Minimum Wage Act in Germany
As of 1 January, 2015 the Act on the organization of a universal minimum wage (hereinafter the “Act”) applied to the entire territory of the Federal Republic of Germany. The Act sets a single minimum wage to which all persons performing work in the territory of Germany (whether for German or foreign employers) are entitled. This legislation, therefore, applies to many Czech and Slovak entrepreneurs.
The minimum wage, which amounts to EUR 8.5 per hour, is entitled to any employee who performs work for his employer in Germany. Although the law may seem contrary to the European principle of freedom to provide services, with respect to the current jurisprudence of the European Court of Justice and Article 9 of the I. Regulation, this adjustment essentially conforms with European law.
The employer is, therefore, obliged to pay their workers the minimum remuneration in the amount corresponding to the minimum wage in Germany, even in the case of short-term work. Currently, the applicability of the Act to cases of transit/transport is under discussion, e.g. if the employee only passes through Germany (the effectiveness of the Act regarding transit traffic is suspended for the time being). The employer is also obliged to perform reporting and record-keeping obligations on employees and activities in the territory of Germany for the German customs office, and is required to keep such records. For employers whose employees carry out mobile activities in German territory, the Act provides some relief. Employers that do not comply with obligations introduced by the Act are threatened by a fine of up to 500.000,- EUR.
Employers, however, are not the only entities to whom the Act affects. The payment of minimum wages to employees by companies for whom the employer in Germany performs work or to whom it provides services are liable.
This liability cannot be excluded. The employee is also entitled to claim directly against the client as a guarantor, even without it first applying against their employer.
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Author: Achim Jähnke, Dvořák Hager & Partners