How your boss can still pay lower than the minimum wage

The first ruling of a German court about the minimum wage, which came into effect in 2015, came down on the side of employers on Wednesday.

How your boss can still pay lower than the minimum wage
A protest in front of the Chancellery in 2013. Photo: DPA

“This method of accounting means that my client in no way profits from the minimum wage,” lawyer Simon Daniel told the Federal Labour Court.

He was referring to the fact that the hospital employee he was representing was being paid €8.03 per hour, far below the legal minimum wage of €8.50.

But, by adding her Christmas bonus and her holiday money onto her hourly wage, her employer had managed to calculate the woman’s annual wage up to €8.69 an hour.

The whole purpose of the minimum wage, which was brought in in 2015, was to fight poverty and the potential for falling into poverty in old age, said Daniel.

Through her employer’s dubious accounting trick his client would still only receive a monthly salary of €1,507 before tax, he pointed out.

But the court saw things differently.

The judge ruled that the practice was fair enough, as long as it is agreed upon with employee representatives first, as was the case with this woman.

That meant that the judge sided with the hospital service company which argued that the minimum hourly wage applied to a person’s total yearly income, inclusive of holiday and Christmas bonuses which employers are not legally obliged to provide.

“This ruling proves that the government was not careful enough in how it wrote the law,” said Heike Werner, the Left Party’s labour minister in Thuringia.

Werner called for the federal government to add an amendment to the law to close the loophole whereby employers can add bonus money onto hourly wage calculations.

Several million people across Germany are on the minimum wage, meaning that the ruling could have a significant impact on the lowest earners across the country.

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