Search
Contact
Login
Share this article
IMPACT – HIGH
What is the change? The German government has clarified that foreign companies may use temporary pay raises when posting low-wage employees to Germany in order to comply with the country’s new €8.50-per-hour minimum-wage law.
What does the change mean? Companies considering posting low-wage employees to Germany now have a clear option for doing so while remaining in compliance with Germany’s wage requirements.
Background: Germany’s €8.50-per-hour minimum wage took effect Jan. 1. The law applies to anyone working in Germany, including foreign nationals.
The law has particular relevance to third-country nationals because their admittance depends on compliance with German labor laws. In the weeks following the implementation of the law, it remained unclear what forms of compensation would count toward satisfying the €8.50-per-hour requirement. In particular, it was not clear whether allowances paid to posted employees to supplement their base pay could be considered.
German authorities have now clarified that “additional allowance” (temporary pay raises) to bridge the gap between what an employee normally makes and Germany’s minimum wage can be counted toward the minimum-wage requirement. Payments such as Christmas bonuses and vacation pay can also be counted as long as these payments are included with the monthly salary on a pro-rata basis. Payments that cannot be counted include overtime pay; premiums for working Sundays, nights, or on public holidays; extra payments for outstanding results; or “dirt money” paid for working in dirty conditions.
Finally, it should be noted that Germany not only requires a wage of at least €8.50 per hour, but also requires that foreign nationals be paid on par with their German counterparts. The recent clarifications apply to the second requirement as well as the first.
BAL Analysis: Companies may now use temporary wage hikes to satisfy the minimum-wage requirement without violating Germany’s minimum-wage law. Employers should consider this option when determining whether to post employees to Germany for temporary work assignments.
This alert has been provided by the BAL Global Practice group and our network provider located in Germany. For additional information, please contact your BAL attorney.
Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.
The U.S. Embassy and consulates in Canada posted general guidance for Canadian citizens on the updated alien registration requirement that…
Effective May 1, 2025, all non-Thai nationals entering the country must complete the Thailand Digital Arrival Card (TDAC). Key Points:…
The Immigration and Foreigners Bill, 2025, introduced in the Lok Sabha on March 11, 2025, aims to modernize India’s immigration…
U.S. Citizenship and Immigration Services made minor changes to Form I-9 to align with statutory language and updated the Department…