12 February 2018

BAG decides: Piecework and performance bonuses are to be counted towards the minimum wage claim

In a ruling in autumn 2017, the Federal Labour Court (Bundesarbeitsgericht, BAG) decided that piecework and performance bonuses must also be counted towards the minimum wage entitlement. For the employer, this means that he also fulfils the minimum wage entitlement with the payment of such wage components. The employee, in turn, cannot demand that such performance bonuses be paid in addition to the minimum wage.

Case in point: Assembly worker sues for minimum wage PLUS performance bonus

In the case at hand, an assembly worker had filed a complaint, who in 2015 received a wage consisting of a basic hourly wage of 6.22 euros gross and a performance-related hourly bonus of 2.30 euros gross. In total, this resulted in a gross wage of 8.52 euros per hour, which was just two cents above the legally applicable minimum wage of 8.50 euros at the time. It is now 8.84 euros (since 1.1.17).

The Federal Labour Court had decided against the assembly helper in the last instance. and rejected their appeal. In its reasoning, the BAG stated that the plaintiff would have had to prove that the disputed performance bonus either did not serve to compensate for work performance or was based on a special legal purpose. In doing so, the BAG also explicitly takes a position on the different interpretations of trade unions and employers as to what exactly the minimum wage entails.

Unions vs. employers: components of the minimum wage

The trade unions argue that the minimum wage is merely a kind of "basic wage" for the "normal performance" of the employee, which can be supplemented by other wage components (e.g. bonuses, holiday/ Christmas pay, overtime, night/holiday bonuses).

The employer side counters that all wage components are relevant to the minimum wage, at least if they are paid regularly every month.

With its ruling, the BAG supports the employer's view. It explains that the term "normal performance" has not found its way into the wording of the Minimum Wage Act.

ZEP Clock: Project-independent recording of working times according to MiLoG

With ZEP Clock, the company provantis IT Solutions GmbH offers a cost-effective, flexible and ready-to-use solution for recording working hours and thus helps companies to fully comply with their documentation obligation according to § 17 MiLoG. According to § 17 of the Minimum Wage Act (MiLoG), the employer is obliged to record and document the working hours of marginally employed employees (mini-jobs).

ZEP Clock is based on the solution that has been successfully established on the market for more than a decade. ZEP - Time recording for projectsbut was specially designed for project-independent recording of working hours. The core functions of the solution, which is offered as a web-based cloud solution, are directly oriented to the requirements of the Minimum Wage Act. These requirements were directly implemented in ZEP Clock:

  • Employee-related, complete recording of working times with start and end time
  • Recording of working hours at the latest seven days after the work performance
  • Retention of recorded working hours for two years and longer
  • Evaluation of working times at any time
  • Recording of working times with apps (iPhone, Android) or web browser

For more information on ZEP Clock, please contact here available.