Should governments have minimum wage laws

Minimum wage 2021, gradual increases & exceptions

1. Current minimum wage & increases until 2023

Since January 1, 2021, the statutory minimum wage has been included 9.50 euros; on July 1, 2021, there will be another increase in accordance with the MiLoG (Minimum Wage Act) 9.60 euros performed. The minimum wage does not contain any allowances such as benefits in kind, benefits or tips - these always apply in addition to the minimum wage.

On January 1, 2022, the general statutory minimum wage will rise to the planned EUR 9.82 per hour, and on July 1, 2022, it will increase to EUR 10.45. With this step-by-step increase in the minimum wage, it would be 12 euros in 2023.

For employers, wage costs will rise in the long term - this must be taken into account in personnel planning. The adjustment of the minimum wage naturally also affects the payroll accounting - a wage software supports this.

2. Exceptions to the minimum wage according to MiLoG

In principle, every employee over the age of 18 is entitled to the statutory minimum wage in accordance with the Minimum Wage Act (MiLoG), which has been regulating the minimum wage since 2015:"Every employee has the right to receive remuneration at least equal to the minimum wage from the employer" (Section 1 MiLoG (1)). But there are no rules without exceptions, because there are also special cases depending on the industry and type of employment.

Exceptions by industry

In some industries, the minimum wage was already in force before the introduction of the minimum wage Collective agreements. These still apply today, which is why the minimum wage can be lower or higher than the statutory minimum wage, depending on the industry.

Note: The following industry minimum wages sometimes rise gradually over the course of the year. If in doubt, please contact your payroll clerk to find out what the current minimum wage is for your industry. We would be happy to provide you with the right experts.

BranchIndustry minimum wage
Waste management€ 10.25, from October 1, 2021 € 10.45
Construction
  • € 12.85 (worker)
  • 15.55 € (half-timbered east)
  • 15.70 € (half-timbered west)
Vocational education and training
  • € 16.68 for educational staff
  • 17.02 € for educational staff with BA
roofer
  • 12.60 € (unskilled)
  • 14.10 € (journeyman)
Electrical trade12,40 €
Building cleaning
  • Interior and maintenance cleaning: € 11.11
  • Glass and facade cleaning: € 14.10
Money and valuables services (money and valuables transport, money processing)
  • Depending on the state; mobile services between € 11.24 and € 15.73
  • Inpatient service between € 9.33 and € 12.92
Scaffolders12,20 €
painter
  • € 11.10 (unskilled)
  • 13.50 € (journeyman)
maintenance

West Germany & Berlin

  • Unskilled: € 11.60, from April 2021 € 11.80, from September 2021 € 12
  • Nursing staff: from July 2021 € 15
  • Nursing staff with at least 1 year of training: from April 2021 € 12.50

East Germany

  • Unskilled: € 11.20, from April 2021 € 11.50, from September 2021 € 12
  • Nursing staff: from July 2021 € 15
  • Nursing staff with at least 1 year of training: from April 2021 € 12.20
chimney sweeper13,80 €
Stonecutters and stone sculptors12,20 €
temporary workFrom April 1, 2021 € 10.45; from April 2022 € 10.88

 

Exceptions according to type of employment

For some groups, the right to a minimum wage does not apply:

Employment typeExplanation
traineeApprentices do not receive a minimum wage, as they complete their training primarily to gain work experience and not to earn money. The state has therefore planned a gradual increase that gradually increases the independence of young people from their parents' home.
Voluntary service / honorary postPeople who work voluntarily or on a voluntary basis can expect a maximum of pocket money.
Self-employed and freelancersThe minimum wage regulations do not apply to people who have started their own business.

 

Interns: complex regulations

Various statutory minimum wage regulations apply to interns - depending on the type of internship and the duration:

  • Compulsory internship:If school or university stipulate the internship, no minimum wage has to be paid.
  • Voluntary internship: Often voluntary internships are completed in order to orientate oneself professionally (orientation internship). No minimum wage has to be paid for all voluntary interns with a duration of less than three months. If, on the other hand, the internship is longer or extended, the minimum wage is due from the first day.
DurationCompulsory internshipVoluntary internship
Max. 3 monthsno minimum wageno minimum wage
More than 3 monthsno minimum wageminimum wage

 

Further exceptions according to MiLoG

  • Young people who are not of legal age and have not completed vocational training
  • Long-term unemployed (at least one year of unemployment) in the first half year of employment
  • Persons with disabilities in a legal relationship similar to an employee
  • People who participate in measures to promote employment
  • People who are taking part in a qualification for employment or in preparation for vocational training
  • Refugees without a work permit

3. Minimum wage in payroll

Do you have employees or are you in the middle of personnel planning for 2021? Then you should pay special attention to the tax aspects, working hours and payroll.

