Introduction

Does the Minimum Wage Act affect foreign airlines? No – but it might.

The government passed the Minimum Wage Act with effect from January 1 2015. The act is a porous framework that lacks answers to many questions – including whether it applies to foreign airline personnel who are not based in Germany. Flight and cabin crews work on German soil while deboarding and boarding passengers, and the period covering over-night layovers and travelling back and forth to accommodation might also be classed as work time. The act's wording suggests that crews are entitled to the German minimum wage of €8.50 per hour during that time (Article 20.1). The employer's place of business is not decisive.

Minimum Wage Act

The act does not appear to apply to airline personnel. It is not foreclosed by the lex registrii (ie, the law of the place of registration of the aircraft). Prevailing case law and legal commentaries agree that crew members of international service aircraft have no "common place of work". Their work is determined by travelling; therefore, the place of registration of the foreign aircraft is coincidental and has no determining influence of where the employee's 'centre of work' lies.

The Rome I Regulation (593/2008) provides rules for cross-border employment relationships. Article 8(1) of the regulation states that the parties to an employment contract may freely choose what law should govern their contract. Therefore, a short period of work time on German ground will not affect the employment contract between a foreign airline and its employees, which is regularly governed by the law applicable at its corporate seat.

However, Article 9 of the regulation allows that a mandatory domestic provision overrides the 'freedom of choice' principle. The Minimum Wage Act is such a provision. The government wanted to establish a minimum wage for every employee working in the German territory, regardless of the corporate seat of the employer. The question remaining is whether this provision applies to employees engaged in the German territory for only a very short period. Certain obligations set forth alongside the Minimum Wage Act indicate that such short-term periods would lead to minimum wage entitlement. Nonetheless, the Minimum Wage Act is not necessarily a provision that can override non-German labour law and respective salary agreements in the case of short-term activity of aircraft crew in the German territory.

Article 20 of the act stipulates "inland employment" as a prerequisite for the act's applicability, without any reference to its duration. Thus, the mere wording would lead to the applicability of the act in any case, even a one-hour stopover. Such an interpretation is unlikely to reflect the German legislature's intention.

The law does not intend to include such minimal short-term activities on German soil to be governed by the Minimum Wage Act. The government has pursued two main objectives with the act:

  • to secure a minimum wage to guarantee a certain standard of living; and
  • to relieve Germany's social security systems.

These objectives will not be affected or impaired by any foreign airline crew member or other employee not being paid the German minimum wage for an average period of between an estimated two to four hours on German soil for a few days a month. It can be assumed that these employees are not integrated in the German social security system; nor do they live in Germany. In two recent decisions the Federal Labour Court in Germany and the European Court of Justice (ECJ) ruled on this line of argument in cases concerning the EU Posting of Workers Directive, which has the same intention as the Minimum Wage Act. The Federal Labour Court ruled that a foreign employee is not entitled to receive continuous remuneration while unfit to work if he or she is not integrated in the German social security system (Federal Labour Court, 10 AZR 200/11, April 18 2012 and ECJ, C 549/13, September 18 2014).

Further, the application of Article 20 of the Minimum Wage Act to the employment relations in question contradicts European law.

If the act obliged a European employer to pay a minimum wage for work performed over short-term periods in Germany, it would interfere with the freedom of services according to Articles 56 and following of the Treaty on the Functioning of the European Union (TFEU), as well as the principle of the free movement of goods according to Articles 28 and following of the TFEU.

In this context, it must be considered that an aircraft (perhaps due to code-share agreements) might not stop only in Germany and then return to its point of origin, but may continue to another European country. If just one stop to deboard and board passengers and their luggage would oblige an airline to pay the minimum wage in one country, it may oblige the airline to pay a minimum wage in every European jurisdiction which has a minimum wage that the aircraft travels to. Thus, minimum wage would have to be calculated for each country according to relative ground time. This may delay take-off in Germany, which would be more detrimental for the airline than a delay in Portugal, for example, which has a lower minimum wage.

Freedom of service in the European Union (Article 56 of the TFEU) demands the abolishment of any discrimination due to nationality or the fact that the original place of business is not the place where the service is rendered. Further, freedom of service demands the abolishment of any restriction if it impedes, prevents or reduces the service's attractiveness to the person or enterprise of a member state. This freedom would be severely violated if a short-term stopover obliged the foreign airline to comply with the Minimum Wage Act. It is evident that a payroll administration which must take several European jurisdictions into account would reduce and impede the attractiveness of the service. If the exchange of goods were also in question the same argument would apply on grounds of Article 28 of the TFEU and the freedom of movement of goods.

Comment

The Minimum Wage Act is currently open for interpretation and case law has yet to be established.

For further information on this topic please contact Hans Georg Helwig or Ulrich Steppler at Arnecke Siebold Rechtsanwälte by telephone (+49 69 97 98 85 0) or email (hansgeorg.helwig@arneckesiebold.de or ulrich.steppler@arneckesiebold.de). The Arnecke Siebold Rechtsanwälte website can be accessed at www.arneckesiebold.de.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.