, etc., should help facilitate the government’s goals to fill jobs and promote a dynamic, future-looking economy, while helping to assure the country’s tax and social security revenues. Furthermore, the draft also takes into account the need for skilled workers who may not have a formal university degree or vocational training (particularly for the IT sector). All of this should be good news both for employers bringing foreign workers to Germany and the workers seeking employment opportunities there.

Furthermore, the suggested fast-track visa procedure can be considered a welcome first step on the path to an improved immigration system. It is hoped this will help alleviate the burdens on immigration officers and diplomatic missions that are in need of additional staff and “digitalization” as well as automation of processes. However, there is a possibility that the fast-track procedure could in fact exacerbate the current under-staffed, under-resourced situation with its guarantee of quick processing times and the expected uptick in migration to Germany. The exclusion of intra-corporate transfers from the fast-track visa procedures may not be reasonable, because companies hosting such assignees face the same pressure concerning quick start dates, as if hiring/employing the individuals locally. 

Overall, the FEG is not just a tongue twister; it is also a quantum leap. If enacted, it is expected to bring the German immigration system to the next level, with much-needed improvements and far-reaching enhancements that will hopefully better serve the hiring and talent development needs of German employers and the labor market access needs of foreign skilled workers, while also supporting Germany’s socio-economic interests.

Footnotes

  1. Report of Prognos AG “Arbeitslandschaft 2040,” online available under: https://www.prognos.com/uploads/tx_atwpubdb/20150521_Prognos_Arbeitslandschaft2040-final.pdf. Please note that this is a third-party (non-KPMG, non-governmental) website. Provision of this link does not represent an endorsement of this site by KPMG.
  2. Summarized under: http://dipbt.bundestag.de/extrakt/ba/WP19/2429/242999.html.
  3. In German: Bundesregierung.
  4. In German: Bundesrat.
  5. In German: Bundestag.
  6. See: https://www.bundestag.de/dokumente/textarchiv/2019/kw19-defachkraefteeinwanderung-640406; however, the Bundestag will not immediately decide on the draft, but various committees of the Bundestag will prepare a draft resolution for the plenum. 
  7. See: BT-Drs. 19/8285, pages 138 and 171.
  8. See: BT-Drs. 19/8285, page 66.
  9. The postfix–E indicates a regulation as per the draft.
  10. According to Sec. 18 (3) AufenthG-E.
  11. In German: Aufenthaltserlaubnis.
  12. The prefix “EU” indicates only that the (EU) Blue Card is based on an EU regulation (No. 2009/50). It is neither a permit category for EU nationals nor an EU-wide residence and work permit.
  13. The minimum salary requirement in 2019 for shortage occupations is EUR 41,484 and for others EUR 53,600. See: Bundesanzeiger from January 15, 2019.
  14. 14. Sec. 39 (2) Sentence 1 No. 3 AufenthG-E.
  15. Sec. 39 (2) Sentence 1 No. 1 AufenthG-E.
  16. Sec. 39 (2) Sentence 1 No. 2 a) AufenthG-E.
  17. Sec. 39 (2) Sentence 1 No. 3 AufenthG-E.
  18. Sec. 39 (2) Sentence 1 No. 1 AufenthG-E.
  19. Sec. 39 (2) Sentence 1 No. 2 a) AufenthG-E.
  20. Sec. 39 (2) Sentence 1 No. 3 AufenthG-E.
  21. Sec. 39 (2) Sentence 1 No. 1 AufenthG-E.
  22. Sec. 39 (2) Sentence 1 No. 2 b) AufenthG-E.
  23. Sec. 18 (2) No. 4 AufenthG-E.
  24. In German: Berufsausuebungserlaubnis; see: Sec. 18 (2) No. 3 AufenthG-E.
  25. Sec. 18 (2) No. 4 AufenthG-E.
  26. Sec. 18 (2) No. 4 AufenthG-E.
  27. See Footnote 9.
  28. Entry visas based on the mentioned regulations will be valid between 90 days and one year pursuant to Sec. 18 (2) of CISA (Convention Implementing the Schengen Agreement).
  29. See below under section “Expedited Visa Application Process and Central Immigration Authorities” in detail. 
  30. In German: Niederlassungserlaubnis.
  31. See: Sec. 4 (1) Sentence 2 No. 3 and Sec. 9 (1) AufenthG. 
  32. Pursuant to Sec. 18c (1) Sentence 1 AufenthG-E.
  33. See: Sec. 18c (1) Sentence 2 AufenthG-E.
  34. See: Sec. 18c (2) Sentences 1 and 2 AufenthG-E.
  35. See: Sec. 18c (2) Sentence 3 AufenthG-E.
  36. Directive 2014/66/EU of the European Parliament and of the Council of 15 May 2014 on the conditions of entry and residence of third-country nationals in the framework of an intra-corporate transfer.
  37. Sec. 6 BeschV. Skills and knowledge of the foreigner will have to be at a level usually obtained by the time of completion of vocational training or graduation from university; additionally, the foreigner will need professional experience of five of the last seven years and German language skills at level B1 will usually have to be proven. 
  38. See: BT-Drs. 19/8285, page167.
  39. See: BT-Drs. 19/8285, page 193.
  40. This will be possible pursuant to Sec. 42 (1) No. 2 AufenthG-E. 
  41. Though exemptions from that are possible based on a discretionary decision.
  42. See Sec. 81a AufenthG-E.
  43. Sec. 71 (1) sentence 3 AufenthG-E.
  44. See: BT-Drs. 19/8285, page 77.
  45. See: BT-Drs. 19/8285, page 68.
  46. See Sec. 81a (2) AufenthG-E for more details.
  47. The latter appears to be the government’s understanding; see: BT-Drs. 19/8285, page 71.
  48. Sec. 82 (6) sentence 1 AufenthG-E.
  49. In accordance with Sec. 4 (5) sentence 3 No. 3 AufenthG-E.
  50. See: BT-Drs. 19/8285, page 84.
  51. See: BT-Drs. 19/8285, page 181.