Following the introduction of a minimum wage in Germany last year, some UK employers have queried whether they are obliged to pay the German minimum wage to their UK employees who work there for brief periods. Employment lawyer Othmar K. Traber considers the impact of the new law on haulage and forwarding companies, their subcontractors and employees.
Generally speaking, the short answer would be yes: UK employers have to pay the German minimum wage to their employees, whether they are German or not, if they work in Germany, as the regulations of the German MiLoG (Law on Minimum Wages) also apply to foreign employees in line with current European Law rules. It is irrelevant where the driver has his residence, or whether he has concluded an employment contract with his employer in Germany or in other EC countries; the minimum wage must be paid if the employee usually carries out his work with a main focus in Germany.
But what about HGV drivers who are simply transiting or unloading goods in Germany during a scheduled work trip? Do they “work” in Germany in the meaning of the law?
This is where things become less straightforward, with German law presenting arguments on both sides. In line with Art. 8, Sect. 2, p. 1 Rome I Regulation, the German labour legislation will not apply to these employees, because a performance is only temporarily rendered in Germany. However, the opinion of the German Federal Ministry of Labour and Social Affairs, and supported through Section 20 MiLoG, is that the regulations on the minimum wage were necessary to safeguard the public interest and should therefore be considered Mandatory Rules within the meaning of Art. 9, Para. 1 Rome I Regulation. Accordingly, the regulations of the German Minimum Wage Act are applicable to all UK employees in Germany, irrespective of their duration of engagement in Germany, including all UK drivers who are merely driving through Germany in transit or unloading goods during a scheduled trip.
However, it is also possible to maintain the view that these employees carry out their work with a main focus and usually abroad, meaning that no “domestic” employment exists under Section 20 MiLoG. It may also be questionable, for example, whether this constitutes a violation of the Freedom to Provide Services under the Treaty on the Functioning of the EU [TFEU].
After protests from Poland and a current pilot process initiated by the European Commission against Germany in January 2015 the government decided to grant exceptions to haulage and forwarding companies whose lorries are transiting Germany only.
So, until there is final clarification by the European Court of Justice or the German Federal Constitutional Court these UK companies are not obliged to pay their employees the German minimum wage. In addition, they are not obliged to display the wage records to the national authorities during a random check (through Federal customs). All other UK employers, whose UK employees have a main focus in Germany and are more than merely transiting or offloading, should err on the side of caution and pay the minimum wage to all foreign employees engaged in Germany, namely for the period of time of their engagement in Germany, to avoid substantial fines. The minimum wages currently amounts gross € 8,50 per working hour (statutory breaks excluded).
Employees are also entitled to claim the difference to the minimum wage before courts, namely towards their contractual employer (the customer’s sub-contractor) as well as towards their customers, who are liable according to Section 13 MiLoG. This regulation refers to Section 14 AÜG (Act on Temporary Work). In line with this Act, the customer is liable as a guarantor.
The author would therefore recommend including a provision of indemnity in the contracts with sub-contractors to cover additional costs arising from fines or other penalties caused by infringements of these regulations by sub-contractors.
Article kindly provided by Othmar K. Traber, a partner with the German law firm Ahlers & Vogel, working in association with Andrew Jackson Solicitors
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