Minimum wage: additional benefits and allowances when it rises

The recently released law on raising the minimum wage says what is applied in the case of an individual labor contract and what three levels of wages are formed.

Premiums and “surcharges” apply to workers who are paid higher wages than those stipulated in their industry contract or national collective bargaining agreement.

If there is an individual labor contract and the salary paid exceeds the minimum amount (provided for by the industry or national contract, i.e. the amount of base salary and allowances), then three positions arise as a result:

Many allowances and benefits provided by law or collective bargaining agreements are not subject to additional payment, but are offset by additional payment. Other allowances and benefits are compensated by an additional allowance and are not subject to additional payment, but only by agreement between the employer and the employee. Other benefits and amounts (eg vacation pay, overtime) cannot be compensated by supplementary benefits or by agreement and are payable in addition to supplementary benefits.

The importance of an individual labor contract
In this context, an individual labor contract, which reflects the agreement between the employer and the employee, is of particular importance as it specifies whether the corresponding benefits will be offset by a supplementary benefit.

The amount of the “supplementary benefit” is of particular importance in connection with the increase in the minimum wage, which will take effect in January next year.

A significant proportion of full-time employees receive wages based on a minimum (today 650 euros) and some additional benefits, as a result of which their total salary exceeds 650-700 euros, and sometimes 1000 euros.

What will happen to the additional payments after the increase in the minimum wage, and what benefits can be compensated

According to the established case-law, the provision is to compensate for the stipulated wage premiums paid from the supplementary benefit, unless it is stipulated in the individual or collective agreement that they will be paid in addition to the agreed higher wages.

Under case law, the offsetting rule also applies to benefits established by a sector-wide collective agreement, even after an individual agreement has been drawn up that pays the highest legal remuneration, unless otherwise provided by a new regulation.

This context includes “managing” the increase in the minimum wage. If the employee is paid the minimum wage of € 650 plus the supplementary benefit, an increase of € 650 will “eat up” part of the supplementary benefit without creating a legal obligation for the employer to increase the net income.

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