Working time credits upon termination in SAP HCM: Section 23d of SGB IV

The settlement of time credits is not a new topic in SAP HCM. Nevertheless, it’s worth taking a closer look at it again in 2026.

In fact, as recently as August 2026, SAP released another fix in Note 3758108. This fix addresses a duplicate gross BG amount when using the technical wage type /3W4. Retroactive calculations are planned for affected cases.
[Source: SAP Note 3758108 / Support Package dated August 13, 2026]

At the same time, Section 23d of SGB IV was amended at the end of 2025. Since then, when settling accrued working time credits, the last pay period in which contribution-subject earnings were earned has been explicitly relevant—even if that period falls in the previous yea^r.1

So the question is no longer simply: Have we implemented Section 23d of SGB IV? Rather: Does our SAP payroll system correctly account for special cases—such as long periods of sick pay prior to settlement—in accordance with contribution and reporting regulations?

When does a working-time credit become subject to settlement?

Upon termination of employment, there are still 40, 60, or 100 “Plus” hours remaining in the working-time account. It is no longer possible to take time off in lieu. The credit is paid out. So far, that makes sense.

However, a case from the Federal Labor Court shows that even determining whether a claim actually exists is not always quite so simple:

When she left the company, an employee still had 67.10 hours remaining in her work-time account. Although she had previously been irrevocably released from her duties, these hours were not automatically considered to have been offset. The Federal Labor Court (BAG) awarded her 1,317.28 euros before tax for the remaining balance.

The key point from a practical standpoint: A leave of absence does not automatically reduce a work-time account. It must be clear that the leave of absence is intended specifically for this purpose.

[Source: BAG, 5 AZR 578/18]

Once it is determined that the credit balance will be paid out, the case is forwarded to Payroll. And that is where Section 23d of SGB IV comes into play.

What does Section 23d of SGB IV provide for?

Effective December 24, 2025, paid wage credits derived from working time credits will be allocated to the most recent pay period in which the employee received current, contributory wages.

This period may also fall within a previous calendar year.

This is particularly relevant when some time has passed between the last regular payment and the settlement.

A Real-World Example

The German Pension Insurance Fund itself uses the following case as an example in 2026:

An employee receives 4,500 euros in monthly pay. Continued pay during sick leave ends on May 15, 2025. Thereafter, he will receive sick pay until October 29, 2026. His employment ends the following day.

The following will be settled:
3,000 euros in vacation entitlement

4,000 euros in accrued working time
There are thus more than 17 months between the last current contributory pay period (May 2025) and the settlement (October 2026).
This illustrates why Section 23d is relevant: For the working time credit, one must look back to the last pay period in which current, contributory wages were recorded. What matters is not the month of payment, but this last “currently recorded” period—even if it falls in the previous year.²

Overtime credit or vacation pay? An important distinction.

In the example of the German Pension Insurance, vacation pay and overtime credit are paid out at the same time. However, for contribution purposes, they are not simply treated the same.

Work Time Credit

Eligibility	What is paid out?	Classification
	Time already worked and recorded in the work time account	Section 23d of SGB IV may be relevant
Vacation Pay	Vacation Entitlement No Longer Available	Separate Treatment for Social Security Contribution Purposes
Value Credit	Credit accumulated over the long term, such as for future leave of absence	Separate statutory framework

[Sources: § 23d SGB IV; DRV, summa summarum 2/2026]
Especially when several payments are due at the time of withdrawal, it should therefore be clear from the outset which entitlement corresponds to which amount.

But what does this mean for SAP HCM?

SAP has made several adjustments to the processing of time credits in recent years.
In 2025, SAP Note 3604584 introduced, among other things, the technical wage types /3W4 and /3WD for the accrual principle. The subapplication SVZ0 has been active by default since January 1, 2026. 4, 5
And even in 2026, the issue was not yet resolved: SAP Note 3758108 corrected the aforementioned double gross amount for the Social Insurance Fund (BG) in connection with /3W4.6
This is a good opportunity to evaluate your own implementation based on more than just a standard termination.

For SAP Professionals

Of particular interest are cases in which the last month with current contributory earnings was quite some time ago or even occurred in the previous year.

Even automatically generated settlements deserve closer scrutiny. What matters is not only whether the entitlement is recorded correctly, but also how it is subsequently processed by time tracking and payroll.

Which SAP corrections and follow-up activities are relevant depends on the specific system version and the actual implementation.

