Our law firm's wide range of clients also includes temporary work agencies that post temporary employees to work in Germany. We support them in a wide range of areas, offering tailor-made solutions for their business. Recently, we have undertaken an analysis of the topic related to the correct remuneration of temporary employees. For one of our clients, a doubt has arisen as to whether temporary workers should be paid in accordance with the sectoral collective agreement, the so-called 'collective bargaining agreement'. Tarifvertrag, should rates in accordance with equal pay (and the German Gleichstellungsgrundsatz) be applied?
This problem has prompted us to write about it on the forum. It certainly affects a much wider range of people or businesses. Are you in the business of posting temporary workers in Germany? Or are you a temporary worker yourself and perform work in Germany?
Be sure to read this article and learn about your rights and responsibilities!
What is equal pay?
Equal pay principle means that the temporary agency worker is entitled to the same working and pay conditions as a permanent employee in the same position in the company. This applies not only to pay, but also to other working conditions, such as working time regulation or the amount of holiday entitlement. Equal pay has above all:
- foster fair treatment of employees and
- prevent inequalities in employment.
From what point in time can equal pay rules be required?
Rules resulting from equal pay are only applicable after the employee has worked in the company for 9 months. What does this mean in practice?
By the 10th month of work at the latest, a temporary employee acquires the same rights as permanent employees of the same employer. This applies in particular to the right to remuneration, but also to other working conditions.
Tarifvertrag, or German collective agreement
In Germany, unlike in Poland, collective agreements are in place on a large scale (German Tarifvertrag). They constitute agreements between the employer or the employers' union and the employees' trade unions. Tarifvertrag indicates the rights and obligations of each of the signing parties, in particular:
- conditions of remuneration,
- working time rules,
- the employee's accrued leave or
- salary supplements.
Among the collective agreements, a so-called sectoral collective agreement can be distinguished (German Branchentarifvertrag). Such an agreement is concluded by a trade union together with a trade association of employers who are affiliated within one industry.
Among the most popular industries with collective agreements are:
- metal industry,
- construction industry,
- electrotechnical sector,
- the temporary employment industry.
In the latter, the most common collective agreement is the BAP Tarifvertrag.
Validity of the Tarifvertrag and the employer's membership of a collective agreement
In principle, BAP Tarifvertrag applies to all employers who are members of the relevant union and who have joined the collective agreement in question.
However, there is an exception! The German Ministry of Labour is entitled to designate a specific Tarifvertrag as universally applicable. In such a situation, it also applies to employers who are not members of the relevant Tarifvetrag. Such decisions are usually taken when, among other things, the public interest warrants it.
More specifically, the specific collective agreement (Tarifvertrag) is considered common when:
- the provisions of the Agreement have become significant in their field or
- when their application avoids undesirable labour market developments and adverse effects on economic development.
What effect does this have?
Even an enterprise that is not affiliated to a particular collective agreement has an obligation to respect the provisions of the agreement. A collective agreement becomes universally binding when,
How to check whether a collective agreement is universally applicable?
Whether a particular Tarifvertrag classifies as universally binding follows directly from the special register so called Register des BMAS. If a collective agreement is on the register, this means that it is generally binding - so its provisions also apply to an employment contract that is not covered by a collective agreement. The effect of this is that even employers and employees who are not members of the party negotiating the collective agreement have to comply with the provisions of the collective agreement.
Is the temporary work industry bound from above by any collective agreement?
In the BMAS register, the collective agreement Tarifvertrag BAP is not designated as generally applicable. This means that the temporary agency does not have an absolute obligation to apply it. Nevertheless, some agencies, in an effort to provide extensive protection to their employees, choose to apply the provisions of this agreement voluntarily, even when they are not members.
Equal pay or Tarifvertrag - which rates to use?
Which rates of pay should be applied in a particular case always depends on the specific factual situation, which requires a detailed analysis by a specialist in the light of the applicable legislation. As a generalisation, however, it can be pointed out that according to German regulations, if an entrepreneur is a member of a collective agreement, the wage rate specified in the collective agreement may be lower than that resulting from the equal pay, as long as it is not lower than the minimum hourly rate currently in force.
Thus, one can see here a certain predominance of provisions arising from the Tarifvertrag. However, this principle does not apply the other way round - a lower rate cannot be applied on account of the equal pay, disregarding the higher rate applicable under the collective agreement.
It follows that priority will be given to the provisions of the Tarifvertragif the employer is a member of it. As long as the employer is a member of a collective agreement, it is not possible for the employer to pay employees a rate lower than that resulting from the Tarifvertrageven if the rate would then be in line with the equal pay rate. The provisions of the collective agreement can only be waived by the employer if the employment contract contains provisions that are more favourable to the employee than those resulting from the Tarifvertrag.
What rates should an employer who is not a member of the Tarifvertrag pay?
If the employer is not a member of a collective agreement and the agreement does not have the status of a universally applicable agreement, then it is up to the employer to decide whether it wants a particular Tarifvetrag voluntarily apply or not.
This also applies to temporary employment agencies. The temporary employment agency, as the employer, has the opportunity to decide whether it wishes to apply the collective agreement in question, e.g. Tarifvetrag BAP.
If an employer chooses to apply a particular agreement voluntarily, and thus to pay employees rates under it that are lower than those resulting from equal pay, it should be noted that the equal pay principle can only be waived during the first nine months of the posting, and only if the Tarifvertrag applies to the entire employment relationship and not only to the period of posting.
Equal pay, or the pay of temporary workers in DE. Summary
An employer that is a temporary employment agency and that is not a member of the Tarifvertrag BAP, is not obliged to be uniform in its choice to apply the provisions arising from the Tarifvertrag BAP or equal pay principles. This means that when engaging with different contractors for the posting of temporary workers, it can choose whether the workers posted to a particular user employer's company will be subject to the regulations under the collective agreement or the equal pay rule.
The German Federal Employment Agency even points out that it is possible to use both Tarifvetrag BAP and the principle of equal paywhere this leads to a better situation for the agency worker.
Entrepreneur! Not sure what pay rates should apply in your company? We will support you in this!
Employee! Are you in doubt about whether your remuneration for work in Germany is compliant? Get in touch with us. We would be happy to talk to you!
Read also: Significant changes in the law that await entrepreneurs in 2023!
