The German Minimum Wage Commission has proposed a two-stage increase of the statutory minimum wage. According to the proposal, the minimum wage is to rise from the current level of 12.82 euros per hour to 13.90 euros as of 1 January 2026, followed by a further increase to 14.60 euros per hour as of 1 January 2027.

The Minimum Wage Commission, composed of representatives of employers and trade unions, agreed unanimously on the adjustment. The Federal Ministry of Labour and Social Affairs is expected to issue a corresponding statutory ordinance to formalize the new wage levels.

Timeline of Increases

• As of 1 January 2026: Increase from 12.82 euros to 13.90 euros per hour
• As of 1 January 2027: Further increase to 14.60 euros per hour

The statutory minimum wage applies nationwide and is legally binding for all sectors and employers, regardless of company size or collective agreements.

Context and Background

The statutory minimum wage was first introduced in Germany in 2015 and is reviewed biennially by the independent Minimum Wage Commission. The most recent adjustment took effect in January 2024, bringing the rate to 12.41 euros, followed by a regular increase to 12.82 euros in January 2025.

With the newly proposed increases, the Commission aims to reflect macroeconomic developments, ensure an appropriate wage floor, and maintain fair competition among employers. The recommendations are based on a range of economic indicators, including wage trends, price levels, and productivity data.

Implications for Employers

Companies operating in Germany should begin preparing for the upcoming wage adjustments. In particular, HR and payroll departments will need to:

• Update employment contracts and payroll systems in line with the new minimum wage levels
• Review internal wage structures to ensure continued differentiation where applicable
• Budget for increased personnel costs, especially in sectors with a high share of minimum wage earners
• Consider potential impacts on marginal employment (Mini-Jobs) and working time arrangements

Failure to comply with statutory minimum wage requirements can result in substantial administrative fines and reputational risks. Employers are therefore advised to take timely legal and operational measures to ensure full compliance.

Conclusion

The announced increase of the minimum wage to 14.60 euros by 2027 marks a significant adjustment within the German wage landscape. Companies should act proactively to integrate the upcoming changes into their payroll and compliance processes.

For further questions on the implementation of the new wage levels or support with payroll compliance in Germany, please feel free to contact us at:

WW+KN, a Baker Tilly Company
info@payrollgermany.de