Effective from 1 January 2017, the minimum wage in Germany will increase from €8.50 to €8.84per hour.
Currently, there are some exceptions for collective bargaining agreements. From 1 January 2017 collective bargaining agreements have to provide a minimum wage of €8.50. However, from 1 January 2018 such exceptions for collective bargaining agreements will be lifted. The commission said that it is yet not clear what the effect of raising the minimum wage will be on labour costs and productivity or indeed its impact on the economy as a whole. It is still hotly debated whether the minimum wage has the targeted effect of fairer wages and better working conditions.
What Action Should Employers Take?
Payroll should be reviewed for employees with lower wages to ensure that the minimum wage is being paid.
Failure to comply with the minimum wage requirement is an administrative offence which could lead to a penalty of up to €500,000.
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