Minimum Wage and Equal Pay in Employee Leasing: A Guide for Foreign Companies

When engaging in employee leasing in Germany, it is essential for companies to understand the regulations surrounding minimum wage and equal pay to ensure compliance and avoid penalties. This article delves into the details of these requirements and provides examples to illustrate their application.

Minimum Wage Requirements

As of January 1, 2024, the statutory minimum wage in Germany is €12.41 per hour. For the temporary work sector, specific minimum wage regulations apply, which may be higher than the general statutory minimum wage. From January 1, 2024, to March 31, 2024, the minimum wage for temporary workers was set at €13.50 per hour.

In cases where no sector-specific minimum wage is in place, the general statutory minimum wage applies. However, the wage must not fall below this threshold under any circumstances.

Equal Pay Principle

The Equal Pay principle, established in the Arbeitnehmerüberlassungsgesetz (AÜG), mandates that temporary workers (Leiharbeitnehmer) receive the same pay as permanent employees in comparable positions within the company they are leased to (Entleiher). This principle aims to prevent wage discrimination and ensure fair treatment.

Key Aspects of Equal Pay:

1. Equal Pay Timeline: Leiharbeitnehmer must receive equal pay after nine months of continuous employment with the same Entleiher. This period can extend to 15 months if specific collective agreements (Branchenzuschlagstarifverträge) apply, which gradually align temporary workers‘ pay with that of permanent employees.

2. Components of Equal Pay: Equal Pay covers all aspects of compensation, including basic salary, bonuses, allowances, and benefits such as holiday pay and pension contributions. If permanent employees receive additional benefits like company cars or mobile phones, temporary workers should receive equivalent monetary compensation.

3. Exemptions and Collective Agreements: While the general rule is to provide equal pay after nine months, collective agreements can stipulate different conditions. For example, the pay adjustment can begin after six weeks, with full alignment after 15 months. Such agreements must comply with legal standards and cannot undermine the basic rights of temporary workers.

Examples of Application

1. Manufacturing Industry: A temporary worker employed in a car manufacturing plant must receive at least the same hourly wage as a permanent worker performing the same tasks. If permanent workers receive a monthly productivity bonus, the temporary worker is also entitled to a proportionate bonus.

2. IT Services: An IT specialist leased to a tech company must receive the same salary as a permanent IT specialist after nine months. If the company’s permanent employees receive stock options, the temporary worker should receive equivalent compensation.

3. Healthcare Sector: A nurse working through a leasing agency at a hospital must be paid the same hourly rate as the hospital’s permanent nursing staff. Any additional benefits such as night shift allowances or health insurance must also be provided.

 Importance for Foreign Companies

Foreign companies planning to hire employees in Germany or engage in employee leasing must pay special attention to these regulations to avoid legal risks and financial penalties. Non-compliance can lead to severe consequences, including fines, revocation of leasing licenses, and legal actions.

Ensuring Compliance

To avoid penalties and ensure compliance with the AÜG, companies should:

  • Conduct Regular Audits: Regularly review compensation structures to ensure that leased employees receive appropriate wages and benefits.
  • Maintain Accurate Records: Keep detailed records of employment contracts, wage agreements, and duration of employment.
  • Stay Updated with Regulations: Regularly update policies to reflect changes in minimum wage laws and collective agreements.

WW+KN and Baker Tilly Support

At WW+KN, a Baker Tilly company, we provide comprehensive support for businesses navigating the complexities of the German labor market. Our services include:

  • Legal Consultation: Expert advice on compliance with minimum wage and equal pay regulations.
  • Documentation and Reporting: Assistance in maintaining accurate records and fulfilling reporting requirements.
  • Training Programs: Training for management on the legal aspects of employee leasing and best practices.
  • Compliance Audits: Conducting thorough audits to identify and rectify any compliance issues.

For further guidance and support reach out to WW+KN, a Baker Tilly Company. Our experts are here to assist with payroll-related aspects and ensure compliance with all relevant regulations. Interested parties can contact us at info@payrollgermany.de.