German parliament has approved Germany's first minimum wage. The German Minimum Wage Act will come into effect in 2015.
Germany will introduce a nationwide, sector-independent, indispensable minimum wage. The minimum wage will be set at EUR 8.50 gross per hour. Generally, the minimum wage applies to all employees from January 1, 2015. The Act provides certain exceptions for children and adolescents without a completed professional training, trainees, volunteers, long-term unemployed, and interns. There are transitional rules for certain collective labor agreements and legal ordinances, as well newspaper delivery persons.
Children and adults without completed professional training have been excluded from the minimum wage. Furthermore, the minimum wage does not apply to trainees and volunteers. Also, Long-term unemployed persons are exempted from the minimum wage during the first six months of their employment. However, this exemption may be of a temporary nature only, considering that the results will be reviewed by legislator in June 2016.
Interns will benefit from exceptions in four cases: The minimum wage does not apply to (i) internships which are obligatory pursuant to school-, training- or examination regulations, (ii) internships which shall serve as orientation with regard to the choice of a professional training or of studies at a higher educational institution, (iii) first time internships in connection with professional or higher educational trainings and (iv) internships in connection with active job creation measures and policies for social inclusion.
The Act contains transitional rules regarding collective agreements (Tarifverträge) made under the German Employee Assignment Act (Arbeitnehmer-Entsendegesetz) and the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz). Until the end of 2016, the old rules will supersede the new minimum wage regulations. The transitional period is extended until the end of 2017, if a payment of the gross minimum wage of € 8.50 per hour is required from January 1, 2017.
Furthermore, the Act imposes extended documentation and record keeping requirements on employers in certain industry sectors.
The Act does not govern the treatment of extra payments, e.g. allowances and bonuses. Hence, it is unclear whether such extra payments will qualify as part of the minimum wage or must be paid in addition to the minimum wage. The legislation draft's reasoning indicates that – in the view of the legislators -extra payments do not qualify as part of the minimum wage if they change the ratio between performance and received compensation. Therefore, employers should review their compensation schemes with regard to possible adaption requirements under German law.