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Minimum Wage Act in Germany applies for all employees from 2015 on

The minimum wage in Germany comes from 2015 and many companies are already thinking about how they escape the minimum wage. The fact is, first of all, that the minimum wage applies to all workers employed in Germany and accordingly, it is very difficult to prevent this in any way. Companies are currently facing the following questions

  • Can I bypass the minimum wage in Germany or are there avoidance strategies?
  • Do I have to pay each employee the minimum wage who works in Germany?

Therefore the media is already warning that the minimum wage will not be paid by companies and be avoided by evasive strategies.

You can escape the minimum wages in Germany?

The question whether the minimum wage can be avoided, is therefore likely to emerge in 2015. Bargain hunters among the CEOs are will look closely on the possibilies. The fact is: The minimum wage can be circumvented – but only if the working conditions are changed. This is generally associated with a lot of effort. Also, there are still many unresolved issues regarding escape strategies. As long as those questions are not resolved, there is the risk that corrective payments and fines will be imposed.

We will describe some situations in which the minimum wage law may not apply. This description shall not be construed as an invitation to breach the law and the employer shall not be required to comply with these points.

Problematic: No minimum wage for freelancers

The minimum wage law does not apply to so-called freelancers. These are employed under a service contract and get not permanently paid by the client, but usually for a project. Legally, a freelancers is independent and self-employed. However, if it should be revealed by the audit authorities that the person is in fact an employee and not self-employed that will lead to severe consequences.

Insofar it must be checked whether the personal is bound to the company in means of an employment relationship or if they are in fact freelancers. In the latter case all difference amounts to the minimum wage must be paid retrospectively. In addition, these retrospective payments must usually be borne by the employer alone , because he can retroactively sue his employees only for three months.

Not possible: Waiver of minimum wage

Another idea would be to let the employee waive his minimum wage so that only the lower wages must be paid.

However, the legislature has already recognized that the economy might think of this and therefore explicitly stated in the minimum wage law that a waiver of the minimum wage is ineffective. A waiver in the employment contract is always ineffective.

Problematic: employment of interns

Companies might consider using interns instead of workers. Under certain conditions, interns do not fall under the minimum wage laws. However, the conditions in the law are strictly laid down and if these are not met, the full minimum wage is due. Thus, only high school or college placements of up to 3 months are exempt from the minimum wage in the rule.

It is also expected that repeated that exceed the total period of 3 months will be considered as a circumvention of the minimum wage. Therefore the minimum wage must be paid. In the worst case even the entire internship will subsequently be construed as an employment relationship, so that the minimum wage is also payable for the first three months of the employment.

Permitted: employment of long-term unemployed

The selfsame considerations as above also apply also for long-term unemployed workers. These are exempted for the first six months of their employment by the minimum wage. Thus companies who act in fields of practice where the employment of long-term unemployed people is an alternative can benefit from this exemption. However, the above mentioned considerations apply. It will probably not be allowed, to use a long-term unemployed person again and again with fixed-term contracts for 6 months.

Permitted: No minimum wage for apprentices

Much more attractive it will be for businesses employ trainees. For trainees, the minimum wage laws do not apply. As a trainee is also for two to three years in operation, it can be used as a fully fledged worker.

However, there will be a practical problem for most companies. The number of students has been declining for years. The media has already warned that many trainees will prefer to apply for a regular job because they get more money there under the minimum wages laws. Companies that pay for its trainees the minimum wage can therefore even perhaps advertise with a unique selling point for their company.

Permitted: reduce working hours

It is possible, however, to reduce the working hours of employees, so as to keep the minimum wage as low as possible. If employees work 10 hours less, companies accordingly have to pay 85, – Euro less. However, care must be taken that the working time is actually reduced and not only „in the contract“. Otherwise there is a risk of falling below the minimum wage.

This particularly becomes an issue if recording of working times is compulsory. According to the minimum wage law recording of working-times is compulsory for:

  • all employees marginally employed workers
  • all employees of vulnerable sectors

The employees of vulnerable sectors currently include:

  • Construction,
  • Catering and accommodation,
  • Passenger transport sector,
  • Freight forwarding, transportation and related logistics industry,
  • Fairground amusements,
  • Forestry companies,
  • Building cleaning industry,
  • Companies that participate in the assembly and dismantling of fairs and exhibitions,
  • meat industry

In these industries, particularly stringent requirements on documentation requirements apply. If the working hours are reduced only in the contract the risk is relatively large, that this point will be discovered during a control.

If the working times shall actually be lowered, companies must dismiss the employee together with the option of altered conditions of employment. The alternative is that the employee agrees  within an amendment agreement to the reduction of working hours.

Problematic: lower wages for on-call services

Maybe it will be possible to pay lower wages for on-call services of the employee. Right now it is in particular not yet clear which concept of „working-times“ the courts will apply under the minimum-wages law.
In the past it was accepted by the courts that can pay a lower wage for on-call times, as no full work is carried out during those times. However, in the recent past judicial decisions increased that ruled that even the standby times have to be paid in full.

How far these rulings will also be held under the minimum wage law is currently very unclear. Therefore, it can currently only be doubted if the reduction of wages for the standby times can be a strategy for the circumvention of the minimum wages laws.

Individual counselling is neccessary

To what extent there are individual strategies for the escape of minimum wages always depends on individual counselling. Often these questions depend on the employment contracts. It is recommended in any case, that these wil be reviewed by an Attorney.

Rechtsanwalt Dr. Tristan Wegner

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