Collective labour law can be subdivided into two levels:
Collective bargaining law – the level dealing with relations between trade unions, employer associations and individual employers.
Workplace labour relations law (also known as works constitution) – the level dealing with relations between employer and workforce in individual establishments.
Collective bargaining law
Collective bargaining autonomy is among the constitutionally protected rights of trade unions and employer associations. The collective bargaining partners thus have the right to enter into collective agreements under their own responsibility.
A general statutory minimum wage went into effect in Germany on 1 January 2015. The minimum wage is regulated by the Minimum Wage Act, which was evaluated in 2020. In addition to this, binding sectoral minimum wages can be negotiated on the basis of the Posted Workers Act and the Temporary Employment Act.
Posting of Workers Act
The Posting of Workers Act (Arbeitnehmer-Entsendegesetz) provides a legal framework for setting higher binding sector-specific minimum wages for all employees in a sector, regardless of whether the employer or temporary work agency is based in Germany or in another country. Such sector-specific minimum wages take precedence over the general minimum wage.
Act on Temporary Agency Work
If proposed by the collective bargaining parties for temporary agency work, under the Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz), the Federal Ministry for Labour and Social Affairs (BMAS) can issue an ordinance setting a binding minimum wage independent of whether, in its capacity as the employer, the temporary work agency is domiciled in Germany or in another country. The basis of this proposal is in each case a collective agreement regulating minimum hourly wages in temporary work. Temporary agency workers are entitled to pay of at least that amount.
The Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) regulates the co-determination of employees in operational matters that directly affect them at their workplace. In every establishment in the private sector within the territory of the Federal Republic of Germany with at least five employees entitled to vote, three of whom are eligible for election, the employees have the right to elect a works council.
The works council represents the interests of all employees towards the employer and shall examine proposals put forward by the workforce and forward them to the employer. One of the works council’s most important duties is to ensure that effect is given to all Acts, ordinances, safety regulations, collective agreements and works agreements designed for the benefit of the employees.
In addition, the works council has a number of participation rights, in particular regarding social welfare, personnel and economic matters.