Minimum wage to usher in ‘new era of plenty’, come what may

Czech Republic: German Minimum Wage Act has come into force on 1 January 2015

On 1 January 2015, the German Minimum Wage Act has come into force, introducing an hourly minimum wage of EUR 8.50 for all employees who perform work on German territory (with a few exemptions).

A minimum wage had already been introduced in certain industries some time previously, and many collective bargaining agreements in Germany have for a long time been stipulating wages above the minimum wage. From its very inception, the Minimum Wage Act was in essence an ideology-driven project, pursued primarily by the Social Democratic Party (SPD) and the labor unions.

Criticism of the Act within Germany focused on the fact that it infringes with the freedom of collective bargaining and distorts the labor market. Quite rightly, the application of the new law to foreign employees has been called a violation of EU law, in particular the freedom to provide services (Sec. 20 of the Minimum Wage Act requires all employers – including those residing in other EU member states or outside the EU – to pay their employees at least the minimum wage if these employees perform work in Germany). On the other side of the barricade, defenders of the Minimum Wage Act invoked the slogan „Fair wages for all“, and praised the piece of legislation as a victory over neoliberalism (reminiscent of the Wilhelmine motto according to which the German spirit is to heal the entire world – now in the form of a socially engineered wage floor).

For now, the application of the Minimum Wage Act to freight transits through Germany, e.g. from the Czech Republic to France and back, has been suspended; however, if the forwarding agent takes on goods in Germany on the return trip, the Minimum Wage Act, and thus the EUR 8.50 minimum wage, applies. It is anyone’s guess how the customs authorities (who are tasked with overseeing compliance with the new law) are supposed to check this.

The Minimum Wage Act triggers extensive reporting and record-keeping duties for employers:
– Work in Germany must reported via facsimile to the Federal Finance Directorate West in Cologne (customs department) – in German language, and prior to undertaking the trip to Germany (fax No.: +49-221-964870; the relevant forms 003037 and 033037 can be found at and;
– If the customs authorities perform an inspection, the following documentation must be presented (in German!): employment agreement or similar agreements, time sheets, pay slips and payroll accounting;
– These documents must be archived for two years (and the employer must submit an affidavit to such effect, as a part of its official schedule of deployment of workers to Germany);
– The respective company must appoint a process agent and a contact person within Germany;
– If the form is submitted with false or inaccurate data, incompletely, in conflict with proper procedure, or late, the authorities may fine the employer for this administrative offense in an amount of up to EUR 30,000.

As if all this were not enough, the Minimum Wage Act also implies liability risks for firms commissioning a shipping company, as the client is liable alongside the forwarding agent whom they hired.

Unless and until a court has clarified whether the application of the Minimum Wage Act to foreign employees who merely pass through Germany is compatible with European law, the only prudent advice can be to follow the reporting and record-keeping duties and to supply drivers with the requisite documentation. Where fines or warnings are issued, the affected company ought to „pull all stops“ and make use of all available remedies, so as to make sure that the legal issue will soon be referred to the Court of Justice (ECJ).

Ultimately, the Minimum Wage Act must be considered a catastrophe in terms of regulatory policy, and a monstrosity in terms of the bureaucratic burden to which it gives rise. No matter: it is the law of the land, and actually quite unambiguous in its wording (no matter the uncertainties associated with its application in practice). Barring clarification from the bench, those who come within the scope of the Minimum Wage Act have no choice but to abide by its letter.

Source: Act on the stipulation of a general minimum wage (Minimum Wage Act – Mindestlohngesetz – MiLoG) of 11 August 2014 (in force since 1 January 2015)

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