German law providing for a minimum wage – current updates from Germany

Pursuant to German minimum wage legislation, which came into effect on 01.01.2015, both German and foreign employers are obliged to pay their employees performing work for them in Germany a minimum wage of at least EUR 8.50 / hour.

This obligation, which wrinkled the foreheads of the majority of Czech entrepreneurs doing business with Germany, has recently been subject to lively debate. In fact, some Czech employers, or other persons involved, tend to interpret the minimum wage law based on the preceding statements of German authorities, according to which it would be possible to (partly) offset against the German minimum wage those meal allowances paid, in accordance with Czech regulations, to employees working abroad. 

Z/C/H Legal has available a statement from the German Ministry of Labor and Social Affairs, issued at the end of January 2016. According to the statement, Czech statutory foreign meal allowances paid to employees on business trips to Germany may not even partly be used to reduce the employer’s obligation to pay the employee a wage at least equal to that required by German minimum wage law.

Based on the interpretation by the German Ministry of Labor and Social Affairs, a Czech employer is obliged to pay employees throughout their time in Germany a minimum wage in the amount of EUR 8.50 / hour, regardless of the fact that under Czech regulations employees are also entitled to a statutory meal allowance.

The above statement should answer some questions and interpretative ambiguities which have recently worried Czech entrepreneurs sending their employees to Germany. In our opinion it is clear that the obligations imposed upon Czech employers to pay their employees both the German minimum wage and the so-called meal allowances required by Czech law pursue the same purpose, i.e. to balance the increased costs of Czech employees associated with their stay in Germany. In effect, this apparent duplication of national regulations disproportionately burdens Czech employers and, in many cases, in business terms can prove terminal.

We thus believe that it is now appropriate for Czech politicians to adopt corresponding legislative measures in order to remove or at least mitigate this competitive disadvantage suffered by those Czech entrepreneurs who send their employees to Germany. However, despite the many demands we have directed to central government authorities, no measures have yet been taken.

It may be assumed that the Czech Republic will not prepare any legislative measures at least until the termination of proceedings on the so-called infringement instigated by the EU Commission against Germany in 2015 on the grounds of a conflict of (a part of) German minimum wage legislation with EU law. The proceedings have not yet been concluded; furthermore, details on the course of the proceedings have not been made public. Following the commencement of these proceedings, Germany temporarily discontinued inspections with respect to the transit of international carriers through Germany. According to our information, German customs authorities continue inspecting the fulfilment of the employers‘ obligations pursuant to the minimum wage act, despite the pending proceedings before the EU Commission.

The issue concerning the German minimum wage and the burden placed upon Czech employers associated therewith will be further monitored.

Should you have outstanding employment agenda relating to the secondment of your employees to Germany, please do not hesitate to contact us.