Businesses

Other wage components - Allowances and supplements

To the table of contents

Other wage components - Allowances and supplements

Principle

The minimum wage is a gross wage, which must be calculated and paid out as a cash benefit.

Remuneration by way of granting benefits in kind, that is to say, benefits provided by the employer in return for the performance of work in a form other than money, is not permissible. The possibility of offsetting benefits in kind for seasonal workers, as provided for by the Minimum Wage Act, does not exist for Postings under the Posting of Workers Act or the Act on Temporary Agency Work.

The minimum wage shall be determined on the basis of the following principles:

The minimum pay pursuant to the Minimum Wage Act is an hourly gross rate which shall be determined with reference to a "full" hour of 60 minutes. By law, the entitlement to receive not less than the minimum rate is not dependant on the time of day when a job is done nor on the circumstances or success of the work performance. The minimum pay entitlement shall be deemed satisfied by the employer as soon as that money has been transferred or made available to the worker at his or her free disposal.

Allowances or surcharges

All monetary contributions coming under the relationship of exchange between employer and employee can satisfy a worker’s minimum wage entitlement. The only monetary contributions in this context which are excluded from satisfying the entitlement are those which the employer provides without regard to an actual work performance or in order to comply with specific legal requirements.

Examples of allowances and supplements that are always taken into account:

  • Allowances or supplements paid exclusively for work that must regularly and continuously be performed under the terms of an employment contract (e.g. a construction bonus for all workers employed on the building site).
  • Allowances that are identified in the employment contract of a worker posted from abroad as the difference between the wage in his home country and the minimum wage due in Germany, the country of posting.

  • Supplements and allowances the payment of which requires:

    • more work per time unit (piecework premiums),
    • above-average quality work results (quality premiums),
    • work at particular times (e.g. overtime, Sunday, holiday),
    • work under difficult or dangerous conditions (e.g. dirt allowances, or danger allowances)

Examples of supplements and allowances which cannot be taken into account

  • Supplements for working nights.
  • Posting allowances paid to reimburse costs actually incurred as a result of the posting (posting costs) cannot be counted against the minimum wage. The costs of posting are in particular travel, accommodation and catering costs.
    If the working conditions applicable to the employment relationship do not determine which components of a posting allowance are paid as a reimbursement of posting costs or which components of a posting allowance are part of the remuneration, it is irrefutably presumed that the entire posting allowance is paid as a reimbursement of posting costs and therefore not taken into account when determining whether the minimum wage requirement has been satisfied.

Please note

Irrespective of whether accommodation and catering for seasonal workers can be seen as part of their wages, all generally eligible legal constructions, such as the setting-off option, can be applied.

Information on accommodation and catering as a component of the wage of seasonal workers

In contrast to the addition method (also known as credit method) which regards accommodation and catering that has been provided by the employer upon agreement as an actual component of the wage, the setting-off method implies that the claims and counterclaims of the partners be reckoned up against each other. Setting-off, therefore, requires a separate claim for accommodation and catering or other employer-provided benefits for consideration.

In order to make the setting-off procedure as transparent and unbureaucratic as possible reference is made to central elements of the provisions regulating the general statutory minimum wage (in particular, specific sums set down in the Social Security Fees Ordinance, and basic valuations in accordance with Section 107 of the German Industrial Code (GewO)). Their respective approaches shall form the basis for the Customs authorities’ verification of minimum wages pursuant to the MiLoG, AEntG and AÜG legislation.

The setting-off shall not, of course, contravene the application - where relevant - of legal provisions such as fiscal law, rent law, or public-law health and safety regulations.

Specifically, the Customs Adminstration’s verification of minimum wages is based on the following:

After setting-off, the employee shall still dispose of a nett sum equivalent to the non-attachable part of the wage (GewO, sentence 5 of Section 107(2) in conjunction with Section 394 of the German Civil Code (Bürgerliches Gesetzbuch - BGB), exemption from attachment), which is based on the relevant amount for a single person without any dependants.

Similarly, the amounts for board and/or lodging according to the Social Security Fees Ordinance shall be taken into account.

The employer’s social security contributions shall not be disregarded for the purpose of calculating the minimum wage.

Additional Information

Note on web analysis and the use of statistical cookies

In order to improve our website, we would like to analyse usage behaviour and compile access statistics. For this purpose, the web analysis software Matomo completely anonymously collects and evaluates statistical information. We will only store a statistical cookie on your device with your consent, and access device information required for this purpose. At no time will this data be linked to personal data or shared with third parties.

More information can be found in our data protection declaration. You can revoke your consent there at any time.

Data protection declaration