On 16 August 2014, the German lawmaker passed the new minimum wage law (Mindestlohngesetz, MiLoG). Following this legislation, a nationwide statutory minimum wage of EUR 8.50 per clock hour, regardless of the sector, has become effective in Germany for the first time in history, starting on January 1, 2015. Therefore, the statutory minimum wage will be effective in 22 EU member states.

Sec. 20 MiLoG establishes the duty for employers with their registered seat in Germany or abroad to pay to their employees in Germany a remuneration amounting at least to the minimum wage, at the latest by the end of the month following the month in which the service was provided. Consequently, the minimum wage constitutes a minimum remuneration rate and therefore applies irrespective of the jurisdiction which governs the employment contract of the individual employee to any employment of workers in Germany. If the employer culpably does not meet the obligation pursuant to sec. 20 MiLoG or does not meet the obligation in time, he can be fined with up to EUR 500,000. 

Only for the mere transit traffic through Germany, the monitoring and punishment of violations pursuant to the new law is (temporarily) suspended for the transport of persons or goods from EU member states or third countries (source: German customs). This interim solution for transit traffic encompasses all carriers or traffic with the point of departure and point of destination outside of Germany, which cross Germany without loading or unloading goods or dropping or taking on passengers. Other transport interruptions, e.g. in order to refuel or take resting periods for drivers or passengers, do not exclude a definition of such transports as a transit.

Moreover, according to sec. 16 para 1 MiLoG, employers with their business seat abroad who employ one or several workers in the sectors or industries mentioned in sec. 2a German clandestine work act (SchwarzArbG) (for instance construction industry, nursing services industry, property cleaning etc.) have a reporting obligation. Accordingly, the employer is obliged to present a written registration in German to the competent customs administration authority before the start of any works or service performance, which contains the essential information that is required for the examination. 

Consequently, the new minimum wage in Germany also poses new bureaucratic challenges to foreign employers who employ staff in Germany. If these are not respected to the necessary extent, the employer may face significant fines.

Anton Kastenmüller, Attorney (Munich)