Statutory Minimum Wage & relative legal regulations in Germany
From January 1, 2015, the new comprehensive minimum wage per hour applies in Germany. At the basis of this statement, there is the "Act for the Strengthening of Tariff Autonomy" (Gesetz zur Stärkung der Tarifautonomie).
Scope of application of the statutory minimum wage in Germany
Every employee from the 18th year of age is entitled to the statutory minimum wage. The working time volume and time (full-time or part-time) or the settlements as mini-jobber, do not influence this legislation. A minimum wage of 8, 50 EUR per hour in also applicable for mini-jobbers; the employer has to pay an additional flat-rate tax of 30% to the German “Minijob-Zentrale”.
Apprentices are considered in a vocational training relationship with the employer (and not in an employment relationship). The statutory minimum wage is generally not applicable to apprentices. The remuneration of apprentices depends in Germany on the Vocational Training Act (Berufsbildungsgesetz).
We can generally talk about a statutory minimum wage also for trainees (§22 para.1 p.1 MiLoG-Mindestlohngesetz, Minimum Wage German Legislation).
The legal concept of the practical training (Praktikum) in Germany has been defined on § 22 para.1 p.1 MiLoG. A trainee is not a vocational training (Ausbildung) or a comparable apprentice.
According to Section 22 of the Act on the Regulation of the General Minimum Wage, no statutory minimum wage has to be paid to trainees who:
- are making a compulsory internship on the basis of a School-Law Provision, an Education Regulation, a Higher Education Provision in the framework of a training at a statutory professional academy,
- are making an internship for a limited time of (up to) three months, to provide an orientation toward a future professional training,
- are making an internship for a limited time (up to) three months concomitant to a vocational or higher education training (unless such an internship has already been provided from the same trainer),
- has to take part to the internship in order to have all the access-qualifications necessary, according to § 54a of the Third Book of the Social Code, or to a vocational training preparation in accordance with Section 68 to 70 of the Vocational Training Act.
In the case of a voluntary internship (freiwillige Praktikum) taking place before or during the course of studies or training and lasting more than three months, the trainer/employer shall pay a statutory minimum wage to the trainee.
There is no clear statement about the statutory minimum wage in Germany. Is the minimum wage to be paid if the three-month period is exceeded from the first day of the internship or only from the first days of the fourth internship´s month? The purpose of the law is to limit the abuse of the practical “instrument” of the traineeship. Unpaid long-term traineeships are not fair and may be prevented; there is therefore a good reason for paying the statutory minimum wage from the fourth month of practical training. According to the statements from the German BMAS, the minimum wage is to be paid from the first month on internships lasting more than 2 months. There are no mandatory indications regarding this matter and that is the reason why the German legal jurisdiction still has to be clarified.
This statement is also open to the question whether the period during which a new voluntary internship of less than three months could be completed in the same company, which would not be covered by the MiLoG. Here is the legislation actually not really clear. In the context of temporary employment relationships, the Federal Labour Law (Bundesarbeitsgericht) for the examination of the pre-employment conditions has established that it is possible to work with the same employer for a maximum period of three years. Possibly this principle can be used analogously.
If different internships are combines, these should all be documented separately and presented in different contracts. A six-month internship can consist of a three-month compulsory internship (unremunerated) and a three-month internship that is not exempt from the minimum wage.
For instance: In the event of a trainee having completed a three-month internship (unremunerated) before the starting of a curse of studies, it is then possible to do (one year later) six months internship consisting of three mandatory months (unremunerated) plus three remunerated months of voluntary internship. These internships shall be clearly separated from each other, preferably in two contracts.
Various kinds of internship are freed from the statutory minimum wage, i.e. a compulsory internship in accordance with § 22 para. 1 no. 1 MiLoG which are followed by an apprenticeship: in this case, this would serve directly as professional orientation. Also in this case, separate contracts for both internships will be issued.
Internship-contracts must also be presented in written form without delay, at the latest before the start of the activity (§ 2 para. 1a NAchweisG). This regulation has been effective since 16.08.2014.
Further exceptions/special cases related to statutory minimum wage matters
Young employees without professional qualifications
Young employees without professional qualifications under 18 years of age do not have any right to the statutory minimum wage. Underage workers shall not be prevented from taking up a vocational training because of the minimum wage.
For long-term unemployed who start a new employment relationship the statutory minimum wage is paid for the first six months of employment. Pursuant to §18 SGB III, with “long-term unemployed” is intended that number of people which have not been working for the last year or more. This exemption is intended to facilitate long-term unemployed in finding a new work. It is unclear how the employer should learn that the applicant belongs to this group of persons. If we assume that the employer has a legally justified interest on this matter, this latter has the right to question. Whether however, the applicant is obligated to declare this information, in view of the jurisprudence of general questions and revelatory duties, is rather very questionable.
In choosing between the applicants, the aspect of the previous unemployment is legally not decisive. The “new” employment relationship can be independently settled and enhanced.
Special Regulations for particular sectors
There is an exception to the statutory minimum wage for newspaper delivery workers. They had a claim to 75% of the statutory wage in 2015 and 85 % of the minimum wage of 8.50 euros from 2016 onwards. From 2017 onwards, the statutory minimum wage will also apply to the members of newspaper delivery staff.
Seasonal workers in the agriculture sector have the right to receive the statutory minimum wage.
