Minimum wage - Mindestlohn
December 14, 2022
Every employee is entitled to the minimum wage. When the minimum wage was introduced in 2015, it was EUR 8.50 per hour. Over the years, the minimum wage has been continuously adjusted. Since 1 October 2022, at least EUR 12 must be paid. The Minimum Wage Commission will then decide on further increases by 30 June 2023 with effect from 1 January 2024. These amounts are understood to be gross of the employee. The amount of the minimum wage is set every two years by a minimum wage commission.
To whom does the minimum wage apply?
The minimum wage applies to employees, but not to trainees. Interns are generally considered to be employees. They do not have to be paid the minimum wage only in exceptional cases if
- it is a compulsory internship,
- the internship does not last more than three months and serves as orientation for training or studies,
- the internship does not last more than three months and is completed during training or studies, or
- the trainees are participating in an introductory qualification or vocational training preparation program funded by the employment agency.
Further exceptions apply to persons under 18 years who not completed a vocational training and to long-term unemployed persons in the first six months of employment. Deviations are possible in specific sectors or due to collective agreements, but from 1 January 2017 at least 8.50 gross must be paid in all sectors, even in sectors that were previously subject to different regulations (e.g. newspaper delivery workers).
Minimum wage for freelancers?
The minimum wage does not apply to self-employed persons. Therefore, tradespeople or freelancers do not have to be paid the minimum wage for their work, because they are not employees. Some start-ups use a business model that is largely based on the services of "freelancers". If the fees of self-employed workers are calculated on an hourly basis and are below the minimum wage, it should be carefully checked whether they are not pseudo-self-employed.
Calculate minimum wage - Steady monthly salary
If an hourly wage has been agreed, it is simply multiplied by the number of hours worked per month. Usually, however, an employee earns a fixed sum x per month. In this case, it must be checked for each month whether the minimum wage has been complied with, because each calendar month has a different number of working days. It is simpler for the employer to pay a so-called "fixed monthly wage". In this case, the hourly wage is multiplied by the number of working days per week and a factor of 4.33. The exact calculation can be made using a calculation tool provided by the employer. The exact calculation can be made using a minimum wage calculator provided by the Federal Ministry of Labour and Social Affairs. This monthly salary can then be paid out as a lump sum on a monthly basis.
Due date of the minimum wage and working time account
It should be noted that the payment of a staggered monthly salary actually contradicts section 2 (1) of the Minimum Wage Act, according to which the salary (in the amount of the minimum wage) must be paid at the agreed time, but at the latest on the last bank working day of the following month. However, since each months have different numbers of working days, the minimum wage limit is (just) not reached in some months. According to the Federal Ministry of Labour and Social Affairs, however, this is not a problem as long as it balances out within a year. Overtime must be entered into a working time account agreed in writing and compensated within twelve months by time off or payment of the minimum wage, unless this has already been reached in total by the recurring remuneration. Only up to 50 % of the agreed working time may be put into the working time account as additional hours.
Offsetting of special payments
The question is to what extent special payments can be offset against the minimum wage. Benefits that are only paid once a year, such as Christmas or holiday bonuses, can in principle only be credited to the month in which they are paid or the month thereafter, because the minimum wage must be paid by the end of the following month at the latest. However, the BAG ruled differently in a case where the employee and the employer had agreed to divide the annual special payments between the individual months, thus reaching the minimum wage threshold in the individual months. Insofar as the payments remained final to the employer and were not made for special work performance or due to special statutory purposes - such as a night work bonus - they could be taken into account for the minimum wage (federal labour court (BAG) - judgement of 25 May 2016 - 5 AZR 135/16). According to the intention of the legislator, allowances for work on Sundays and public holidays, night work and overtime bonuses, bonuses for particularly arduous or dangerous work or "piecework and quality bonuses" are not eligible for consideration. As a rule, tips and non-cash benefits of monetary value are not chargeable, although there is a controversial view that an exception should apply to food and lodging for seasonal workers.
In order to ensure that the minimum wage is actually paid for each hour worked, there is a documentation requirement for marginally employed workers and the economic sectors listed in section 2 a of the Act to Combat Clandestine Employment. These include, for example, the construction industry, restaurants and hostels, the forwarding, transport and logistics sector, forestry companies, cleaning services, trade fair construction and the meat industry, as well as the prostitution industry. The daily working time, excluding breaks, must be documented. This can be done up to seven days after the work has been done. The corresponding list remains with the employer and must be available for inspection by customs. The Federal Ministry of Labour and Social Affairs provides a model.