Unlike most European countries and the United States, Germany’s workforce has long operated without a nationwide/general minimum wage. But that will change January 1, 2015, when the country’s first national minimum wage legislation goes into effect. Germany’s Minimum Wage Act, or Mindestlohngesetz (MiLoG), will require a minimum wage of €8.50 per hour.

The Minimum Wage Act applies to employees who perform work in Germany, regardless of whether the employer is based inside or outside the country. The Act creates strict regulations on an employer’s liability – including for contract employees. In particular, employers are liable for the minimum-wage obligations of their contractors, as well as the contractors’ subcontractors and payroll providers. The Act provides certain exceptions for minors and trainees, employees in fields such as agriculture and newspaper delivery, and employees covered by collective bargaining agreements.

A “Minimum Wage Commission” will examine the minimum wage level every two years, beginning June 30, 2016. The Commission’s objective is to evaluate which minimum wage level “is likely to contribute to an adequate minimum protection of employees, facilitate fair and functioning competition, and not to jeopardize employment.” The Commission will look to guidance from the wages negotiated in collective bargaining agreements, with negotiated wages serving as a benchmark for the future minimum wage.

For more information on Germany’s Minimum Wage Act, see Dr. Marc Spielberger’s article in the Labor Law Journal, "Minimum Wages in Germany – You Might Be Affected, Too." If you have questions about how the Act affects your organization, please contact Dr. Spielberger at mspielberger@reedsmith.com or +49 (0)89 20304 169, or contact the Reed Smith Labor & Employment attorney with whom you work.

Client Alert 2014-285