In the course of the new nationwide introduction of the minimum wage, the minor social insurance- free employment will be also regulated. Accordingly, this would prospectively happen, if the employment is limited to a minimum of three months or 70 working days within a calendar years, unless the employment is carried out professionally and its pay exceeds EUR 450, 00 per month. The previous regulation provided for only two months or 50 working days. Costs and lodging have to be calculated on the minimum wage.
Transitional Measures for the collective wage agreement (AÜG)
On the basis of the Act on the Posting of Worker and on the Temporary Employment Act (AÜG), obligatory minimum wages can be negotiated, so far, for a whole industry.
These collective agreements (and only these!) are allowed to deviate from the statutory minimum wage until 31.12.2017. From the 1st January 2017, however, a minimum wage of EUR 8, 50 hourly has to be obligatory paid.
The same applies in the temporary employment sector on the basis of the legal ordinance to § 3a AÜG.
You can find an overview of those tariffs according to the German “Arbeitnehmerentsendegesetz” following the external links.
Which remuneration components are included in the statutory minimum wage? The German “Mindestlohngesetz” (Minimum Wage Act) itself does not include any regulation regarding which tariff should be included in the hourly minimum rate.
The minimum wage hourly rate shall not apply to:
- Payments received by an employee as compensation for additional benefits if he or she provides additional hours of work or working hours under special conditions (Sundays, holiday, night work, on shift work, overtime expenses).
- Christmas and holidays allowances, unless the employee is actually and irrevocably paid out at the due date for the statutory minimum wage: a monthly, proportional payment of holidays and Christmas allowances. Annual single payments of Christmas or holidays allowances are not included in the minimum wage.
- Travel allowances, if paid as compensation for the employee´s “special” expenses. This is rather considered as a sort of genuine remuneration component.
The so-called “tip” is not included in the wage (Trinkgeld); there is no actual claim for a tip. It is rather a voluntary service that shall not be accredited to the minimum wage.
Piecework wage agreements
According to the German Legislation, piecework´s rate agreements are still allowed. However, it must be ensured that the minimum statutory wage is reached, per each working hour. The contractual freedom of the employment parties is restricted to this extent: performance fluctuations must not lead to a lower hourly wage than EUR 8, 50/per hour.
The German legal regulation also raises the question of whether an average consideration is permissible in these cases, and if so, which period of time shall be considered. For further information on this topic, a legal consultation could help you.
Different contractual arrangements
In case of individual contractual agreement, the statutory minimum wage can not be precluded or restricted. Only by a court settlement, the employee can effectively forego compliance with the statutory minimum wage.
Further obligations for employers:
Recording the working hours of the employees
According to the (Arbeitszeitgesetz) German Working Hours Law (ArbzG, § 16 para. 2), each employer shall record the working hours that exceed the working time (8 hours, § 3 ArbZG) and keep the corresponding documents for two years.
The legislature has limited the documentation and reporting requirements from the MiLoG to employees whose temporary regular monthly wage amounts to a maximum gross of EUR 2958 by means of a legal ordinance (Mindestlohndokumentationspflichten-Verordnung, s. ext. Link).
The employer must keep separate records for the working hours of “mini-jobbers”, temporary workers or employees in the economy sectors pursuant to § 2a of the Anti-Discrimination Act (Schwarzarbeiterbekämpfungsgesetz), for which there is an immediate reporting obligation pursuant to § 28a Abs. 4 SGB IV.
- Construction workers,
- Workers in the hotel and restaurant industry,
- Workers in the transport business industry,
- Workers in the transports and related logistics industry,
- Exhibitor trade,
- Forestry companies,
- Cleaning Services,
- Companies involved in setting up and dismantling trade fairs and exhibitions,
- Meat industry workers.
The employer is obliged to record the start, duration and end of the daily working hours and to keep these records for two years from the time of recording. The recording of the working hours must take place no later than the end of the seventh day of the calendar day following the date of the work.
Employers must keep the documentation with which the payment of the minimum wage can be checked. This retention obligation covers the entire period of employment of the worker in question, but no more than two years in total.
„Generalunternehmerhaftung“– General Contractors and Sub-contractors Liability for Infringement
The MiLoG provides for the so-called „piercing of the corporate veil“(Durchgriffshaftung) for violations of the statutory minimum wage legislation for companies and their subcontractors.
Contrary to the misleading wording in § 13 MiLoG, the general contractor liability does not include all entrepreneurs who commission other entrepreneurs with the provision of works or services. It concerns cases in which the contractor acts as a general contractor; third parties are involved in order to fulfil a contractual obligation which he himself has contracted with his client. The Federal Labour Court (Bundesarbeitsgericht) has clarifies in some jurisprudential decisions that the liability in § 14 AEntG is an exclusive subcontractor liability, not a comprehensive “client”-liability, and the concept of the “entrepreneur” has to be interpret as restricted. A customer liability has to be taken into consideration only in the event that he does not himself fulfils a contractually required obligation for the provision of work or services, but serves a subcontractor for this purpose.
A manufacturer or consignor does not then belong to the chain of liability, if this latter, for instance, as logistics contractor, assigns a work to a gardener or a window cleaner, this service provider is not contracted to fulfil his own contractual obligation to a customer. There is no liability for the minimum wage of these companies.
The general contractor´s liability under section 13 MiLoG is not restricted to individual sectors, but, according to the clear wording, it basically includes all works and/or services which an entrepreneur assigns to another contractor. Exceptions to the statutory minimum wage results only in sectors and activities expressly excluded from the scope of this Act.
Due to the complexity of this matter, we would kindly ask you to contact a specialized attorney in case you have further questions on this topic.