Employer's liability
Pursuant to Article 13 of the Minimum Wage Act (Mindestlohngesetz - MiLoG) and Article 14 of the Posted Workers Act (Arbeitnehmer-Entsendegesetz - AEntG) an employer becomes liable, in the same way as a guarantor who has waived the benefit of execution and irrespective of any fault of his own, for the obligation on
- the contractor commissioned by him,
- any sub-contractor commissioned by that contractor,
- any supplier of labour commissioned by that contractor and/or sub-contractor
to ensure compliance with the minimum conditions of employment and, in the scope of the AEntG, to the payment of holiday fund contributions. In the explanatory memorandum setting out the legal rationale, the German legislator stipulated that the Federal Labour Court’s restrictive ruling with regard to an employer’s liability under the AEntG likewise be applied to Article 13 of the Minimum Wage Act. Such restrictive jurisdiction shall also apply in cases where administrative offences are committed through a chain of subcontractors (Article 21(2) MiLoG and Article 23(2) AEntG) so that, within the meaning of the law, only that person is regarded an employer who, when entering the contractual relationship with the contractor, passes on or fulfils a contractual obligation that already had arisen to a third party (client), or who intends to use the contractor for fulfilling a contractual obligation which will typically arise as part of that person’s business model.
To find out whether a subcontractor is under an obligation to grant minimum conditions of employment, you should refer to the summary Conditions of employment as laid down in collective bargaining agreements and legal provisions.
The obligation to grant a minimum level of pay in accordance with the Minimum Wage Act applies to all employment relationships unless they come within the scope of provisions stipulated in the Posted Workers Act or the Provision of Temporary Workers Act.
Conditions of employment as laid down in collective bargaining agreements and legal provisions
The minimum level of pay shall include in the employer´s liability no more than the amount to be paid out to the employee after taxes and social security contributions, payments towards the promotion of employment or other such social insurance payments have been deducted (net pay). The net pay does not include remuneration components that go beyond the minimum remuneration in accordance with Article 5 sentence 1 No. 1 AEntG in accordance with Article 5 sentence 1 No. 1a AEntG.
Both domestic and foreign workers are entitled to bring any claims in this respect before the competent German labour court.
German-domiciled and foreign-domiciled employees can enforce this claim in the competent German labour court.
