The German Federal Cabinet has approved an inter-ministerial action plan to combat social benefit abuse and organized labor exploitation. The 10-point program, developed by the Federal Ministry of Labour and Social Affairs (BMAS) jointly with the Federal Ministry of the Interior (BMI), introduces measures against sham employment schemes and fraudulent claims under basic income support (Grundsicherung, formerly Bürgergeld).
The government’s plan focuses on strengthening coordination among job centers (Jobcenter), customs authorities, and immigration offices, as well as equipping municipalities with additional regulatory tools to monitor substandard residential properties.
- What happened: The German Federal Government adopted a 10-point plan against organized benefit fraud and sham employment, particularly in the context of internal EU labor mobility.
- Key measures: Enhanced inter-agency data sharing, employer liability for bogus employment arrangements, expanding the BA Competence Center with five regional units, and a planned exclusion of benefits for individuals subject to an enforceable arrest warrant.
- Who is affected: Recipients of basic income support (SGB II / SGB XII), employers, landlords, and local municipal authorities.
Automated Data Sharing and Establishing the BA Competence Center
A central component of the approved plan is improved data sharing across agencies, including the use of push notifications. Since July, job centers have already been submitting alerts to customs authorities (Zoll / Finanzkontrolle Schwarzarbeit) when undeclared work or statutory minimum wage violations are suspected.
The Federal Employment Agency (Bundesagentur für Arbeit — BA) will establish a centralized Competence Center against Benefit Abuse (Kompetenzcenter Leistungsmissbrauch) backed by five regional branch units.
According to State Secretary at the Labour Ministry Leonie Gebers, closer information sharing between immigration authorities (Ausländerbehörden) and job centers will help detect abuses faster, including duplicate benefit claims.
Employer Liability for Bogus Employment
The action plan introduces stricter financial liability for companies and employers. In cases where employment (whether in a marginal Minijob or subject to full social security contributions) is registered fictitiously, incompletely, or solely to construct formal eligibility for social assistance, employers will be held liable to reimburse the state for overpaid benefits.
This liability mechanism under Book II of the Social Code (SGB II) entered into force on July 1, 2026; a corresponding rule is planned for incorporation into Book XII of the Social Code (SGB XII).
In addition, the Federal Employment Agency is updating its operational directives (Fachliche Weisungen) for job center personnel and procedural guidelines for authorities, including immigration offices, harmonizing enforcement of the EU Freedom of Movement Act (FreizügG/EU) with social security regulations.
Municipal Oversight of Substandard Properties and Cutting Off Benefits for Fugitives
A major portion of the government measures targets substandard or dilapidated residential buildings (Schrottimmobilien). As reported by Tagesschau, organizers of fraudulent schemes house individuals in rundown properties and set up bogus registration addresses, while landlords charge inflated rents reimbursed by the Jobcenter.
The planned reform of the Building Code (Baugesetzbuch) is designed to broaden municipal authority:
- facilitate repair and modernization orders (Instandsetzungsgebote);
- streamline the municipal right of pre-emption (Vorkaufsrecht);
- provide for compulsory acquisition (Enteignung) in extreme cases of persistent abuse.
The plan also foresees adjustments in civil registration law (Melderecht) to prevent overcrowding and registrations at properties subject to an official prohibition of use (Nutzungsuntersagung).
Under a separate provision of the plan, the government plans legislative amendments to bar benefits under SGB II and SGB XII for persons wanted under an enforceable arrest warrant (vollstreckbarer Haftbefehl). This primarily targets individuals sentenced to imprisonment who evade serving their sentences.
The government action plan targets organized benefit fraud and human exploitation. While it may lead to closer verification of housing details and employment records, the BMAS announcement does not introduce new documentation requirements for bona fide benefit recipients.