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Planned amendments to the German Posting of Employees Act - Compensation issues and working conditions

The EU Directive on Posted Workers has to be transposed into national laws by 30.7.2020. The Federal government’s draft law on this has been available since February 2020.

Background - The implementation of EU requirements

The EU freedom to provide services means that service providers are able to deploy their employees across borders. Amendments to the German Posting of Employees Act in accordance with the requirements of the EU Directive should, where possible, create the same pay and working conditions for employees posted to Germany. Furthermore, German employers would also be protected from, for example, wage dumping and competitive disadvantages.

Overview of the amendments to the German Posting of Employees Act

(1) Compensation - Up to now, the rules on minimum wage rates have been applicable to employment relationships between employers based in a foreign country and their workers employed in Germany. Under the new provisions of the Posting of Employees Act (Arbeitnehmer-Entsendegesetz, AEntG), the usual requirements with respect to compensation including overtime rates will now apply to posted employees. This means that when posted workers perform the same work they will also have to be paid the same wage.

Please note: This includes remuneration components such as allowances (e.g. for dirty or hazardous work), supplements and bonuses.

(2) Posting-related expenses - No posting-related expenses can be credited against the compensation (such as expenses for travel, accommodation and meals). Allowances that have accrued for the posted worker as a result of the posting do not constitute a compensation component.

(3) Working conditions - Posted workers will be able to benefit not only from the amended rules in the Posting of Employees Act as regards compensation and posting-related expenses, but also with respect to the applicable working conditions. In this case, the protection of posted workers extends not only to the statutory regulatory or administrative provisions, but also the generally binding collective agreements.

Please note: As regards the accommodation that is provided for posted workers, the relevant guidelines set out in the German Workplace Ordinance have to be complied with. In particular, requirements related to hygiene and state-of-the-art equipment have to be addressed.

(4) Long-term postings - Employees who are posted for longer than 12 or 18 months will be covered by the protection afforded by all the rules on working conditions (e.g. the German Working Hours Act). Moreover, mandatory working conditions in generally binding collective agreements will also have to be complied with.

Please note: The requirements of the amended Posting of Employees Act are also supposed to apply to temporary workers who are being deployed in Germany.

Recommendation: In the future, if employees are posted to Germany you should bear in mind that they have to be paid the same wages for the same work. Accommodation that is provided has to have the minimum standards set out in the German Workplace Ordinance and employers have to assume any costs that arise as a result of the posting.

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