SOKA BAU – the holiday fund for the construction industry in Germany.

What is SOKA BAU?

SOKA BAU is the German construction industry holiday fund, which operates based on the collective labour agreement on the operation of social funds in the construction industry (VTV), which under the German Act on the Posting of Workers Abroad (AEntG) also applies to employers delegating their employees to work in Germany. Accordingly, an employer paying wages to a construction worker working in Germany should deduct the appropriate percentage from the wages as a contribution paid to the holiday fund.

Determining whether a given employee qualifies as a construction worker under the collective agreement is not as straightforward as it might seem. The legal act precisely lists the types of work and professions considered construction work and those which are not. Construction work includes, among others: laying and fitting panels, tiles, and mosaics; bricklaying; plastering, stucco, gypsum, and drywall work; building drying; façade work; road construction; and drying of buildings. Work not considered construction includes, for example, that carried out by glaziers, plumbers, or electrical installers, unless such persons perform tasks listed as construction work.

Currently, the contribution payable to SOKA BAU amounts to 15.4% of the gross wage paid for work in Germany and must be paid to the holiday fund’s account by the 20th day of the month following the month for which the contributions are made. For employees posted to work in Germany, only the portion of wages paid for work performed abroad is subject to contributions; the portion paid for work performed in Poland is exempt from contribution deductions.

How does SOKA BAU work?

The holiday fund creates two funds from the collected contributions: the equalisation fund for construction holiday wages (ULKA) and the additional financial security fund in construction (ZVK). The money held in the equalisation fund for construction holiday wages constitutes the amount from which wages paid as holiday remuneration to employees employed in Germany are disbursed.

An employee who, despite contributions being paid, did not take holiday during work in Germany, has the right to request payment of an equivalent for unused holiday pay. The application for payment of the equivalent for unused holiday can be submitted three months after the end of work in Germany, as this is when the holiday fund legally considers that the employee will not return to work in Germany in the near future and holding their contributions is no longer necessary.

Holiday claims and claims for the equivalent expire at the end of the year following the year in which the claim arose. In such cases, SOKA BAU pays compensation for unused holiday or unpaid equivalent.

What are the consequences of not paying contributions?

Delays in paying contributions result in interest charges of 0.9% on the contribution amount for each month of delay. SOKA BAU may initiate legal proceedings in case of unpaid contributions, which can cause additional problems because, according to the collective agreement, the only competent court for these matters is the court in Wiesbaden – the city where the holiday fund’s headquarters are located.

Failure to pay contributions on time also constitutes an offence under German criminal law, in which case a fine of up to €500,000 may be imposed.