Crediting of remuneration components against the minimum wage

The ECJ (European Court of Justice) was required to decide on the question of to what extent remuneration components can be credited against the minimum wage. The employment relationship of an employee was covered by the collective wage agreement Minimum Wage Industrial Cleaning. The employer had not paid the employee the minimum wage, asserted by way of legal action, and argued that the employee had already received payments above the minimum wage. Two lump-sum, collective-wage-agreement allowances (allowance as increase in the profit sharing and special payment based on the economic situation) as well as capital formation benefits were to be credited against the minimum wage.

Based on a submission of the BAG (Federal Labour Court) dated 18 April 2012, 4 AZR 168/10, the ECJ decided on 17 November 2013 that the inclusion of remuneration components in the minimum wage is possible, provided the relationship between the performance of the employee on the one hand and the financial counter-performance, provided to him/her on the other hand, does not change.

In the opinion of the ECJ, the crediting of capital formation benefits does not result in a change in performance and counterperformance. Capital formation benefits differ from the wage in the actual sense as they are aimed at achieving a social-policy objective. Consequently, they cannot be regarded as components of the normal relationship between the work performance and the financial counter-performance to be provided by the employer for this.

By contrast, lump-sum benefits, intended as a wage increase for work performed, can be credited against the minimum wage. It is a matter for the BAG to check whether this is actually the case in the pending legal dispute.

Conclusion

According to the decision of the ECJ, capital formation benefits cannot be credited against a minimum wage to be paid. In terms of further payments, a check must be made in each individual case as to whether these are intended as financial counter-performance for workperformed, with the result that crediting against the minimum wage is possible.