Minimum Wage (Germany) 

Adjustment of the minimum wage 

Based on the 4th Minimum Wage Adjustment Ordinance (MiLoV4) of 24.11.2023, the minimum wage will increase from €12.41 to €12.82 with effect from 01.01.2025. Accordingly, the marginal employment threshold also increases to €556.00 per month. 

Compensatory levy according to § 160 SGB IX

Adjustment of the compensatory levy

Employers with at least 20 workplaces are legally obliged to employ severely disabled people for at least 5% of their jobs under Section 154 SGB IX. If this is not fulfilled, they must pay a compensatory levy for severely disabled persons for each mandatory position not filled according to Section 160 SGB IX. 

According to Section 160 (2) SGB IX, the following values apply per vacant workplace for the reporting year 2024:

• €140.00 with an employment quota of severely disabled persons from 3% to less than 5%
• €245.00 with an employment quota of severely disabled persons from 2% to less than 3%
• €360.00 with an employment quota of severely disabled persons below 2%
• €720.00 with an employment quota of 0%

Compensation levy for smaller employers

For smaller employers, special rules apply regarding the levy for unfilled mandatory positions for severely disabled persons:

Self-Determination Act

What is the Self-Determination Act? 

On 01.11.2024 the law on self-determination with regard to gender entry (SBGG) came into force. It is intended to enable persons of legal age to change their gender entry and first name by making a declaration to competent public authorities. 

Changes to labor law 

With the entry into force of the Self-Determination Act, the employee may request, in accordance with Section 10 (2) SBGG, that documents such as certificates and contracts with the amended gender entry as well as first names be reissued should there be a legitimate interest. The employer must, as far as possible, ensure that conclusions drawn about a re-issue are avoided. 

An amendment should not be rejected lightly in order to avoid allegations of gender discrimination. 

Family Start Time Act

Draft of the Family Start Time Act

Please note:
The draft of the Family Start Time Act was published on March 29, 2023. The further course of the legislative process and when the law will enter into force is still open.

The Family Start Time Act is intended to allow two-week paid leave for partners after the birth of a child, based on EU law, to make it easier for families to start family life. The leave should start on the day of birth or the following first working day and be remunerated with a partnership wage. 

The leave should be available without a minimum period of employment or notification period. 

Eligible persons are partners within the meaning of the Maternity Protection Act (MuSchG): 

• Parent living in the same household as the person giving birth
• Life partner living in the same household as the person giving birth
• A person who does not live in the same household and who has already been designated by the childbearing person during pregnancy or after childbirth. The aim is to ensure that future single parents can also benefit from the family start time.

The partnership wage is based on the average salary of the last three calendar months before childbirth. The costs are to be reimbursed to the employer via the U2 cost-sharing system, similar to the subsidy for maternity benefit or maternity protection pay. 

Proof of childbirth, which can be issued by a doctor, midwife or maternity nurse, is required to claim this leave. The proof must include the name of the person giving birth as well as the partner and the date of delivery.

Fourth Bureaucracy Reduction Act

Adjustment of the written form requirement 

On 01.01.2025, the Fourth Bureaucracy Reduction Act comes into force. It should also provide relief for labor law, such as replacing the legal requirement for written form with text form requirements.

A major change in the Fourth Bureaucracy Reduction Act is the introduction of the text form as an alternative to the written form in labor law matters. Documents that previously required a handwritten signature can now be legally concluded by email, especially agreements for temporary workers. This simplifies documentation and reduces administrative burden.

Change of risk assessment according to MuSchG

Pursuant to Section 10 (1) MuSchG, employers are not required to carry out a health risk assessment for pregnant employees if an official rule of the Committee on Maternity Protection pursuant to Section 30 (4) MuSchG stipulates that this activity is inadmissible for pregnant women or breastfeeding women. This amendment relieves employers of unnecessary risk assessments for workplaces where pregnant or breastfeeding women are not allowed to work anyway.

Case Law from Labor Law

Overtime supplements for part-time workers 

ECJ, judgments of 29.07.2024, C-184/22 and C-185/22

The European Court of Justice ruled on 29.07.2024 in cases C-184/22 and C-185/22 that there is discrimination if part-time workers receive overtime supplements only if they exceed the working hours of full-time workers. This violates the principle of equal treatment according to Section 4 (1) Part-Time and Fixed-Term Employment Act (TzBfG). The ECJ stressed that such arrangements would penalize part-time workers and create an incentive for employers to assign overtime to part-time workers without supplements, which counteracts the actual objective of the supplements. 

Bonus payment upon termination 

Federal Labor Court (BAG), judgment of 15.11.2023, 10 AZR 288/22

In the judgment of 15.11.2023, the BAG clarified that a clause allowing the employer to determine the amount of a bonus at their own discretion is invalid as it deviates from the legal requirements of Section 315 (1) of the German Civil Code (BGB). A bonus must be determined according to fair and comprehensible criteria. In addition, it is not allowed to exclude the bonus in the event of a resignation by the employee. This ruling is intended to protect employees by ensuring that they are adequately paid for their work and preventing their freedom to resign from being restricted by such regulations. 

Compensation in the absence of target agreements

Federal Labor Court (BAG), judgment of 03.07.2024, 10 AZR 171/23

The BAG decided on 03.07.2024 that an employer is liable for damages if they fail to negotiate target agreements with their employee, even though this was contractually agreed. The employer must be willing to negotiate targets together with the employee and must not unilaterally set them. This obligation arises from the contractual ancillary obligation to conduct negotiations seriously and to involve the employee in target setting in order to allow performance-based compensation.

Reduction of vacation during parental leave

Federal Labor Court (BAG), judgment of 16.04.2024, 9 AZR 165/23

In its judgment of 16.04.2024, the BAG clarified that the employer can only reduce the vacation entitlement arising during parental leave during the current employment relationship. After termination, a reduction is no longer permitted. The vacation entitlement accrued during parental leave may not be forfeited and, in accordance with Section 17 (2) Federal Parental Leave Act (BEEG), becomes due only after the leave period. Employers should be encouraged to decide on vacation entitlements in good time to avoid subsequent compensation claims.