Increasing the statutory minimum wage to EUR 12 gross per hour was one of the SPD's key campaign promises.

The Federal Council recently approved the draft of the "Act to increase protection through the statutory minimum wage and to make changes in the area of ​​marginal employment".

From October, employers are generally obliged to pay their employees at least EUR 12 gross per hour.

However, there will still be groups that are not covered by the Minimum Wage Act.

This includes young people under the age of 18 and the long-term unemployed during the first six months of employment after unemployment has ended.

Interns are also not entitled to a minimum wage if they complete a mandatory internship as part of company or university training.

There is also no minimum wage for internships that last no longer than three months.

Volunteers are also not recorded.

A separate minimum training allowance applies to trainees.

However, those who are entitled to the minimum wage will not only get more money in October.

A "regular" increase in the statutory minimum wage to EUR 10.45 gross per hour is already planned for July 1, 2022.

So there will be two increases by the end of the year.

It should also not be forgotten that higher statutory or collectively agreed minimum wages apply in numerous sectors, which of course remain unaffected.

Need for action for employers' associations and trade unions

The previous practical problems will not be solved by the new regulation.

There is still a dispute as to whether and which supplements and other financial benefits can be offset against the statutory minimum wage.

According to the case law of the Federal Labor Court, the guideline is that all those “additional services” can be credited with which the actual contractual activity, i.e. normal activity, is remunerated.

This is affirmed, for example, for performance bonuses or shift allowances.

Night surcharges, tips or company loyalty payments such as the Christmas bonus are not eligible.

There is a need for action above all for the employers' associations and trade unions.

A large number of collective agreements, especially in the low-wage sector, will tear the new legal lower limit.

So adjustments are needed here.

If one considers the unusually high jump in remuneration due to the new statutory minimum wage in the lowest salary groups, it should be clear that new regulations for collectively agreed remuneration systems will not be trivial.

Employers and their associations will certainly not (want to) apply the high percentage increase in hourly wages to higher pay brackets in the same way.

The increase coming on October 1, 2022 will probably be associated with a fundamental restructuring of the remuneration systems - which should primarily affect the gaps between pay groups.

Insofar as remuneration systems have been agreed at company level, the same challenges arise.

In practice, the timeframe up to October 1 is likely to be too ambitious.

A longer transition period would certainly have been appropriate.

An expensive system change

The increase in the statutory minimum wage is accompanied by fundamental changes in the area of ​​marginal employment and midi jobs.

The upper limit for so-called midi jobs in the transitional area will increase from the current EUR 1,300 gross to EUR 1,600 gross.

Of even greater practical importance are the changes in marginal employment.

Nothing less than an expensive system change has been recorded here.

In the future, the marginal part-time work limit will be determined dynamically: a weekly working time of ten hours is initially assumed.

This value is extrapolated to the average monthly working hours.

The monthly hours must then be multiplied by the statutory minimum wage.

This means: The monthly marginal income limit will be 520 euros from October.

There is a need for action, especially in the case of minor employment.

Insofar as a fixed weekly working time has been agreed, the imminent jump in remuneration can also lead to the increased marginal employment limit being exceeded.

Employees then drop out of marginal employment under social security law.

A unilateral reduction of the agreed working hours by the employer is not possible.

Employees and employers must therefore ultimately find an amicable solution.

It would also be possible to agree that only marginal employment is wanted and then the number of hours that results from the relevant hourly wage and the respective marginal employment limit is considered agreed.

It is therefore possible to find solutions for typical constellations in practice.

What is important, however, is that these must be expressly and transparently agreed.

The author is a partner in the law firm Dentons Europe LLP.

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