These factors are important:

  1. Taxes
    For employees subject to compulsory insurance, taxes and social security contributions are due. As an employer, you pay this flat rate. Mini-jobbers can be exempted from compulsory pension insurance. You will then receive the minimum wage free of any deductions.
  2. Mini jobbers
    Care should be taken when employing mini jobbers. Their earnings limit is 450 euros a month. Their working hours are decreasing due to the rising minimum wage. As a mini-jobber, employees work fewer hours than their full-time colleagues. Otherwise their activity will be subject to social security contributions.
  3. Payroll
    You should of course take the rising minimum wage into account when making your payroll. If you do your own payroll with professional software, it is quite easy. You then simply adjust the base wage and the system does the rest.
  4. repayment
    Employees can also request the minimum wage retrospectively if they received less money beforehand. This even applies if the person in question no longer works for the company.
  5. Allowances
    Ultimately, only wages are added to the minimum wage, payments for company pension schemes, benefits in kind or benefits in kind do not count towards the minimum wage. The same applies to tips in restaurants.

Documentation and registration obligations for employers

The beginning, end and duration of an employee's activity must be recorded. These documents must always be kept ready in the event of a check by customs or the pension insurance. In practice, it has already been required to note down the specific break times - but there is no legal basis for this.

These documentation requirements apply to all employers who

  • Employing mini jobbers or
  • Belong to certain industries in which the legislature or regulatory authority requires recording obligations (e.g. gastronomy, hotel industry)

Incidentally, no uniform format is required for recording this information, so the employee can also write down his working hours himself and then pass it on to his employer.

The records must be available no later than seven days after work has been performed and must be archived for a period of two years.

Consequences of non-compliance with the MiLoG

If an employee is paid less than he is entitled to, the employer must subsequently pay the employee the withheld wages. Social security contributions are then levied on this subsequently paid wage.

In many cases there will also be a fine, which is calculated according to a formula that is not specified by law, but is generally applicable:

Insufficiently paid remuneration x 2 x 30%

This sum would be doubled in case of intent.

4. Frequently asked questions about the topic

A nationwide statutory minimum wage has existed across Germany since January 1, 2015.

The minimum wage is the gross wage.

With a few exceptions, the minimum wage applies regardless of the scope of the work, i.e. also regularly for mini-jobbers.

The control of compliance with the MiLoG is the responsibility of the customs administration (financial control of illegal work). Violations can be punished with fines of up to 500,000 euros.

Since vocational training serves to acquire knowledge and skills in the chosen occupation and the trainees usually live with their parents (= not financially on their own), the minimum wage does not apply here.

In principle, all employees over the age of 18 are entitled to the statutory minimum wage, even if there are some exceptions, such as interns, trainees or various industries in which the minimum wage is not regulated by the MiLoG, but by individual collective agreements.

The minimum wage is regulated by the Minimum Wage Act (MiLoG).

As the cost of living for citizens is rising steadily, the federal government has set up the minimum wage commission. This is reappointed every five years and is composed as follows: Chairman (Jan Zilius, as of 2021), three trade union representatives, three employer representatives, two academic members

Every two years the commission proposes by what percentage the statutory minimum wage should increase. The collective wage index of the Federal Statistical Office serves as a guide. As a rule, the minimum wage is not below the general standard wage development.

Once the proposal has been worked out, the federal government decides whether to accept or reject it. However, she cannot change him. If the government agrees with the recommendation, it implements it by ordinance.

5. Conclusion: How to comply with all regulations

The minimum wage has been rising steadily since 2015 - for this reason alone, employers should be aware that this entails adjustments in payroll accounting and personnel planning. Here is a summary of the most important aspects:

  • If there are record-keeping obligations, these should not only be met: always check immediately whether all provisions of the labor law under occupational health and safety are being complied with:No more than eight hours a day, no more than 48 hours a week - based on all employment relationships of an employee.
  • You should pay special attention to mini jobbers, who usually have a second job. Because by recording the working hours, you can even provide evidence of the violation of health and safety regulations in this case.
  • Employment contracts must conform to the minimum wage. Things that contradict the minimum wage law should not be included there.

You can also discuss all of these points with your payroll clerk. We are happy to recommend the right contact person. Payroll software can also help you quickly adjust the wage and salary slips with regard to the minimum wage. We compared the top providers and selected test winners:

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