As from January 2015 the minimum hourly rate for all workers and employees in Germany was increased to €8.50. However transition periods will apply for some sectors until the end of 2017. Even these sectors will have to pay €8.50 from 01.01.2017. Existing, generally binding minimum industry wages which are over €8.50 will remain valid.
Minors are excluded from the statutory minimum wage. The minimum wage does not apply to trainees, young people doing their entry-level qualifications, or people in compulsory practical training as part of an apprenticeship or university-level study course.
People in voluntary internships (pre apprenticeship or study courses) are entitled to claim the national minimum wage if their practical training takes longer than three months, dated from the first day of the internship. By contrast, the minimum wage rate does not apply to voluntary internships of up to three months, or to mandatory internships in the context of training or study courses. Employers are, however, bound to supply written information about the contents of contracts for all types of internship, paying particular attention to training and study goals.
Long-term unemployed people, who have been registered with the Federal Employment Agency or a Job Centre for more than one year, are only entitled to receive the minimum wage six months after taking up a new job.
3. Which Sectors Are Entitled To Pay Less Than The Legal Minimum Wage Until The End Of 2016?
For certain jobs: agreed, generally binding, collective bargaining agreements allow employers to pay less than €8.50 an hour for the duration of the transition period from 2015 until the end of 2016. What does “generally binding” mean? These collective bargaining agreements apply to ALL people employed in a specific sector, irrespective of whether or not individual companies have concluded collective bargaining agreements. Sectors where such collective bargaining agreements permit hourly rates below €8.50 cover, for example, workers in hairdressing, the meat industry, agriculture, forestry and horticulture.
4. Which Special Rules Apply To Newspaper Delivery Staff?
A phased payment system will apply to newspaper delivery staff.
From 1 January 2015 they will receive a minimum of €6.38 per hour, €7.23 per hour from 1 January 2016, and a minimum of €8.50 per hour from 2017.
However, newspaper delivery staff are frequently paid piecework rates. Even so they must still receive the minimum hourly wage. So employers have to determine how many papers are to be delivered per hour. People delivering advertising leaflets or letters, as well as newspapers, must receive the full minimum wage.
5. What Special Rules Apply To Seasonal Workers?
People employed on a temporary basis for a single season’s work in the hotel and restaurant trade, or in agriculture, will receive the minimum wage.
People employed in this way for less than 70 days annually will not be covered by social insurance, or qualify for pension or unemployment benefit insurance, even though they receive the minimum wage. However, this only applies if the work performed is of a casual nature, rather than professional, and if the monthly earnings do not exceed €450. In other words, this work is not supposed to cover the individual’s livelihood, which is why this exception does not apply to the unemployed.
The 70 day rule is only valid until the end of 2018, after which the 50 day restriction will apply again. N.B.: employers may make deductions from the minimum wage for food and accommodation costs, but these must not be excessive. The ministries concerned have yet to lay down exactly what this means.
6. Does The Minimum Wage Apply To Foreign Employees?
Yes, as from 2015, everybody employed in Germany will be entitled to receive the €8.50 minimum wage as a matter of principle. This also applies where the individuals concerned, or the companies employing them, are base abroad.
7. Will I Receive The Minimum Wage For Voluntary Work?
No. Voluntary work presupposes the people concerned have chosen this course freely – and not to make money. In fact, many volunteer workers are paid compensation for expenses; but the minimum wage does not apply.
N.B.: some employers might attempt to redefine normal work as voluntary, to avoid paying the minimum wage, dodge paying taxes and social insurance contributions and circumventing obligations under employment law.
8. Are “Mini-Jobbers” Entitled To The Minimum Wage?
Yes, people who are legally of age and doing so called mini-jobs (earning up to €450 per month) are entitled to the hourly €8.50. Mini-jobbers receive their pay without payroll deductions (gross incomes equalling net earnings) which applies even if their hourly wage is higher.
Social insurance contributions and a flat rate of tax are paid by employers. This is a legal provision and applies even in cases where mini-jobbers receive higher net pay than other employees who pay social insurance themselves. After all, social insurance contributions incur benefits for which mini-jobbers do not qualify. So in future, persons in marginal employment will be allowed to work a maximum of 52 hours a month and if they work longer hours, their employment will be subject to social insurance payments.
9. Will The New NMW Supplant Wages Payments In The Public Sector Under Public Procurement Legislation Where Minimum Pay Is Set At A Higher Level?
No. If public contract award pay scales exceed €8.50 in some Länder (federal states), these will remain valid and may continue to rise in the future.
10. What controls Will Ensure Companies Really Do Pay The Minimum Wage?
The Tax Enforcement Unit for Undeclared Work (“Finanzkontrolle Schwarzarbeit” – FKS) which is part of the customs authority, is responsible for monitoring. This body has already been monitoring compliance with minimum industry wages and its staff is to be increased by 1,600 jobs to monitor compliance with the new minimum wage.
Wherever companies have works councils, these will also keep their eyes on minimum wage compliance.
11. When Will The Minimum Wage Be Raised? And Who Is Responsible For This?
Every two years, a minimum wage commission will discuss adjusting minimum wages, with the previous two years’ collective bargaining rates acting as a benchmark. The commission will comprise representatives of both employers and employees, together with economic experts as advisors. Ultimately, the federal government will decide if the compromise is to come into force.
The commission will first meet in 2016 and deliberate the level to which the minimum wage is to be raised from 2017.
12. What Action Should Be Taken If The Boss Isn’t Prepared To Pay The Minimum Wage?
Everybody is subject to the law, or they risk fines of up to €500,000. In his or her area, everybody can refer his superior to the new law and insist the minimum wage is actually paid.