What is the minimum wage and why does it exist?
The statutory amount that employers must pay their employees per hour worked is known as the minimum wage. It was introduced in Germany on January 1, 2015. Previously, employers and trade unions largely regulated wages and working conditions and laid them down in collective agreements. However, particularly in sectors such as retail, catering and cleaning services, there were no binding wage targets - low wages often made it difficult to earn a living with a full-time job. The minimum wage was intended to close this gap and ensure that employees are paid fairly and receive a living wage.
Before the introduction of the minimum wage, employees with low wages often had little bargaining power vis-à-vis their employers. The minimum wage provides employees with a basis for justifying their wage demands and thus strengthens their position in negotiations. At the same time, it protects them from exploitation by employers. The minimum wage therefore acts as a tool to create a balance between the interests of employers and employees and to promote a fairer and more stable world of work.
Since its introduction in 2015, the minimum wage has risen continuously. The regular adjustment takes into account economic developments and inflation. It currently stands at 12.41 euros per hour.
To whom does the minimum wage apply?
The statutory minimum wage applies in principle to all employees in Germany.
However, there are some exceptions and special regulations to which the minimum wage does not apply:
- Minors who have not completed vocational training: Special regulations apply to young people under the age of 18. The minimum wage may be lower for them if they have not completed vocational training and their employment is for career guidance purposes. In this case, a training allowance may be paid that is lower than the statutory minimum wage.
- Long-term unemployed: The long-term unemployed over the age of 25 can be exempt from the minimum wage for the first six months of a new job. This is intended to facilitate their integration into the labor market. After these six months, however, they are entitled to the full minimum wage.
- Interns: Compulsory internships as part of school or academic training are exempt from the minimum wage. Internships that serve as orientation on the job market and last no longer than three months can also be paid below minimum wage. However, voluntary internships that last longer than three months must be paid at minimum wage.
- Apprentices: Anyone completing vocational training is not entitled to the minimum wage. For them, the training allowances apply in accordance with the collective agreement or statutory provisions.
- Self-employed persons: Self-employed persons and freelancers are not in a dependent employment relationship and are therefore not subject to the minimum wage regulation. They agree their remuneration directly with their clients.
Hidden danger: marginally employed workers
Anyone who employs people on a mini-job or midi-job basis must pay particular attention when it comes to the minimum wage. Low-income employees are not only entitled to the minimum wage, they are also subject to a monthly earnings cap that must not be exceeded. With an increased workload, the calculated hourly wage can quickly fall below the minimum wage by mistake. For this reason, employers should establish a time recording system that warns them as soon as the working hours of their marginally employed workers threaten the minimum wage. In the event of an unannounced inspection by customs or social security, employers must be able to show the time records immediately.
The earnings limit for mini-jobbers is currently 538 euros per month. Midi-jobbers may earn between 538.01 euros and a maximum of 2,000 euros. This means that mini-jobbers are currently allowed to work a maximum of 43.35 hours per month:
538 euros (earnings threshold) / 12.41 euros (minimum wage 2024) = 43.35 working hours
What happens in the event of violations?
Violations of the Minimum Wage Act (MiLoG) are punished extremely severely and can have serious consequences for employers. If employers are unable to provide complete documentation of their employees' working hours during inspections, they may face severe fines of up to 30,000 euros in connection with the minimum wage. In addition to the fines, companies may also be required to pay compensation to compensate for the financial losses suffered by the employees affected.
Employers will also be held consistently accountable if they do not comply with the statutory minimum wage. There are drastic penalties of up to 500,000 euros for paying wages below the minimum wage. In addition, managing directors can be held personally liable and face criminal penalties, including a possible prison sentence of up to five years.
These measures underline the seriousness of the minimum wage legislation and are intended to ensure that employers take their obligations towards their employees seriously and comply with the legal minimum standards. It is therefore crucial that companies accurately document their working hours and ensure that all employees receive the minimum wage to which they are entitled.
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