The new minimum wage

Despite fierce protests from the business community, the new minimum wage of €8.50 per hour will take effect nationwide in 2015.

Exempt from the minimum wage are young people under 18 who have not completed vocational training, volunteers, and unemployed individuals who have been out of work for at least one year, during the first six months of employment. Newspaper delivery workers will be gradually brought up to the minimum wage by 2017. Seasonal workers in agriculture receive the minimum wage. Interns may only be exempt from receiving the minimum wage in exceptional cases.

Calculation

The following may not be included in the minimum wage calculation, for example:

• one-time payments, Christmas bonuses, or vacation pay
• tax- and social security-exempt allowances for Sunday, holiday, and night work
• tax- and social security-exempt benefits in kind
• contributions to pension funds, retirement plans, or direct insurance policies
• Travel allowances for trips between home and the workplace

New record-keeping requirements

Strict regulations apply to mini-jobbers as well as to employees covered by the Act on Combating Illegal Employment: This includes the construction, restaurant and lodging, passenger transport, freight forwarding and transport, trade show, meat processing, and building cleaning industries. Records must be kept of the start, end, and duration of daily working hours as well as breaks, and these records must be made no later than seven days after the work is performed. This obligation applies to all employees, including salaried employees, with a gross monthly salary of up to €2,958. Work time accounts remain permissible. However, overtime must be compensated within 12 months at the latest through the granting of vacation time or through payment.

Consequences of Non-Compliance

If caught by customs or another authority, an administrative fine will be imposed. In cases of flagrant violations, this may even constitute a criminal offense. If an affected employee takes the matter to court, any difference must be paid retroactively, even if the employee has already left the company’s service. Additionally, social security contributions must be paid on the difference amounts.

Liability for Subcontractors

If an employer contracts a subcontractor to perform work or provide services, the employer is also liable for ensuring that the subcontractor pays minimum wages.