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Minimum wage from 1 January 2015 – Part II

In the second part of our two-part overview, we will address further obligations and liability with regard to the implementation of the new statutory minimum wage.

Can the minimum wage entitlement be waived?
The minimum wage is mandatory (sec. 3 of the Minimum Wage Act). Agreements according to which the employee’s remuneration will be less than the minimum wage or which limit the exercise of the right to claim the minimum wage are invalid. The Minimum Wage Act only provides an exception for a waiver in a court settlement for existing claims.

Who is liable for the employee’s entitlement?
Sec. 13 of the Minimum Wage Act regulates that sec. 14 of the German Secondment Act (Arbeitnehmerentsendegesetz) shall apply accordingly. This provision states that the employer is liable in the same manner as a guarantor who has waived the defense of failure to pursue remedies (Verzicht auf die Einrede der Vorausklage), ie if the employer instructs a third party he is also liable for the minimum wage entitlement of the contractor’s and any subcontractor’s employees. This liability may only be excluded or limited in the internal relationship between the principal and his contractor but not with external effect for the employees.

Are there any reporting or documentation requirements?
The Minimum Wage Act contains in sec. 17 documentation obligations for employers who employ people in a so-called “mini-job” (except mini-jobs in private households) or in a sector defined in Sec. 2a of the German Control of Unreported Employment Act (Schwarzarbeitsbekämpfungsgesetz, SchwarzArbG). These employers are obliged the record the beginning, the end and the duration of the daily working time and keep the documentation for a period of at least two years. Furthermore, foreign employers who employ people in these sectors are obliged to have the employees registered at the competent custom authority (sec. 16 of the Minimum Wage Act).

How are violations of the Minimum Wage Act punished?
Violating the obligation to pay the minimum wage may incur a fine up to an amount of EUR 500,000.00 (sec. 21 of the Minimum Wage Act). In addition, anyone who has incurred a fine of at least EUR 2.500.00 for a violation of the Minimum Wage Act shall be excluded from public procurement for a reasonable time until the party has proved the restoration of reliability (sec. 19 of the Minimum Wage Act).