Underage workers are exempt from the statutory minimum wage unless they have completed their vocational training; reduced rates apply to voluntary positions. Trainees are not required to be paid a minimum wage. However, not only full-time and part-time employees are entitled to the minimum wage, but so are temporary workers, marginal part-time workers, seasonal workers and - with a few exceptions - interns. This means that not just a few industries are affected by the statutory minimum wage - almost every company is.
And the new law doesn't just require employers to pay a minimum wage. It also establishes a series of other requirements, such as when wages and salaries must be paid, namely no later than the last banking day of the month following the period in which the work was performed, although where employment agreements provide for earlier payment, they obviously take precedence.
Only proper timesheet systems that have been agreed to in writing enjoy certain protection. They remain permissible such that the compensation of overtime may to a certain extent be postponed by making an entry in the timesheet.
But that is not the only reason why the employer's self-monitoring is time-consuming. If, for example, the employment agreement provides for a fixed wage of less than €8.50 per hour, then an analysis must be performed to determine whether the minimum wage is reached by adding other wage components to the hourly rate.
Lump-sum wage agreements, such as in the form of a monthly salary, are even more complex to evaluate. If the monthly salary is not clearly higher than the minimum wage, care must be taken, particularly in cases where employees work variable hours. In many cases it will not be possible to avoid shadow calculations on the basis of the minimum wage, which will result in increased administrative expense. This applies particularly to temporary employees, but also to employees with a relatively low base salary and frequent overtime.
The current discussion of the minimum wage record-keeping requirements must be seen against this backdrop. In certain industries records of the actual work performed must be kept for all employees who receive a monthly salary of up to €2,958. These include the construction industry, hotels and restaurants and the trucking and related logistics industry.
The reporting obligations apply to all employers with respect to their marginal part-time workers and their short-term employees. In all of these cases the beginning, end and duration of the daily working time must be recorded within a week after the work is performed and the records must be kept for at least two years.
There are reasons to pay close attention to marginal part-time employment relationships anyway. These often involve working times of around 15 hours a week. That results in 60 to 65 hours worked per month; multiplied by the minimum wage, a gross amount of €510 to €552.50 would have to be paid, i.e., more than the €450 limit for marginal part-time work. If the employee demands to be paid the minimum wage, then not only must the employer pay the difference in arrears, but the employment relationship retroactively loses its status as marginal. Back taxes and social security payments will have to be paid, most of them by the employer.
Given the limit on marginal part-time employment, an employee engaged in marginal part-time work should now not work more than around 52.9 hours per month. The working hours provisions of existing employment agreements with persons engaged in marginal part-time employment should be reviewed, along with any provisions regarding overtime.
Finally, a decision to outsource individual tasks to subcontractors is not without its problems. For example, the employer can be required to pay the minimum wage by the employee of its subcontractor if the subcontractor fails to meet this obligation. Although the employer in such situations has a claim against the subcontractor, there are bound to be costly disputes and if the subcontractor becomes insolvent, the claim will ultimately be worthless.
The bottom line is this: Every company - and also every association and private individual with employees - must review their compliance with the minimum wage requirements. Violations can result not only in back-pay obligations, but in many cases constitute administrative offenses subject to significant monetary penalties. It is also possible that violators will be excluded from participation in public tenders. And that is something everyone wants to avoid.
Michael Huth, Attorney and Specialist Attorney for Labor Law at Ebner Stolz in Hamburg