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Global employment briefing: Germany, May 2015

  • Germany


    Minimum wage 2015 – prospects for less bureaucracy?

    In certain sectors in Germany, such as the retail sector, the impact of staffing costs upon profits is particularly high. As a result, such industries are particularly affected by the German statutory minimum wage. Furthermore, for temporary or irregular roles, this is exacerbated by the increased administrative burden.

    The applicable statutory minimum wage introduced in Germany at the beginning of this year is EUR 8.50 per hour. Employers are by now familiar with the new regime but fewer organisations are likely to be familiar with new registration and documentation obligations concerning the German Minimum Wage Act (Mindestlohngesetz, MiLoG).

    New registration obligations apply to foreign employers operating in certain industries in Germany (e.g. industrial cleaning, logistics or construction). These employers must now register with German Customs.

    Separately, new record-keeping obligations for the German retail trade require that all employers who engage employees in marginal roles or who engage employees in applicable industries (as indicated above) are required to record the start, end and duration of daily working time within seven days and to retain that information for at least two years. The timing of breaks need not be recorded, merely the working day. The way in which working time is recorded is not prescribed and may therefore be conducted electronically or in writing, or may even be out-sourced. In addition, these employees will need to provide documentary evidence of receipt of the minimum wage. Breach of the recording obligation or the obligation to hold documents verifying payment of the minimum wage attracts potential fines of up to EUR 30,000.00.

    There have also been changes to requirements over documentation. Shortly before Christmas, the various Minimum Wage Regulations were relaxed for certain groups of employees and job profiles, as follows:

    • the record-keeping obligation was removed for employees earning more than EUR 2,958.00 per month;
    • the duration of daily working time only need be recorded if the employee performs his/her activities without having a fixed place of work, if the employer does not specify the working time or if the employee may schedule his/her working hours flexibly and independently;
    • employers with a registered office abroad face reduced obligations to disclose documents.

    Despite these changes, the various regulations are still onerous for employers. Whilst they remain in force at present, there is a possibility of further changes in 2015. The economic wing of the Christian Democratic Union has requested complete removal of the record-keeping obligation for those in marginal employment, as well as a further reduction in the earnings threshold to which that obligation applies, from EUR 2,958.00 to EUR 1,900.00 per month. Employers in the retail trade, in particular, may therefore wish to keep a close eye on further developments.