EOR & Compliance Digest, June 17: Germany’s Active Pension Goes Tax-Free as US Overtime Rolls Back

If you run payroll in Germany, the rules for older workers just changed. The Germany active pension, known locally as the Aktivrente, took effect on January 1, 2026. It lets people who keep working past the state retirement age earn up to 2,000 euros a month tax-free. It is the headline shift this week, but it is not the only one. The United States quietly rolled back its overtime expansion, Thailand lifted its social security ceiling, and Japan widened safety duties to freelancers. Here is what each change means for distributed teams, and what to do before the deadlines hit.

Germany Active Pension Goes Tax-Free for Over-67 Workers

The German Bundestag passed the wider pension package on December 5, 2025, and the active pension took effect on January 1, 2026. Under the scheme, the standard retirement age is currently 67. Employees who keep working past it can earn up to 2,000 euros per month free of income tax. (Source: The Local) The government expects the break to cost about 890 million euros a year in foregone tax between 2026 and 2030.

What the Germany active pension changes for payroll

The tax exemption is narrower than it first looks. It applies only to employees who pay into social security and who have passed the statutory retirement age. Self-employed contractors, freelancers, and civil servants are excluded. (Source: Grant Thornton Germany) The earnings stay tax-free, but they are not contribution-free. Workers still pay health and long-term care contributions. Employers, meanwhile, must keep paying pension and unemployment insurance on those wages.

Why the active pension matters for employers

For a startup with a senior engineer or finance lead in Germany who wanted to retire, this is a retention lever. The labour ministry framed it as a way to keep experienced staff in a tight market. So the practical question is how your payroll engine treats the exemption. Your German payroll provider has to apply the tax-free band correctly while still deducting the social contributions. Maybe you handle German hires through an employer of record for German payroll. If so, confirm the active pension logic is already coded before the next cycle. Get it wrong and you either over-tax a returning worker or under-pay statutory contributions.

Action item: Do you employ anyone in Germany at or above 67? Check this month that your payroll system applies the 2,000 euro tax-free band. It must still run pension and unemployment deductions. Ask your provider for written confirmation.

US Overtime Threshold Rolls Back to the 2019 Level

The US Department of Labor confirmed the change on May 14, 2026. It is restoring the older, lower salary thresholds for the executive, administrative, and professional overtime exemptions. (Source: US Department of Labor) As a result, the exempt salary floor returns to 684 US dollars a week, or 35,568 dollars a year. The highly compensated employee level stays at 107,432 dollars.

This technical amendment follows the courts. Federal judges in Texas vacated the 2024 expansion, and the Fifth Circuit dismissed the final appeal on May 5, 2026. (Source: Ogletree Deakins) Because the 2024 increases are now gone, fewer salaried staff automatically qualify for overtime. However, several states set their own higher floors, so the federal number is the minimum, not the ceiling. If you employ salaried staff in the US, review your exempt classifications against both the federal rule and any state rule that applies. Start with the latest US employment law requirements before you reclassify anyone.

Thailand Raises Its Social Security Ceiling and Leave Floors

Thailand lifted its social security contribution ceiling from 15,000 baht to 17,500 baht in monthly wages, effective January 1, 2026. (Source: Rödl & Partner) Because contributions run at 5 percent, the maximum monthly deduction for each side rises from 750 baht to 875 baht. So both your Thai employees and your company pay a little more each month.

Separately, amendments to the Labour Protection Act took effect on December 7, 2025. They expand several leave entitlements, including longer maternity leave. (Source: AustCham Thailand) A new Employee Welfare Fund is also scheduled to start in October 2026. If you employ staff in Thailand, update your payroll deductions now and review your Thailand employment law obligations for the wider leave rules. For background on how wage ceilings feed into statutory pay, see this primer on social security wages.

Japan Extends Safety Duties to Freelancers

Japan’s Freelance Act has been in force since November 2024. In 2026, new amendments tie into the Occupational Safety and Health Act. They extend safety protections to sole proprietors, including freelance IT engineers and independent construction workers. (Source: Abe & Partners) In short, the line between contractor and protected worker keeps moving toward the worker.

This matters if you engage Japanese freelancers. The Freelance Act already requires written terms, payment within 60 days, and 30 days’ notice before ending a continuing contract. (Source: Fisher Phillips) Now safety obligations are layered on top. Therefore, if you treat Japanese contractors casually, you carry growing misclassification risk. Review your contracts before you renew them, and check your hiring path against the rules for hiring talent in Japan.

Quick Hits

• UAE: Private-sector firms must lift Emirati salaries to at least 6,000 dirhams a month by June 30, 2026. From July 1, non-compliant companies risk suspended work permits and lost Emiratisation credit. (Source: Middle East Briefing)
• EU: The bloc’s Pay Transparency Directive transposition deadline lapsed on June 7, 2026. As a result, salary-history bans and pay-range disclosure rules will start landing in national law across member states. (Source: Lewis Silkin)

Action Items This Week

If you employ over-67 staff in Germany: Confirm your payroll provider applies the active pension 2,000 euro tax-free band. It must still deduct pension and unemployment contributions. Ask for it in writing.

If you have salaried staff in the US: Re-check exempt classifications against the restored 684 dollar weekly floor. Also check any stricter state threshold before July 1.

If you employ in Thailand: Update social security deductions to the new 17,500 baht ceiling from the January cycle. Budget for the expanded leave entitlements too.

If you hire freelancers in Japan: Audit contracts for written terms and the 60-day payment rule. Add the new safety duties before renewal.

If you hire Emiratis in the UAE: Adjust existing contracts to the 6,000 dirham minimum before June 30.

The Bottom Line for Distributed Teams

Four countries moved their employment rules in four different directions this month. Germany’s active pension rewards older workers, the US trimmed overtime eligibility, Thailand raised costs, and Japan tightened contractor duties. Tracking each one by hand does not scale. Maybe these shifts have you rethinking how you run multi-country payroll. Asanify’s Global HRMS and EOR handle local tax, payroll, and statutory rules in one place. Worth a look before your next hire.

Frequently Asked Questions

What is Germany’s active pension (Aktivrente)?
It is a tax break that started on January 1, 2026. Employees who work past Germany’s statutory retirement age of 67 can earn up to 2,000 euros a month free of income tax. The earnings still carry social security contributions. Self-employed people, freelancers, and civil servants are not eligible.

Does the German active pension remove all payroll deductions?
No. Only income tax is waived on the first 2,000 euros a month. Employees still pay health and long-term care contributions, and employers still pay pension and unemployment insurance on those wages.

What is the US overtime salary threshold in 2026?
The exempt salary floor is back to 684 US dollars a week, about 35,568 dollars a year, after the Department of Labor restored the 2019 rule. The highly compensated employee level stays at 107,432 dollars. Some states set higher floors that override the federal minimum.

Do we need an EOR to hire one person in another country?
Say you have one or two hires in a country. An employer of record removes the need to open a local entity. It also absorbs the tax and compliance risk. Companies with ten or more staff in one country often switch to a local entity. An EOR keeps you current as rules like these change.

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.