How is the settlement of accrued time recorded in SAP?

One option in the standard SAP system is Infotype 0416, “Time Quota Settlements.”

Any remaining time entitlements can be compensated financially. SAP cites, for example, vacation or time off in lieu of overtime. Depending on the process, different compensation rules can be defined.7

In practice, based on our experience, there is no single approach. Companies use different time accounts, pay types, and, in some cases, customer-specific processes.

That is why the question “Do we use IT0416?” is not sufficient for an assessment—a more relevant question is: What happens to the settlement in our payroll afterward?

Three Cases We Would Examine More Closely

1. Extended Receipt of Sick Pay Prior to Settlement

The last month in which contributory earnings were earned may have been quite some time ago. The German Pension Insurance addresses precisely this scenario in its 2026 publication.

2. The Relevant Payroll Month Is in the Previous Year

A change of year does not reset the allocation. Section 23d expressly permits allocation to a payroll period outside the current calendar year.

3. The support package has been installed

This alone does not answer the question of whether all necessary follow-up activities have been completed. SAP Note 3758108, for example, specifies that retroactive calculations must be performed for affected employees.

The third point, in particular, is easily overlooked in everyday life. The system is technically up to date. Nevertheless, there may still be work to be done.

What should the payroll department check in such a case?

A few questions can help quickly identify whether an audit is necessary:

What is actually being paid out: accrued working time, vacation, or another type of entitlement?
When was the last time regular, contributory wages were paid?
Was there sick pay or another extended absence prior to the settlement?
Does the relevant period possibly fall within the previous year?
How is the settlement generated in your own SAP system?
Have the latest SAP updates been applied, and have the corresponding follow-up activities been taken into account?

Anyone who cannot clearly answer these questions in a specific case should take a closer look at it. Especially when there is a lack of time or specialized SAP expertise in day-to-day operations, we provide support with our Business Payroll Service even directly in payroll processing—from individual tasks and follow-up activities all the way to complete payroll processing.

By the way: We’re not talking about a minor issue here

As of the end of 2023, there were a total of 473 million surplus hours in German short-time work accounts. Employees with short-time work accounts had saved an average of just over 30 hours^.8

The figures show the role that working time accounts play in practice. This makes accurate payroll processing all the more important when employees leave the company with a positive time balance. Especially in cases involving longer breaks before payment or an allocation that spans the turn of the year, it’s worth taking a close look at how this is handled in SAP HCM.

When Is a System Check Worth It?

Section 23d of SGB IV is not new. Nevertheless, a lot has changed since its introduction: The statutory provision was amended at the end of 2025, and SAP made further technical adjustments in 2026.

Anyone settling accrued work time upon termination should therefore pay particular attention to special cases—such as long periods of sick leave, suspensions of employment, or settlements made months after the last regular paycheck.

And not just when something stands out during payroll processing, but before errors in contributions and reporting occur.

Questions about the settlement of time credits in SAP HCM?

Are you unsure whether Section 23d of SGB IV is correctly implemented in your system? Or do you have a specific payroll scenario—such as termination, leave of absence, or extended periods of sick leave—where the allocation raises questions?

Then feel free to contact us. We’ll help you properly classify the case both from a technical standpoint and within SAP HCM, review the contribution and reporting assignments, and determine whether adjustments are needed in your system—before any retroactive calculations are made.

Sources

[1] Section 23d of Book IV of the Social Code (SGB IV): Settlement of Derived Remuneration Credits, current version effective as of December 24, 2025
[2] German Pension Insurance: summa summarum, Issue 2/2026
[3] Federal Labor Court: Judgment of November 20, 2019, Case No. 5 AZR 578/18
[4] SAP Note 3604584: Settlement of Work Time Credits, /3W4 and /3WD
[5] SAP Note 3643989: Settlement of Working Time Credits (Section 23d of SGB IV), Problems with Terminations
[6] SAP Note 3758108: Duplicate gross social insurance contribution when using wage type /3W4
[7] SAP Help Portal: Time Allowance Settlements (Infotype 0416)
[8] IAB Brief Report 12/2025: Increasing Flexibility in Working Hours: Record High of 473 Million Hours in Short-Time Work Accounts

Note: This article is intended to provide general technical information and does not constitute legal or tax advice. The content presented is based on the legal and SAP status known at the time of publication. When assessing a specific individual case, the relevant legal framework and the individual system status must be taken into account.