No dismissal with the option of altered conditions to offset minimum wage

A dismissal with the option of altered terms and conditions will be invalid if additional payments are taken away to offset the higher hourly base pay required under the Minimum Wage Act (judgment of the Higher Regional Labour Court of Berlin-Brandenburg, Landesarbeitsgericht, LAG, dated 25 September 2015, docket number 8 Sa 677/15).

In the case at hand, until 31 December 2014, an employee earned an hourly wage of EUR 6.44. Her employer also provided for additional payments tied to performance payable in respect of an employee’s vacation, as well as additional payments at the end of the year. On 1 January 2015, the Minimum Wage Act entered into force, requiring employers to pay a minimum hourly wage of EUR 8.50. As of 1 March 2015, the employer wanted to take away the entitlement to these additional payments. The employer thus issued a dismissal and offered to continue the employment relationship at an hourly wage of EUR 8.50 but without any such additional payments.

Both the labour court of the first instance and the Higher Regional Labour Court found this dismissal to be invalid. The sole reason for the dismissal was to offset costs incurred through the requirements of the Minimum Wage Act. However, in order for such a dismissal to be effective, the employer would have been required to prove urgent operational reasons. The court, however, found no such reason. While the employer had argued that the dismissal was necessary to be profitable, the court held that the mere expectation of a smaller profit margin was not sufficient reason.