On September 18th, 2018, the Federal Labour Court (Bundesarbeitsgericht – BAG) ruled (9 AZR 162/18) that a forfeiture clause (Verfallklausel) in an employment contract is invalid in the context of a general terms and conditions review (AGB-Kontrolle) if it does not exclude the statutory minimum wage (currently 8,84 EUR per hour) guaranteed by sec. 1 Minimum Wage Act Mindestlohngesetz – MiLoG) from expiration. Such a clause preformulated by the employer is not compatible with the transparency requirement of sec. 307 subsec. 1 sent. 2 German Civil Code (Bürgerliches Gesetzbuch – BGB). A forfeiture clause must therefore distinguish between the minimum wage entitlement and other entitlements. Since the Minimum Wage Act has been in force since January 1st, 2015, only employment contracts signed after December 31st, 2014, are affected.

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