The German government recently approved the country’s first minimum wage. With the application of the minimum wage, the government intends to guarantee a decent quality of life for German employees and to promote the financial stability of the country's social security system. What will be the impact on employers? Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com

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Minimum wage introduced in Germany
Publication Date: 22 July 2014 | Author(s): Corinna Verhoek Member Firm(s): Kliemt &
Vollstädt Country: Germany
The German government recently approved the country’s first minimum wage.
Germany was previously one of seven countries in European Union without a statutory minimum
wage level. A minimum wage only applied to employees whose contracts or sectors were
governed by collective agreements (Tarifvertrag). This resulted in around 30% of employees in the
East of the country earning less than the new minimum wage, about twice the number of
employees as in the West.
Key points
• As of January 1, 2015 a new legal minimum wage of EUR 8.50 an hour will be enforced.
• The minimum wage shall apply nationwide without any territorial exceptions.
• There will be some exceptions for specific sectors and groups of employees. For example, the
minimum wage does not cover minors or long-term unemployed people for their first six
months back on the job. Short internships that form part of a training or education will also
be exempt.
• For some work sectors the statute provides special arrangements. For example, in the sector of
newspaper delivery the minimum wage is introduced gradually until January 2017. For
seasonal workers, the minimum wage applies; however, the time period during which there
is no requirement to contribute to social security is extended from 50 to 70 days.
• Any current collective agreements that provide for a different minimum wage shall be applicable
until December 31, 2016, at the latest. As of January 1, 2017, the minimum wage shall be
observed nationwide.
With the application of the minimum wage, the government intends to guarantee a decent quality
of life for employees in Germany. The minimum wage is also intended to promote the financial
stability of the German social security system, as low incomes will no longer have to be
supplemented by public allowances.
A “minimum wage commission” consisting of representatives of the collective bargaining partners
will be formed in order to propose adjustments of the minimum wage every two years, beginning
June 1, 2017. The proposal will need to be approved by the government through an ordinance,
and German customs will be responsible for monitoring the observance of the minimum wage.
Taken from the Ius Laboris Knowledge Base: www.globalhrlaw.com
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