Recent Developments in the Field of Employment Law

At the end of 2014, the German Federal Cabinet advanced several legislative initiatives, of which some amendments in the field of employment law are already effective. These amendments include the minimum wage, the principle of one collective bargaining agreement per business (Tarifeinheit), and the reconciliation of work and family life. The following is a summary of the most important amendments.

1.    Minimum Wage

The act governing the basic minimum wage (the “Minimum Wage Act”, Mindestlohngesetz “MiLoG”) became effective on 1 January 2015. The act provides for a comprehensive, statutory minimum wage that applies universally in Germany, irrespective of industry sectors or professions.

The act applies to all employees and all trainees within the meaning of section 26 of the German Vocational Training Act (Berufsbildungsgesetz), unless they are excluded under section 22 of the Minimum Wage Act. The new act currently raises numerous issues and will continue to pose unexpected challenges for companies.
A key problem is how to determine the minimum wage. To this end, companies must determine which parts of a salary are attributable to the gross amount of EUR 8.50. Particularly in view of commissions, bonuses, or special benefits, employment agreements may have to be modified. For example, annual one-time payments cannot be fictitiously deemed to apply on a monthly basis, but instead will have to actually be paid to employees on a monthly basis and then applied to the minimum wage. The determination of the hourly wage can be especially difficult for working time models that differ from the customary full-time and part-time arrangements. According to the act, the wage must be determined on a separate monthly basis. This also applies to marginally employed persons (geringfügig Beschäftigte) whose employment agreements currently provide for a fixed salary in the gross amount of EUR 450, but at the same time provide for a number of hours for which the minimum wage does not add up. These agreements will have to be modified.

Furthermore, there are still many open questions regarding the applicability of the act. This particularly affects the employment of pupils and students who are still in school as well as trainees. Mandatory internships and short-term internships for orientation in vocational training or for admission to a study and those that accompany a vocational or university education are not covered by the Minimum Wage Act. Cases that do not fit any of these categories will have to be clarified by the courts.

In 2016, the Minimum Wage Commission (Mindestlohnkommission) established by the German Federal Government will meet to adjust the minimum wage for 2017.

2.  One Collective Bargaining Agreement per Business

On 11 December 2014, the German Federal Cabinet approved a bill providing for one collective bargaining agreement per business (Tarifeinheitsgesetz). The goal of this act is to ensure that the possibility to bargain collectively can function properly. It therefore governs cases in which two unions in one business represent the same group of workers but strive for different collective agreements.

The bill contains the following rules:

• If several collective bargaining agreements exist in a company, the agreement of the union with the most members at that company applies.

• The minority union has merely the right to be heard or the right to enter into a collective bargaining agreement with the same content.

• The Labour Court Act (Arbeitsgerichtsgesetz) will be amended accordingly. The Labour Courts will accordingly be responsible for deciding which collective bargaining agreement is applicable at the company. A decision-making procedure with binding effect on third parties can be carried out at the request of a party to a collective bargaining agreement whose content differs.

The law of labour disputes (Arbeitskampfrecht) is not affected by the Collective Bargaining Agreements Act (Tarifeinheitsgesetz). Whether labour disputes to bring about a collective bargaining agreement with differing terms are appropriate will have to be decided on a case-by-case basis.

The bill has already been heavily criticized. Furthermore, certain parts of it are even being considered unconstitutional. It will now have to be executed by the German Federal Council (Bundesrat) and ultimately by the Federal President. According to the bill, the law will enter into force on the day after its promulgation. It remains to be seen whether the law will be adopted in its current version.

3.  Reconciliation of Family, Care and Work

On 4 December 2014, the German Federal Cabinet adopted a bill to improve the compatibility of family, care and work. This bill provides that employees in companies with more than 25 regular employees are legally entitled to family care time (Familienpflegezeit).

Employees who take care of close relatives in their home shall be entitled to a part-time release from their employment for up to 24 months with a reduction of working hours by at least 15 hours per week. A care support allowance (Pflegeunterstützungsgeld) is planned as a substitute salary during short-term care of up to 10 working days. In addition, the bill provides for the possibility of an interest-free loan. In return, employers shall be allowed to shorten paid leave by 1/12 for each full month of full-time release.

After the German Bundesrat approved the bill on 19 December 2014, the law entered into force on 1 January 2015.

All new aspects will create new challenges for employers. Until there are final court decisions on these issues, many of them are still open to interpretation. Our labour law team is happy to advise you.