Special allowance for work during normal hours can be included in the minimum wage

On 12 January 2016, the Higher Labour Court Berlin-Brandenburg (Landesarbeitsgericht, LAG) ruled (docket number 19 Sa 1851/15) that whether or not a special allowance has to be paid in addition to the minimum wage, depends on the reason for the special allowance. If the special allowance is paid for the regular work which an employee has to perform, the minimum wage can be calculated including the special allowance.

In the case at hand, an employee earned less than EUR 8.50 (the current minimum wage in Germany), as the contractual hourly wage. In addition to that, she was entitled to two annual special allowances, to be paid out equally over twelve months (i.e. one twelfth per month). These special allowances together with her contractual hourly wage would be higher than the minimum wage. The plaintiff claimed that her contractual hourly wage should be raised to EUR 8.50 and that the special allowances should be paid additionally. She also claimed night shift remuneration to be calculated based on the minimum wage and not on her lower contractual hourly wage.

The Higher Labour Court denied the claim regarding the special allowances for work during regular hours, but accepted it regarding the night shift work. The special allowance is due in respect of the plaintiffs regular work and therefore is part of the minimum wage. Special allowance for night shift has to be calculated based on the minimum wage, according to the Higher Labour Court based on sec. 6 para. 5 Working Hours Act (Arbeitszeitgesetz, ArbZG).

This decision reinforces case law in one of the key areas of the new Minimum Wage Law (Mindestlohngesetz, MiLoG): Which wage elements can be regarded as part of the minimum wage and which have to be paid additionally? On which basis are special allowances to be calculated? The Higher Labour Court´s decision improves legal security in this field which is essential for the economy. Due to its importance, the Higher Labour Court has permitted an appeal to the Federal Labour Court (Bundesarbeitsgericht, BAG).