The German government has implemented for the first time a general statutory minimum wage, in force from 1 January 2015.

Generally, all employees working in Germany will be entitled to a minimum wage of €8.50 gross per hour. Any benefits and additional payments will be disregarded when determining compliance with the minimum wage. However, there are several exceptions from the minimum wage, eg, for specific internships. Additionally, transitional rules will be applicable until January 2017 for certain collective bargaining agreements and other regulations which provide for lower wages (eg, for temporary agency workers or newspaper delivery staff). Higher statutory minimum wages for certain industries (eg, construction sector) prevail.

Non-compliance with the minimum wage may result in an administrative fine of up to €500,000 and an exclusion from public orders and bid proceedings. A company might also be liable for third parties’ breaches if a company’s contractor does not pay the minimum wage to its employees.

The minimum wage will be reviewed every two years.

Actions for employers

Companies with a business in Germany need to check whether their employment contracts comply with the minimum wage or whether any exceptions and transitional rules apply.

Compliance with the new minimum wage requirements will also need to be considered for any transactions in Germany, particularly in the due diligence process and in negotiating the share/asset purchase or merger agreement. In terms of the parties’ liability, the following rules apply (although the seller and buyer may re-apportion liabilities between them by negotiating indemnities in the transaction agreement):

  • share deal: the acquired company remains liable for any violations and imposed fines.
  • asset deal: the buyer is not liable for violations and imposed fines; however, employees can claim against the buyer to pay the (minimum) wages retrospectively (and for the future). 
  • merger or division (eg, split-off): the successor will be liable for any violations and imposed fines of the legal predecessor.