Increase in German Minimum Wage
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.
For further information or to discuss any of the issues raised, please contact Stefanie Andrelang (email@example.com) on +49 89 2422 3040.
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.