Global mobility: working in Germany

In our today's newsletter on global mobility, we summarise the most important labour, tax and social security information for Germany, another frequent posting destination of Hungarian employees.

Germany as an EU member state is obliged to comply with provisions laid down in Directive 96/71/EU of the European Parliament and of the Council (the “Posting Directive”). This directive sets out the minimum working conditions that a member state’s employer should ensure when posting employees to another member state. When posting employees to Germany, it is recommended that employers pay particular attention to these requirements.

In line with the Posting directive, the main labour law-related minimum rules (applicable in the host country), which should be complied with also in the case of posted employees, are as follows:

• the maximum working time and the minimum rest period;
• the lower limit of the number of paid days off per year;
• the applicable minimum wage, including overtime pay;
• the same rules apply to the wages of posted workers as to those of the local workers in the host country;
• the employee is considered to be posted on a long-term assignment after 12 months, meaning that they should become subject to almost all the provisions of the host country's labour law;
• health, safety and hygiene at work.

In line with the above minimum standards, member states are free to lay down detailed rules, compliance with which is checked by the authorities. 

The following is a summary of the basic labour law considerations that Hungarian employers should always take into account when posting employees to Germany.

Registration requirement

If a foreign employer posts its employees to Germany to provide services, the employer is generally obliged to register before the posting begins.

The obligation to register is not mandatory in all cases: it applies only to industries covered by collective agreements in Germany or which are considered to be at risk of illegal employment (e.g. construction, transport, health, tourism, etc.).

The details of the registration requirement may vary depending on the industry in which the employer operates. It is important to underline that the scope of the posting employer's activity is always the determining factor for the registration requirement and its content, not the specific job of the posted employee(s).

If an industry is subject to the registration requirement, the posting company must comply with it, regardless of the length of the posting (so even business trips of a few days may be in the scope of the registration requirement).

German minimum wage rules

Germany (unlike Switzerland featured in our previous newsletter) does have a minimum wage requirement set at the national level.

The current statutory minimum wage applicable from 1 October is gross EUR 12 per working hour, which is mandatory for all industries.

In addition, in some industries, the collective agreements in force may set a higher minimum wage than the above, which should also apply to posted workers if they work in the affected industry.

Penalties

If the posting employer does not comply with the obligation to register or pay the minimum wage, it may be subject to the following default penalties:

• for non-payment or delayed payment of the minimum wage – up to EUR 500,000;
• for non-compliance with the registration requirement – up to EUR 30,000.

Further sanctions such as withdrawal of business license are possible depending on the degree of severity.

In addition, it is essential to check the tax and social security situation of posted workers before they start their posting. More detailed information on the steps to be taken in this respect is available in our previous newsletter on postings in Switzerland.

VGD Hungary provides a full service to meet the tax and social security requirements and administrative obligations related to postings. If required, our partner companies in Nexia, the global network of consultancy firms provide all the necessary support to our clients in understanding the provisions of national law and in completing the specific administrative tasks. 

4 Oct, 2022.

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Should you have any questions regarding this newsletter,
the tax experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute tax advice.