Significant changes in German labour law – new minimum wage rate
On 1st October 2022, the new minimum wage in Germany will come into force – at € 12.00 gross per hour of work.
The new rate will be applicable until the end of 2023, while a consultation on a possible amendment is scheduled for the end of June 2023, with effect from 1 January 2024.
The increase in the minimum wage will have an impact on a number of further wage-related regulations, like for example so-called Minijob wage, which will be raised to € 520.00 gross as of 1st of October, or with regard to the rates previously applied in collective agreements, particularly in the temporary work sector.
Therefore, all employers, including those based overseas, will be obliged to reasses their wage policy and possibly adjust wages to the new standard which will come in force from 1st October.
In the case of the temporary employment sector, due to the need to adjust the rates, the parties of the collective agreement – on the employers’ side – the employers’ associations BAP and iGZ, which together form the Negotiating Association for Temporary Employment (Verhandlungsgemeinschaft Zeitarbeit – VGZ), and on the employees’ side, all eight trade unions belonging to the German Trade Union Confederation (DGB) – have agreed on new wage rates for EG 1, 2a and 2b from 1 October 2022. We would also like to point out that the previous grade 2 in the temporary agency work sector (EG 2), has been split into EG 2a and EG 2b, in which the following – different – rates apply:
The change is important for all employers who, when assigning employees, apply the principles of the BAP or iGZ collective agreements in their individual contracts with employees. The reason for this is the need to adjust not only the rates, but also, in many cases, the content of the employment contracts or subsidiary agreements used – in a way that complies with the requirements of the new Evidence Act.
In terms of the sector-specific minimum wage (e.g. for scaffolding or electrical work), it will not, as a rule, be increased as a result of an increase in the national minimum wage, provided that it already equals or exceeds €12.00 gross per hour prior to 1st of October 2022.
