Attendance premiums may set off minimum wage entitlement

Attendance premiums paid in addition to the hourly wage may be used to satisfy an employee’s minimum wage entitlement (judgment by the Higher Regional Labour Court Mecklenburg-Vorpommern dated 22 November 2016, docket number: 5 Sa 298/15).

In the case at hand, the employee was entitled to a remuneration based on an hourly wage as well as an “attendance premium”. Following the implementation of the German Minimum Wage Act, the employer redistributed parts of the attendance premium which lead to an increased hourly wage to meet minimum wage requirements but also lead to a reduced payment of the attendance premium. The employee demanded payment of the full amount of the attendance premium in addition to an hourly wage of EUR 8.50 gross.

The court rejected the employee’s claim. According to the court, the employer had satisfied the employee’s entitlement to payment of the attendance premium by splitting the premium into two parts, one being part of the monthly wage and the other being paid out separately. The court reasoned that the employer was entitled to use part of the attendance premium to satisfy the minimum wage entitlement. As a general rule, all payments which aim to compensate employees for their work may be used to fulfill the minimum wage requirement. If a payment aims to remunerate the same type of work which is also remunerated by payment of the minimum wage (“functional equivalence”) the payment may be used to satisfy the minimum wage requirement. In the case at hand, the court held that the purpose of an attendance premium was to encourage employee attendance and keep disruptions at a minimum. As such, the court recognized that the premium ultimately had the same objective as the salary payment, i.e. to remunerate employees for their work. Therefore, the employer was entitled to set off the entitlement to the attendance premium against payment of the increased hourly wage.