The number of suspected minimum wage violations increased last year, despite fewer companies being inspected in 2023 than in the previous year.
According to Germany's Finance Ministry on Tuesday, minimum wage checks were conducted on 42,631 employers in 2023, as opposed to 53,182 in 2022.
Of these, 7,249 cases led to investigations into minimum wage violations. That’s up from 5,898 proceedings in 2022. Overall, around one in six inspections resulted in legal proceedings in 2023.
"There's a lot more minimum wage fraud," Left Party MP Victor Perli told DPA
Victor Perlin founded an informative website and reporting portal called Mindestlohnbetrug.de (Minimum wage fraud) to help document and investigate wage infringements.
Since October 2022, when the minimum wage was initially raised to €12 per hour, the number of reports on the site "increased significantly," Perli said. He added that stricter rules are needed for the recording of working hours so that wage theft can be easily proven.
According to the Ministry of Finance, the sectors with the highest number of inspections were construction, restaurants and accommodation, and freight forwarding and transport.
What is Germany’s minimum wage?
Since January 1st 2024, Germany’s federal minimum wage has been €12.41 per hour. At 40 hours per week, that amounts to a monthly salary of €1.942 before tax.
The minimum wage is set to be raised again to €12.82 in January 2025.
It increased significantly in 2022, jumping up to €12 per hour. It had been €9.50 as recently as the beginning of 2021.
Still, employee representatives on Germany's Minimum Wage Commission have argued that the currently planned wage hikes do not go far enough to protect wage workers from inflation.
READ ALSO: Why Germany's proposed minimum wage increase has been called a 'scandal'
What is minimum wage fraud?
Germany’s minimum wage was introduced in 2015 in order to ensure that hourly wage workers receive a minimum level of compensation – enough to afford them a decent standard of living.
Minimum wage fraud refers to any tactic used by employers to pay their employees less than minimum legal requirements.
The most obvious form of minimum wage fraud occurs when an employer compensates employees at an hourly rate that is lower than the current minimum. For example, paying employees €12 per hour rather than the €12.41 that is currently required.
But more often employers may engage in other tactics to get out of paying fair minimum wages, such as setting performance targets too high for piecework.
Piecework is employment that is paid by the task rather than the hour. For example, a landscaper might get paid €12 for every lawn that they mow. But if mowing a lawn takes an hour or more, then their resulting compensation would be below the minimum wage.
Information published by Germany's Employment Agency (Bundesagentur für Arbeit) stated that, “Even if you have agreed a piecework rate with your employer, you may not earn less than the statutory minimum wage.”
Illegal salary deductions, incorrect records of working hours, undeclared work, misclassified job titles, and unpaid sick or vacation days are among the most common issues resulting in wage fraud.
READ ALSO: Vacation days in Germany: What to know about your rights as an employee
What to do if you suspect wage fraud
The Financial Control of Undeclared Work (Finanzkontrolle Schwarzarbeit), part of the Finance Ministry, is responsible for investigating and controlling Minimum Wage Act violations.
The department comprises 8,600 posts, but is known to be understaffed. As a result, many wage fraud cases are missed.
The German Institute for Economic Research (DIW) estimates that 2.4 million employees do not receive the statutory minimum wage.
Workers that suspect they are not being paid sufficiently can report minimum wage fraud here. You can also find a minimum wage salary calculator here, and more resources and information here.
With reporting from DPA.
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