13. March 2014
A tribunal has ruled that under German employment law, an hourly wage of 3 euros should be considered exploitation. Supplementary payments made by the employment agency to help low paid employees should be reimbursed by the employers, the court decided.
Low pay under German employment law
A pizza restaurant owner who paid his employees an hourly wage of under €3.40 has been ordered to reimburse ‘wage top up’ payments made by the German employment agency.
The employer had worked out the hourly wage so that it would total around €600 a month if employees worked a 40 hour week. However, the employees were engaged for just 14 to 14.5 hours per week. This meant that they actually earned much less than €600 and were therefore forced to apply for supplementary payments from the employment agency to guarantee their subsistence.
Following negotiations, the employer refused to increase the hourly wage rate, leading the job centre to sue for reimbursement of the top-up payments.
Unethical wage and profiteering
The employment tribunal found in favour of the employment agency. The judgement became legally binding after the employer withdrew his appeal (case ref. 2 Ca 428/13).
The court ruled that the agency was entitled to request the reimbursement of supplementary payments made to the employees, as the employer had been paying them an unethical wage.
According to the court, the job centre should be entitled, in those cases where the employees would not have required assistance had they received a reasonable wage, to receive reimbursement of the supplementary payments. In those cases where the employees would still have required top-up benefits despite a reasonable wage being paid, the court found the employment agency should be entitled to the difference.
Notably, the court stated that an employer who pays employees amounts of €1.59, €1.65, €2.48, €2.72 and €3.46 gross an hour, is guilty of profiteering and exploitation.
The court also stated that the employment agency was entitled to use low wage data gathered through its activities in finding employment for low-qualified job seekers in the hotel and restaurant industry as a basis for conducting its investigations.
This is a good and understandable judgment. As the employees in this case were only working 14 – 14.5 hours a week and their pay so low, they were only earning around €100 a month.
It is clear that the wages in this case were unethical and amounted to exploitation. It is also obvious that the employment agency should be entitled to reimbursement of the benefit payments.
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Categories: Employment Law