The German Minimum Wage Act (Mindestlohngesetz, MiLoG), which entered into force on August 1, 2014 prescribes a mandatory minimum wage of EUR 8.50 per hour for all types of employment as from January 1, 2015. This also includes marginal employment (»mini jobs«), i.e. jobs paying a gross monthly maximum wage of EUR 450.00. In addition, the law also covers an employer’s obligation to record the daily working hours of marginal employees as from August 1, 2014.
Minimum wage and mini job
In the context of the introduction of a minimum (hourly) wage as from January 1, 2015, in view of the many existing mini job employment relationships it will be found that the statutory minimum wage is not realized. Converting the generally agreed monthly fixed remuneration of EUR 450.00 to the number of working hours actually worked by employees must result in a minimum hourly wage of at least EUR 8.50 here too. If the minimum wage is fallen short of, either the remuneration as a whole must be raised or the employee’s working hours must be lowered while keeping the remuneration unchanged. However, increasing the salary will generally result in exceeding the limits defined for marginal employment resulting in a loss of the »mini job« privileges. The end result will be that the employee will have lower net earnings than before.
Obligation to record the working hours of marginal employees
In addition to the minimum wage itself, § 17 (1) MiLoG provides for the employer’s obligation to record the working hours of an employee in marginal employment, i.e. the start, end and duration of the employee’s daily working hours (including breaks). The working hour records must be created by the end of the seventh day after the respective work done and retained for at least two years. Other than the minimum (hourly) wage, the recordkeeping obligation does not apply only from January 1, 2015 but has already been in effect since the entry into force of the Act, i.e. August 1, 2014. The meaning and purpose of this recordkeeping obligation is to enable the authorities responsible for reviewing compliance with MiLoG to determine whether a company's mini job holders are paid a minimum hourly wage of EUR 8.50. These are, after all, those employees that generally receive the lowest hourly wage in the company. Pursuant to § 21 (1) no. 7 MiLoG, a fine of up to EUR 30,000.00 is levied if the recordkeeping obligation is violated.
Recordkeeping obligation in some sectors
The more stringent recordkeeping obligation pursuant to § 17 (1) MiLoG, in addition, also applies to companies in the sectors at risk of illegal employment pursuant to § 2a of the German Act on Combating Clandestine Employment (Schwarzarbeitsbekämpfungsgesetz, SchwarzArbG), for instance those in the construction, catering, accommodation or facility cleaning services industries. The recordkeeping obligation applies to all employment relationships here and not only to marginal employees. Companies wanting to avoid a fine here are therefore well advised to keep the recordkeeping obligations associated with the statutory minimum wage on their agenda.
Update (January 2015):
The German Minimum Wage Documentation Obligation Ordinance (Mindestlohndokumentationspflichten-Verordnung, MiLoDokV), which entered into force on January 1, 2015 significantly facilitates the existing recordkeeping obligation pursuant to the German Minimum Wage Act (Mindestlohngesetz, MiLoG).