German minimum wage set to rise from 1 January 2017.
With effect from 1 January 2017, the minimum hourly wage in Germany will increase from EUR 8.50 to EUR 8.84. The minimum wage rate will apply during the next two years; afterwards, a commission tasked with setting the minimum wage will have to revisit the rate. The minimum wage law (from the German Mindestlohngesetz, “MiLoG”) applies to employees.
Does this change affect you and your employees, too? Slovak employers planning to second their employees to Germany must pay their employees a minimum hourly wage under MiLoG. No matter what country tax and social obligations are fulfilled in – by crossing the German border, under the German MiLoG employees will be entitled to a minimum hourly wage from their employer. It is also important to mention that travel and subsistence expenses are not included in this wage; they have to be paid extra. Further, MiLoG sets a reporting and documentation requirement for employers planning to second their employees to Germany. The reporting requirement consists in the obligation to report the beginning, end, and duration of working time to the German customs service. The documentation requirement lies in the obligation to present the German customs service with all documents required under MiLoG. All documents must be in German. The only derogation from the obligations under MiLoG applies to certain employees whose gross monthly wage exceeds EUR 2,000.
What happens if you do not fulfil your obligations? MiLoG provides for this situation, too. An employer who breaches the reporting or documentation requirement may be sanctioned up to EUR 30,000. Sanctions for acting in conflict with some statutory provisions of MiLoG could amount up to EUR 500,000.
Revisiting the introduction of the minimum wage is planned in 2020. This should verify whether the statutory provisions and framework conditions of MiLoG are appropriate. At the same time, the situation as to both undeclared work and so-called bogus employment relationships will be checked as well.