Facts about the new German Minimum Wage Act
Facts about the new German Minimum Wage Act Article by SCHUFFELS RECHTSANWAELTE
1. What is new?
As of January 2015, a nationwide minimum wage has been introduced in Germany with the new Minimum Wage Act (Mindestlohngesetz).
2. What is the scope of application?
The Minimum Wage Act applies to all individuals employed in Germany, regardless of whether the employers are based in Germany or abroad. There are only few groups of persons exempted, such as but not limited to long-term unemployed individuals and interns whose either school or university education or apprenticeship includes practical training. Therefore, the minimum wage has to be paid to all other individuals employed in Germany including part-timers and employees on probation.
The European Commission currently is examining whether the Minimum Wage Act also applies to drivers in transit, i.e. to vehicle drivers passing through Germany without loading respectively unloading goods or picking up respectively dropping off passengers. Meanwhile, minimum wage related controls are suspended in the field of mere transit by transport carriers with starting point and destination outside of Germany.
3. What is the amount of the minimum wage?
The minimum wage is 8,50 € gross per hour.
In a transition period until 31.12.2016, employees and employers can agree a lower wage than required by the Minimum Wage Act. However, this cannot be done by an individual agreement between employee and employer but only by collective labor agreements (which are operative, for example, for the textile industry, the hairdressing sector, meat industry, agriculture, horticulture and forestry).
Every two years the so called Minimum Wage Commission is going to discuss whether the minimum wage should be adjusted, and then the Federal Government will decide about an implementation of the commission`s proposal. For the first time, a modification of the minimum wage from 01.01.2017 on is to be discussed in 2016.
4. Is the minimum wage mandatory?
Yes, the minimum salary under the Minimum Wage Act is mandatory.
Contractual restraints of the minimum wage or its exclusion are legally invalid. Therefore it is to be seen as a mandatory minimum income guaranteed by law. In a transition period until 31.12.2016, lower wages may be paid in accordance with collective labor agreements.
5. What are the related obligations for the employer?
Several documentation and reporting obligations for employers arise from the Minimum Wage Act. Certain industries such as for instance the building industry and the transport and logistics sector are committed to fulfill extensive documentation and reporting duties. These documentation and reporting obligations may be eased concerning employments with a monthly gross salary above 2.958,- €.
6. What are the consequences of a breach?
The Customs authority (Zollverwaltung) is entrusted with monitoring the compliance with the Minimum Wage Act. Fines up to 500.000,- € as well as an expulsion from the award of
public procurements can be imposed on employers in case of violation. The decisionmakers on the employers’ side may also be held liable in terms of penal law. Companies charging another company as a contractor with services or work have to bear in mind their own liability – irrespective of negligence of fault – for the subcontractors’ obligations to pay the minimum wage to their employees. This does not mean that the subcontractor itself is not bound to fulfill the legal requirements of the Minimum Wage Act. But in case that the Customs authority discovered a breach committed by the subcontractor of the legal requirements under the Minimum Wage Act, the principal will be held liable for such breach and the Customs authority has the option to take action only towards the principal instead of the subcontractor. The principal therefore should make sure that the subcontractor will fulfill the duties imposed on him by the Minimum Wage Act, and should also be prepared so as to take recourse to the subcontractor in case of breach.
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