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Minimum wage introduced in Germany

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The German government recently approved the country’s first minimum wage. With the application of the minimum wage, the government intends to guarantee a decent quality of life for German employees …

The German government recently approved the country’s first minimum wage. With the application of the minimum wage, the government intends to guarantee a decent quality of life for German employees and to promote the financial stability of the country's social security system. What will be the impact on employers?

Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com

Published in News & Politics
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  • 1.   Minimum wage introduced in Germany Publication Date: 22 July 2014 | Author(s): Corinna Verhoek Member Firm(s): Kliemt & Vollstädt Country: Germany The German government recently approved the country’s first minimum wage. Germany was previously one of seven countries in European Union without a statutory minimum wage level. A minimum wage only applied to employees whose contracts or sectors were governed by collective agreements (Tarifvertrag). This resulted in around 30% of employees in the East of the country earning less than the new minimum wage, about twice the number of employees as in the West. Key points • As of January 1, 2015 a new legal minimum wage of EUR 8.50 an hour will be enforced. • The minimum wage shall apply nationwide without any territorial exceptions. • There will be some exceptions for specific sectors and groups of employees. For example, the minimum wage does not cover minors or long-term unemployed people for their first six months back on the job. Short internships that form part of a training or education will also be exempt. • For some work sectors the statute provides special arrangements. For example, in the sector of newspaper delivery the minimum wage is introduced gradually until January 2017. For seasonal workers, the minimum wage applies; however, the time period during which there is no requirement to contribute to social security is extended from 50 to 70 days. • Any current collective agreements that provide for a different minimum wage shall be applicable until December 31, 2016, at the latest. As of January 1, 2017, the minimum wage shall be observed nationwide. With the application of the minimum wage, the government intends to guarantee a decent quality of life for employees in Germany. The minimum wage is also intended to promote the financial stability of the German social security system, as low incomes will no longer have to be supplemented by public allowances. A “minimum wage commission” consisting of representatives of the collective bargaining partners will be formed in order to propose adjustments of the minimum wage every two years, beginning June 1, 2017. The proposal will need to be approved by the government through an ordinance, and German customs will be responsible for monitoring the observance of the minimum wage. Taken from the Ius Laboris Knowledge Base: www.globalhrlaw.com About Ius Laboris Ius Laboris is an alliance of law firms offering employers cross-border employment and pensions law advice. It has 1,300 specialist HR lawyers in over 150 cities and 44 countries. Ius Laboris offers access to the best local HR law experts in one global team with 20% more ranked employment lawyers (Chambers & Partners, November 2013) than any other global HR legal
  • 2.     services organisation. Further, Ius Laboris has 50% more recommended lawyers than its nearest rival in a recent survey in PLC's employment law guide. Clients include many household names as well as multinational companies in all sectors ranging from energy, retail and technology to pharmaceuticals. For more information on Ius Laboris, please visit iuslaboris.com.