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Germany — Labour court ruling on sector-specific minimum salaries

26 October 2009

Germany's highest court for labour matters (BAG) has decided that a minimum salary only needs to be paid if the ultimate employer has signed up to a bilateral employer-union agreement (Tarifvertrag) for his industry.

Minimum salaries in Germany are not set by the government but by industry specific bilateral agreements between employers and unions. Minimum salaries therefore vary by industry sector. Some sectors do not or do not yet have minimum salaries.

The association of German temporary employers (iGZ) welcomes the decision and explains in a simple example the implication of the court ruling.

"If a craftsman from one industry, which has a bilaterally agreed minimum salary, is placed by a temporary employment agency in another industry, which does not have a minimum salary, the agency does not have to pay a minimum salary." IGZ use the example of a painter who might work for a timber manufacturer, i.e. a completely different industry sector.

In other words: It is the employer's industry which matters, not the employee's industry. In the past, a temporary employment agency would have had to pay the minimum salary of the employee's industry without being able to recuperate some of the money from its client, the ultimate employer.



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