The German Minimum Wage Law

Everything You Need To Know About the German Minimum Wage Law

Will the minimum wage law bring the end of the "practicum generation"?
How will it influence the Mini-Job employees?
And what implications of the law should students notice?

First advertised in Spitz Magazine

The new German minimum wage law which entered into force in the beginning of the year is considered to be pretty revolutionary, as until now, there was never a homogenous minimum wage in Germany. The law says that every employee is eligible to a minimum wage of 8.5 Euros per hour and this right cannot be conceded.

The law applies to most sectors of employment, excluding teens under the age of 18 who have not finished a professional training track, interns in a mandatory practicum (see below) and volunteers. In addition, there are a few unionized employment sectors, to which the law will only gradually be applied; and also people who were supported by the job center for a long period of time are able to work under the minimum wage for six months, in order to ease their return to the job circle (this clause will be revisited in 2016). The law does not apply to freelancers, nevertheless, employing freelancers full time in order to cut costs is illegal and holds severe implications for employers.

It is important to emphasize that despite rumors, according to which employers had been given time to organize, every business which is not unionized in very specific workers' unions specified in the law, must pay the minimum wage to its employees beginning on January 1st 2015.

The end of the practicum generation?
Ten years after the magazine "Die Zeit" coined the term "The Practicum Generation", which defined for the first time the phenomenon in which many young people in Germany had to keep doing "internships" without pay even after they have finished their studies, one of the goals of this law is to eradicate this phenomenon.

The law says that only a mandatory practicum as a part of a study program (both in university and in professional training – hereafter Ausbildung) and a practicum as part of professional retraining for people supported by the state will not be obligated to pay the minimum wage. A practicum which is a part of orientation before getting in to university or an Ausbildung, and a practicum which is not mandatory, but is done as a part of a study program/Ausbildung – will not have to pay the minimum wage for only three months. Any practicum which is not part of the categories stated above, will be obligated to pay the minimum wage.

Mini-Job and Midi-Job
Mini-Job is a job where the employee receives a monthly salary of 450 Euros without any social benefits. So far, there had been no limit on the monthly number of hours of a mini-job, but since the new law also includes the mini-job, it means that it is now limited to 52.9 monthly hours. In addition, mini-job employees now have to have social insurance (occupational disability and unemployment), unless they officially chose to concede this right (and in any case compulsory pension insurance cannot be conceded). Predictions say that following the law, there will be a significant transfer of employees from mini-job to midi-job, which is the nickname for a job with the monthly salary of between 450.01 – 850 Euros. Midi-job employees have to have a reduced social insurance in the sum of 15% of their wage, when some of this sum is paid by the employer (and for that reason, the employee is also eligible for public health insurance). The new regulations do not apply to people going through professional training.

Students
According to the German law, a student is a person whose main activity is studying. For this reason, students are allowed to work up to 20 hours per week. If a person works more than this quota, the law concludes that his main activity is not studying and he is obligated to have social insurance same as any other employee in the market. The new law requires the employer to record his employees' working hours, so if in the past students could work a mini-job in the framework of more than 20 hours a week with no repercussions since their working hours were not recorded, this is supposed to change now. A practicum which has been done as part of the study course or work during holidays and/or weekends are not included in the hours' calculation. Nevertheless, it is important to note that students with student visas or study preparation visas cannot exceed the hour limitation stated on the visa, which is now at 120 days or 240 half days a year beginning on the second calendar year since visa's day of issue.

Overtime and night shifts
According to the German law, the employer does not have to pay for breaks, overtime and working on holidays or Sundays, and therefore, in relevant cases, one should make sure that these conditions are specified in the contract. On the other hand, there is a special reference to pay supplement on night shifts (or alternatively granting days off) in the case of employees who have to work at night due to the nature of their job or working night shifts at least 48 days a year.

Enforcement
An infringement of the law by the employer could get him a fine of up to 500 thousand Euros, in addition to paying the full salary, the taxes and the social benefits prevented from the employee. If an employer refuses to pay the minimum wage, you can turn to the Finanzkontrolle Schwarzarbeit division, which is responsible for enforcing the minimum wage law. This institution is supposed to assign 1600 new workers to this subject, with whom you can contact Monday-Thursday between 8:00 – 20:00 through their minimum wage hotline: 030-60280028.

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