On 28 June 2016, the Minimum Wage Commission, composed of employer and employee representatives, unanimously resolved to raise the statutory minimum wage from the current €8.50 to €8.84 at the beginning of 2017.
Minimum Wage Increase
After two years of the statutory minimum wage, it will now be raised to €8.84. The Minimum Wage Commission, which consists of a chairperson, three representatives each from the unions and the employers, and two advisory academics, now sets the rate every two years. According to the commission's chairperson, Mr Jan Zilius, the level of the adjustment is based on collective bargaining developments, i.e. on the increase in the average hourly wage under collective agreements. The commission naturally also retains its own scope for discretion.
It should therefore be noted that from 2017 onwards, every employee in Germany must receive a statutory minimum wage of €8.84.
Adjustment of Employment Contracts
For many employers, the increase in the statutory minimum wage involves a considerable amount of work. Particularly when employing marginally employed workers, contract adjustments are essential to ensure that the marginal employment thresholds are not exceeded.
Our Rechtsanwalt (German Attorney-at-Law) team is, of course, available at any time to assist you with the implementation of the statutory minimum wage increase and with any other questions relating to employment law. Please contact Ms Kerstin Steffen, Fachanwältin (German Specialist Attorney) for Employment Law, in this regard.
Frequently asked questions
Frequently asked questions
What is the statutory minimum wage from 2017?
The statutory minimum wage will be raised from EUR 8.50 to EUR 8.84 gross per hour effective 01.01.2017. This increase applies in principle to all employees in Germany.
Who sets the level of the statutory minimum wage?
The minimum wage is set by the Minimum Wage Commission (Mindestlohnkommission), which consists of a chair, three representatives each from the trade unions and the employers, and two academic advisors. The commission reviews and decides on adjustments every two years.
What guides the adjustment of the minimum wage?
The adjustment follows, with a time lag, the development of collectively agreed wages, i.e. the increase in the average collectively agreed hourly wage. In addition, the commission has its own scope of discretion.
Why do employment contracts for mini-jobs need to be adjusted?
For employees in marginal employment (Minijob), the contract must be adjusted so that the higher hourly wage does not push earnings above the marginal earnings threshold. As a rule, the agreed monthly working hours must be reduced in order to maintain the mini-job status.
How often is the statutory minimum wage reviewed and adjusted?
The statutory minimum wage is reviewed and reset every two years by the Minimum Wage Commission (Mindestlohnkommission). The first adjustment after its introduction took effect on 01/01/2017.