The legislative plans of Germany's Grand Coalition government will bring about major changes in German employment law in 2015.  In addition to the reforms of parental leave and dependent care leave, as well as the much discussed introduction of binding quotas for the number of women on supervisory boards of listed companies with equal shareholder/employee representation, the following changes are worth noting.

Introduction of minimum wage from 1 January 2015

For the first time in history, the German government has introduced a statutory minimum wage.  As of 1 January 2015 employees across all industries and sectors are entitled to receive an hourly wage of at least EUR 8.50.  The law itself excludes certain groups of employees – for example, formerly long-term unemployed during the first six months of their new employment and interns completing compulsory education-related internships.  The minimum wage level can remain lower than EUR 8.50 until 31 December 2016, provided that the lower wages are provided for in collective bargaining agreements that have been declared to be generally binding in the particular industry.  Not only are employers now well advised to determine as quickly as possible whether they comply with the remuneration standards introduced by the new law but also companies working with subcontractors also need to make sure that their subcontractors actually pay the minimum wage to their employees to avoid further liability risks.

Principle of tariff uniformity

Smaller unions have become more and more influential ever since the German Federal Labour Court abolished the principle of tariff uniformity.  This rule stated that only one collective bargaining agreement could apply to the same employment relationships in an operation.  Following a recent series of strikes called for by competing unions of train drivers and the craft unions of pilots and doctors, the German government now intends to enact a new law, in effect to restore this principle.  In future, the parties involved must first try to find an amicable solution to a tariff conflict.  If they fail to do so, a "majority principle" will apply.  As a result only those collective bargaining agreements concluded by the union representing the highest number of employees in the operation will be effective.

Reform of agency work

The German government intends, probably by the end of 2015, to introduce further restrictions on the employment of agency workers.  Firstly, agency workers must not be employed for longer than 18 months by the same hirer unless a collective bargaining agreement allows for more flexibility.  Secondly, agency workers will generally be entitled to "equal pay" after nine months at the latest, thereby being put on par with the hirer's own personnel in terms of remuneration.  Thirdly, stricter legal consequences will apply if agency work turns out to have been wrongly declared as a contract for the provision of work or services.  In this case the hiring company will no longer be able to avoid the establishment of an employment relationship with agency workers even if the provider of the services possesses a permit for employee leasing.  Going forward, contracts for the provision of work or services will therefore require an even more thorough analysis to avoid adverse consequences for the companies involved.