German Minimum Pay Act And Foreign Employers
On 1 January 2015, the Minimum Pay Act (Mindestlohngesetz, shortly: MiLoG) entered into force in Germany, which introduced for all employees carrying out work in the territory of Germany (with some exceptions, e.g. newspaper delivery men), regardless of whether they are employed full-time or part-time, a guarantee that they will be paid at least the amount specified in the Act.
In accordance with § 20 of MiLoG, both German employers and foreign employers who employ or delegate employees to provide work in the territory of Germany are obliged to pay them the minimum of EUR 8.50 per hour. It is assumed that the regulations will also apply to foreign transportation companies whose drivers only cross the territory of Germany. Due to the doubts regarding the compliance of the regulations with the EU legislation, on 30 January 2015 the German government decided to suspend their application to foreign carriers.
Further, the Act imposes a number of obligations on the employers related to the maintenance of employee records. § 17 (1) of the Act requires the employers active in the industries listed in § 8 of the Act on Combating Illegal Employment (e.g. building, transport, gastronomic industries) to record the time of work and to keep the timesheet records for a period of 2 years. For the purposes of a control of observance of the provisions of the Act, the employer must keep the relevant documentation in German throughout the time of providing work in the territory of Germany and at least for 2 years.
An additional obligation to report persons delegated to work in Germany by employers seated outside the territory of Germany is provided in § 16 of MiLoG. Foreign employers are obliged to file with the competent customs office (as soon as before the commencement of work) a written declaration made in German, containing personal details of the employee, place of employment, employer’s details, and ensure that they observe the requirements regarding the minimum pay set out in § 20 of MiLoG.
Detailed requirements regarding submissions to the competent offices are contained in the Regulation on registration obligations of 27 November 2014 (shortly: MiLoMeldV). The Regulation identifies the s-called solely mobile activity, i.e. activity not related to a specific place of employment, like e.g. transport of goods and persons, delivery of letters and parcels, waste collection, street cleaning, etc. In such cases, the documentation may be also kept outside the territory of Germany if the employer ensures that it will be produced in German at each request of customs authorities.
The Minimum Pay Act provides for a fine of up to EUR 500,000.00 for infringing the statutory obligations. It is notable that the entrepreneur will be also liable for violation of the law by its subcontractors if the employer knew or should have known that they do not meet the statutory standards. The control in this respect is exercised by competent customs administration authorities.