In a very interesting issue for employers, namely the offsetting of special payments against the minimum wage rate, the local labour court Berlin-Brandenburg has issued a first ruling. The ruling was quite in favour of employers, i.e. if certain requirements are met, payments with the character of special payments also qualify for offsetting.

Facts of the Case

In a current case, the local labour court Berlin-Brandenburg had to judge whether for an employee’s contractually agreed hourly wage of less than the minimum wage of EUR 8.50, special payments agreed in the employment contract in the amount of half a monthly salary twice per year can be off-set against the minimum wage. Consequently, the minimum wage was only reached by adding the special payments to the contractual hourly wage. As a particularity, it had to be considered in this regard that there was an agreement between the employer and the company’s works council to have these special payments made in instalments of 1/12 per month rather than twice a year.

Furthermore, the court had to decide whether contractually agreed surcharges for overtime, Sundays, bank holidays as well as night time work would have to be calculated on the basis of the contractually agreed hourly wage which falls below the minimum wage or on the basis of the minimum wage amount. Accordingly, the parties had a dispute as to whether these special payments should increase the hourly rate of the minimum wage or the basic hourly rate pursuant to the employment contract.

The Ruling

In its ruling of 12 January 2016, of which only the operative part has been published so far, the local labour court has found a differentiated solution allowing for the employer to offset at least the special payments which are the subject matter of this dispute against the minimum wage. The background in this regard probably is that this special payment was in fact an integral part of the wage which was paid on a monthly basis and that this was also stipulated by the works agreement.

The local labour court ruled along the same lines with regard to surcharges for overtime, Sundays and public holidays. These may be calculated on the basis of the general hourly rate falling below the minimum wage as - solely - contractually guaranteed surcharges. Only with regard to the calculation of the night time surcharges, the local labour court has made reference to Section 6 (5) Working Hours Act (Arbeitszeitgesetz), which stipulates that the employer must “grant an adequate surcharge on the gross remuneration to which he/she [the employee] is entitled in this regard for hours worked during night time”. Since the gross remuneration is mandatory according to the Minimum Wage Law, this surcharge had to be paid in addition to the amount of EUR 8.50.

Outlook

This ruling is a first indication as to how the case law will evolve with regard to this issue. However, it remains to be seen whether the Federal Labour Court will follow this direction (the appeal was permitted). It would have certainly been much easier if the Federal Government had complied with the express request of the Bundesrat in the legislative procedure on the minimum wage law (law strengthening free collective bargaining, “Tarifautonomiestärkungsgesetz”) and issued a conclusive catalogue of benefits in kind which are subject to offsetting (see BT printed matter 18/1558 Annex 3, page 61 lit. 2). Since this was not the case, each individual set-off will have to be separately assessed in the future, as was the case here.

(LAG Berlin-Brandenburg, judgment of 12 January 2016, court reference 19 Sa 1851/15)

Dr Holger Kühl, lawyer, specialist lawyer for labour law, Berlin