The determination of phantom wages is a focal point of social security audits. If the remuneration paid by the employer falls short of the employee’s entitlement, this is referred to as a „phantom wage“ or „fictitious wage“.
It is not uncommon for mini-jobs – which are in themselves exempt from social security contributions – to be reclassified as employment relationships subject to compulsory insurance, and the employer is threatened with substantial additional payments. In the recent past, contributions from phantom wages have been claimed in particular when employers have deviated from the regulations regarding vacation pay or continued payment of wages in the event of incapacity for work and on public holidays.
This brochure introduces the concept of phantom wages and the principle of origin that applies in social security law, and highlights ongoing and particularly current risks in social security audits.
In addition, I will be happy to provide you with individual advice.