How to define a Minimum Wage … Experiences from Germany and other European Countries Dr. Thorsten Schulten Association of Free Trade Unions of Slovenia (ZSSS) Friedrich Ebert Stiftung International Conference on Minimum Wages Ljubljana, 16 June 2015

Content Minimum Wages in Europe Problems of Comparison How to define a minimum wage? Views of the European Court of Justice Experiences from Germany and other European Countries Dr. Thorsten Schulten 16 06 2015

National Minimum Wages in Europe (per hour, in Euro, January 2015) Dr. Thorsten Schulten 16 06 2015

National Minimum Wages in Europe Problems of Comparison Comparison in Euro Influenced by exchange rate Different costs of living Dr. Thorsten Schulten 16 06 2015

National Minimum Wages in Europe (per hour, in Purchasing Power Parities, January 2015) Source: WSI Minimum Wage Database 2015 Dr. Thorsten Schulten 16 06 2015

National Minimum Wages in Europe Problems of Comparison Comparison in Euro Influenced by exchange rate Different costs of living Different relative values In comparison to average or median wages Dr. Thorsten Schulten 16 06 2015

Relative Level of Minimum Wages Minimum wage in % of median wage, 2013 Dr. Thorsten Schulten 16 06 2015

Relative Level of Minimum Wages Minimum wage in % of median wage, 2013 Dr. Thorsten Schulten 16 06 2015

National Minimum Wages in Europe Problems of Comparison Comparison in Euro Influenced by exchange rate Different costs of living Different relative values In comparison to average or median wages Different scope of the minimum wage Exclusion of certain groups of workers Different definitions of minimum wages Which wage components are included and which not? Dr. Thorsten Schulten 16 06 2015

Content Minimum Wages in Europe Problems of Comparison How to define a minimum wage? Views of the European Court of Justice Experiences from Germany and other European Countries Dr. Thorsten Schulten 16 06 2015

Minimum Wage in Germany New Statutory Minimum wage of 8,50 Euro per hour (from 1 January 2015) German Minimum Wage Act include no definition of a minimum wage, but refers to the Law on Posted Workers German Government says that the definition of a minimum wage has been has been clarified by jurisdiction of the European Court of Justice and the German Federal Labour Court Dr. Thorsten Schulten 16 06 2015

How to define a minimum wage? European Posted Workers Directive (96/71/EG) “For the purposes of this Directive, the concept of minimum rates of pay … is defined by the national law and/or practice of the Member State to whose territory the worker is posted” (Article 3). Dr. Thorsten Schulten 16 06 2015

How to define a minimum wage? Jurisdiction of the European Court of Justice Case C341/02: Commission v. Germany, 14 April 2015 Case C‑522/12: Isbir v. DB Services GmbH, 7 November 2013 Case C‑396/13: Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna 12 February 2015 Dr. Thorsten Schulten 16 06 2015

How to define a minimum wage? European Court of Justice Case C341/02 Commission v. Germany (14. April 2005) “It is entirely normal that, if an employer requires a worker to carry out additional work or to work under particular conditions, compensation must be provided to the worker for that additional service without its being taken into account for the purpose of calculating the minimum wage.” (Recital 40) Dr. Thorsten Schulten 16 06 2015

How to define a minimum wage? European Court of Justice Case C341/02 Commission v. Germany (14. April 2005) Judgment follows the principle that minimum wages can include all wage components “which do not alter the relationship between the service provided by the worker and the consideration which that worker receive in return.” (Recital 43) Every work which is in addition to normal work can not be include in the minimum wage and has to be paid extra !!! Dr. Thorsten Schulten 16 06 2015

How to define a minimum wage? European Court of Justice Case C‑522/12 Isbir v. DB Services GmbH, (7 November 2013) “In that regard, the Court held that it was normal that, if an employer requires a worker to carry out additional work or to work under particular conditions, compensation must be provided to the worker for that additional service without its being taken into account for the purpose of calculating the minimum wage.” (Recital 39) Dr. Thorsten Schulten 16 06 2015

How to define a minimum wage? European Court of Justice Case C‑396/13: Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna (12 February 2015) “According to the Court’s settled case-law, allowances and supplements which are not defined as being constituent elements of the minimum wage by the law or practice of the Member State to whose territory the worker is posted, and which alter the relationship between the service provided by the worker, on the one hand, and the consideration which he receives in return for that service, on the other, cannot under the provisions of Directive 96/71, be considered to be elements of that kind” (Recital 36) Dr. Thorsten Schulten 16 06 2015

Calculation of the German Minimum Wage “As a rule, those employer payments that are paid in compensation for the employee’s “normal work” are to be counted as components of the minimum wage. Payments that an employee receives as compensation for work beyond this may not be counted as part of the minimum Wage.“ German Ministry of Labour (2015) Dr. Thorsten Schulten 16 06 2015

Calculation of the German Minimum Wage Can be considered Can not be considered Basic remuneration Overtime bonuses Lump-sum payments Bonuses for night or weekend work Guaranteed bonuses paid on a regular (monthly) basis Bonuses for heavy and dangerous work Annual bonuses (Christmas and holiday bonus) Tips   Compensations for additional costs (e.g. work wear, work equipment, travel costs etc.) Additional company pensions Dr. Thorsten Schulten 16 06 2015

Can Bonuses for Work during Nights, Sundays or Public Holidays be included into the Calculation of the Minimum Wage? Non! No! Nee! Nein! Bonuses for work during special working times are not part of the minimum wage, but have to be paid extra !!! Dr. Thorsten Schulten 16 06 2015

Conclusion: Why a precise definition of the Minimum Wage is so important? Fairness for Workers: Extra work should be paid extra! Control and Enforcement: Unclear definitions give opportunities to circumvent the Minimum Wage Law Dr. Thorsten Schulten 16 06 2015

WSI Minimum Wage Database Current Minimum Wage Data from 30 Countries! Available in English! http://www.boeckler.de/wsi-tarifarchiv_44064.htm Dr. Thorsten Schulten 16 06 2015 22

Contact and Further Reading … Social Europe 9 April 2015 New Book FES-Studies Dr. Thorsten Schulten Thorsten-Schulten@boeckler.de Dr. Thorsten Schulten 16 06 2015 23