Until now, employees had little recourse against employers in cases of late wage payments. Claims for damages from default could only be asserted if the damage could be specifically identified (e.g., reminder fees or direct debit reversals).
The legislator has now introduced a flat-rate compensation through §288 Abs. 5. The amount of EUR 40.00 is payable by the employer with every late payment. This also applies to instalment payments.
This new regulation is intended to encourage employers to pay on time. In addition, the flat rate is meant to acknowledge at least the initial inconvenience in the event of a late payment.
Initially, this regulation only applied to employment relationships that began after 28 July 2014. Since 30 June 2016, however, it applies to all employment relationships.
Frequently asked questions
Frequently asked questions
What flat-rate compensation are employees entitled to in the event of late wage payments?
Under § 288 Abs. 5 BGB, employees are entitled to a flat-rate default fee of EUR 40.00 if the employer pays wages late. This flat rate applies to each late payment, without any need to prove actual damages.
Does the EUR 40 late payment fee also apply to delayed installment payments?
Yes, the flat fee of EUR 40.00 under § 288 Abs. 5 BGB is also payable for delayed installment payments. The only decisive factor is that the employer is in default with the payment.
Did employees previously have to prove a specific loss in cases of wage arrears?
Before the introduction of the statutory late payment lump sum, employees could only assert claims for compensation if they could quantify a specific loss, such as reminder fees or charges from returned direct debits. Without concrete evidence, there was practically no leverage against the employer.
From when does the flat-rate default fee under § 288 Abs. 5 BGB apply to existing employment relationships?
Initially, the rule applied only to employment relationships commenced after 28 July 2014. Since 30 June 2016, however, the flat-rate default fee applies to all employment relationships, including older contracts.
What is the purpose of the late payment flat fee for wages?
The flat fee is intended to encourage employers to pay wages on time and thereby increase the pressure to meet payment deadlines. At the same time, it provides a lump-sum compensation for the initial inconvenience suffered by the employee due to delayed payment.