News - Germany

Germany - July 2014

Minimum wage to be introduced in Germany from 2015

A minimum wage of € 8.50 gross per hour will be introduced in Germany for the first time from January 2015. Collective agreements with a lower minimum wage can still remain in force until December 2016. The minimum wage will be reassessed every other year and shall be in line with the overall progression of wages negotiated in collective agreements. The first reassessment will take place for the year of 2017.

There are some exceptions such as:

1) For trainees: if trainees carry out work as part of their professional training or their studies, the minimum wage only has to be paid after three months of employment.

2) For workers below the age of 18: minimum wage rules do only apply if the worker has completed his professional training (“abgeschlossene Berufsausbildung”).

3) There will be special rules for the long-term unemployed regarding the first few months of new employment.

4) The new legislation also impacts on marginal employment and low-paying jobs in private households (so called ‘Mini-Jobs’). From January 2015, these will be exempt from social security contributions, if employment within one calendar year is limited to three months (currently: two months) or 70 days (currently: 50 days), except for employment relationships where the services are rendered on a professional (“berufsmäßig”) basis and the gross salary exceeds € 450.00 per month. These changes aim to reduce the impact of the minimum wage with regard to seasonal work.  

Commentary

It is still hotly debated whether the minimum wage will deliver fairer wages and better working conditions. Its opponents fear that the introduction of the minimum wage will reduce available jobs and cost about ten billion Euros. The supporters of the minimum wage emphasize that in most other European countries a minimum wage is in place without resulting in negative impact on the economy. Around four million employees will benefit from the new regulation and finally receive fairer wages. Who is right? We will find out over the next few years.

Resources

Draft bill of the German Parliament dated 28.05.2014 (in German language)

For further information or to discuss any of the issues raised, please contact Stefanie Andrelang on +49 (0) 89 2422300 at Keller Menz - http://www.keller-menz.eu/.

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