Reform of the German Law on the Posting of Workers

The revised European Posting of Workers Directive (RL 2018/957/EU of 28 June 2018) has been implemented in Germany by the reformed Law on the Posting of Workers (“Arbeitnehmerentsendegesetz – AentG”), which came into force on 30 June 2020.

The aim of the revised Posting of Workers Directive is to ensure that employees posted abroad are subject to the same wage and working conditions throughout Europe as the respective domestic employees. With the implementation of this directive in the form of the new German Law on the Posting of Workers (AEntG) is thus intended to enhance the protection of employees posted to Germany by enabling them to benefit more from the working conditions regulated by German laws, regulations and administrative provisions and by generally binding collective agreements. However, the implementation of the amending directive does not affect the social security law component of the posting.

A further purpose of this reform is to protect local wage and working conditions from unfair competition from abroad and consequently prevent distortion of competition and wage dumping.

  1. Immediate application of all remuneration conditions in all industries
    From now on, companies that post employees to Germany are bound to the remuneration conditions applicable in Germany from the very beginning of the posting. In particular, generally binding collective agreements including all wage components apply to all industries.In addition to the minimum wage, the employee is also entitled to all minimum wage rates as well as all other wage components for all industries that are stipulated in generally binding collective agreements or by law, i.e. also to overtime rates, allowances (e.g. dirty-work and hazard bonus), contributions in kind provided by the employer (if stipulated by law or in generally binding collective agreements).
  2. Gradual alignment of working conditions for foreign employees in all industries
  • The accommodation (hostels etc.) of posted employees must comply with the minimum standard of the Workplace Ordinance in Germany from the start.
  • The catalogue of working and employment conditions, which also apply to posted employees, has been extended. If the listed working conditions are regulated in generally binding collective agreements valid throughout Germany, they now also apply to posted employees from the start and in all industries.
  • After twelve months, all working conditions that are prescribed at the place of employment both in legal and administrative regulations and in generally binding collective agreements (e.g. entitlement to continued remuneration on public holidays, entitlement to parental and care leave) will apply to posted employees, irrespective of the industry. Excluded are the regulations on company pension schemes, the procedural and formal requirements and conditions for the conclusion or termination of employment relationships (regulations that affect the existence of the contractual relationship as such, e.g. are excluded requirements for fixed-term employment contracts under the Part-Time Work and Fixed-Term Employment Contracts Law, as well as regulations on protection against dismissal under the Dismissal Protection Act and other special legal provisions on protection against dismissal such as those in the Maternity Protection Act or the Federal Parental Benefits and Parental Leave Act), including post-contractual competition prohibitions.
    • An application for an extension of these 12 months by six months is possible in exceptional cases and must be applied for at the customs office before the end of the period.
    • Very strict rules apply to the calculation of this 12-month period. In particular, after interruptions, the period does not start again from the beginning, but the operations are added together. Furthermore, periods of deployment within affiliated companies are also added up. In the same way, the periods of deployment are added up in the case of employees who continue to be employed in Germany in similar constellations in proximate connection (= between the two jobs there is no employment of the employee in another Member State), and if an employee is replaced by another posted employee who performs the same work at the same location. For the calculation of the duration of employment, periods of employment in Germany before 30 July 2020 are counted. In this case the extension by six months is automatically regarded as having been granted, so that a period of employment of 18 months is still unproblematic.
  1. Employers must also assume the costs of accommodation, travel and meals
    Posting related costs, such as accommodation, travel expenses or meals, must generally be borne by the employer according to the rules in their country of origin. These costs may not be imposed on the workers, nor are they part of their remuneration, i.e. they must be paid in addition to the minimum salary.
  2. Limiting the scope of application of the reforms of the Law on the Posting of Workers
    • initial assembly and installation work (not being construction work) that takes only eight days within a year or
    • participation in meetings, trade conferences or trade fair visits, etc., provided that they do not exceed 14 days without interruption and do not exceed 30 days within a period of twelve months

    are excluded from the application of the law. Special regulations apply to the road transport sector (freight forwarding, long-distance drivers).

  1. Effects on the supply of temporary workers:
    • In the case of cross-border supply of temporary workers, the hirer is obliged to inform the foreign lender so that the latter can obtain the information necessary for compliance with the legal requirements.
    • The same regulations on the harmonisation of working conditions also apply to posted temporary workers. -> The area of remuneration is excluded and remains subject to the previous regulations under the German Temporary Employment Act (“Arbeitnehmerüberlassungsgesetz – AÜG”).