As of 30 July 2020, the amended German Act on the Posting of Workers (“AEntG”) comes into force. The amendment of AEntG implements the revised Posting of Workers Directive (EU) 2018/957, which reacts to pay disparities on the labour market in the EU and helps ensure that posted workers are granted the same working conditions as local employees. The amended AEntG was approved by the German Parliament (“Bundestag”) on 18 June 2020.
Key Aspects of New German Law
The AEntG extends the array of Germany’s applicable working conditions to posted workers. Of special importance is the extension related to remuneration terms, also known as Equal Pay Principle of the revised Posting of Workers Directive. In future, not only minimum wage rates need to be observed, but so does total remuneration, which consists of the following components:
The AEntG prevents the offset of payments received for board, lodging, travel, or accommodation against the remuneration granted to posted workers.
The extended working conditions must be, however, laid down in generally binding collective bargaining agreements (hereinafter: “CBAs”). Only if the posting company falls within the scope of a generally binding CBA in Germany will that trigger the compliance requirements of the revised Posting of Workers Directive, i.e., Equal Pay Principle.
The amended AEntG has extended the scope of application of generally binding collective bargaining agreements pursuant to Sec. 5 of the Collective Bargaining Act (“TVG”). Generally binding collective bargaining agreements will in future apply not only to foreign companies sending employees in the construction industry, but to all companies providing services in any sector listed in AEntG. These sectors are as follows:
Additionally, collective bargaining agreements are relevant for all other sectors other than those referred to above if the extension of the legal provisions of the collective bargaining agreement appears necessary in the public interest. Currently, no extensions exist for other sectors though.
In addition, different collective bargaining agreements are relevant depending on the duration of the assignments, i.e. short-term and long-term postings. In case of short-term postings (up to 12 months plus one extension possibility of six months) only federal generally binding collective bargaining agreements apply, while regional generally binding collective bargaining agreements apply to long-term postings (more than 12 months plus 6 months).
If companies do not fall within the scope of generally binding collective bargaining agreement, they still need to observe mandatory working conditions such as minimum wage rates, mandatory working time regulations, minimum annual leave as well as mandatory working conditions for long-term postings.
Recommendations for Companies
KPMG Law Services
We offer full-fledged services around the implementation of the revised Posting of Workers Directive in Germany and throughout Europe. These include:
Please find further information on our Equal Pay Hub to be checked out at https://kpmg-law.de/rechtsgebiete/eu-entsenderichtlinie/