Germany's minimum wage law (German. Gesetz zur Regelung eines allgemeinen Mindestlohns; Mindestlohngesetz - MiLoG) has been in effect since January 1, 2015 and introduces a minimum hourly wage that all employees performing work in Germany must receive. The rules also apply to those employed on the basis of freelance contracts. In practice, this means that even those working on civil law contracts, if they meet certain criteria, are entitled to the minimum wage. For Polish entrepreneurs and employees operating in Germany, understanding and applying MiLoG regulations is crucial to avoid penalties and legal problems. In this article, we will discuss in detail what MiLoG is, how it affects Polish assignment contracts in Germany, and what obligations employers have.
What is MiLoG?
MiLoG is a German law that regulates the minimum wage for workers within Germany. The law was introduced to protect workers from low wages and sets a minimum hourly wage that applies to all employees, regardless of their form of employment.
As of 2025, the gross statutory minimum wage in Germany is EUR 12.82 per hour. This law applies to:
(a) all employees performing work in Germany,
(b) to both German citizens, citizens of European Union member states and foreigners (non-EU citizens),
(c) and to workers employed by companies based in Germany and abroad (e.g., Polish companies posting workers).
What types of contracts does MiLoG cover?
In the context of MiLoG, the key distinction is between:
a) employment contract (German: Arbeitsvertrag) - a typical employment relationship, subject to the full regulations of labor law,
b) contract for work (German: Werkvertrag) - a contract for the performance of a specific work, without personal subordination,
(c) service contract (German: Dienstleistungsvertrag) - the provision of services to a principal, often closer to an employment relationship.
The MiLoG covers all persons who perform work in the capacity of an employee - that is, when there is subordination, an obligation to provide work in person, and a specific place and time of work. If an assignment meets these conditions, then while it may formally be an assignment contract, under labor law it is treated as an employment relationship and covered by the MiLoG.
Contracts of mandate and MiLoG - key issues
When is a contract of mandate subject to the MiLoG?
The primary criterion for determining whether a contract of mandate is subject to the German Minimum Wage Act (MiLoG) is the actual nature of the relationship between the contractor and the principal. In German labor law, the principle is that it is not so much the formal nomenclature of the contract that is important, but the actual circumstances of its execution.
The criteria for determining eligibility for MiLoG therefore most often relate to the following:
(a) personal performance of work
If a person undertakes to personally perform work, without the possibility of entrusting it to another person (so-called personal performance of work), this is a feature of the employment relationship. A contract of mandate that meets this condition may be subject to the MiLoG.
(b) subordination and supervision
If the contractor acts under the direction and supervision of the principal, e.g., must perform work at specific times, according to established procedures, this is a signal of an employment relationship. In such a case, the MiLoG applies.
(c) specific place and time of work
A contract that requires work at a specific place (e.g., on the premises) and time (fixed working hours) is often treated as an employment relationship.
(d) lack of freedom to organize work
If the contractor has no real freedom to organize work and decide independently on the method of performing tasks, this indicates an employment relationship.
(e) constancy of relationships
Contracts that are entered into for an extended period of time or on a continuous basis may indicate employment and thus an obligation to apply the MiLoG.
Consequences:
In such situations, the German labor inspectorate(Zoll) can fine the employer for failure to comply with the minimum wage and require compensation to be paid to the employee.
Employer's obligations under the MiLoG
Employers who hire individuals performing work in Germany are subject to the MiLoG and have a number of obligations to them to ensure compliance with the minimum wage law.
(a) ensuring a minimum wage
Employers are required to pay employees at least the minimum hourly wage set by the MiLoG (currently €12.82 gross). This includes any commission agreement that is in the nature of an employment relationship.
(b) documentation of working time
The employer must keep accurate records of the working hours of persons subject to MiLoG. The records should include information on start and end times, breaks, days of work, among others.
(c) information obligation
Employers should inform employees of their right to the minimum wage and the conditions of employment related to MiLoG. Transparency is important so that employees can effectively exercise their rights.
(d) obligation to control subcontractors
If an employer uses subcontractors, it is responsible for the subcontractors' compliance with the MiLoG. He must therefore verify that subcontractors pay the minimum wage to their employees.
(e) storage of records
All documents related to wages, contracts and working hours should be kept for a minimum of two years to allow inspection by German authorities.
Consequences of violations
MiLoG violations can result in serious sanctions:
(a) financial penalties of up to €500,000.00,
(b) an order to pay outstanding wages with interest,
(c) criminal liability in case of intentional avoidance of paying the minimum wage,
(d) loss of business confidence and possible sanctions in public tenders.
Responsibility for subcontractors and principals
An important aspect is the liability of entities using subcontractors. The principal can be held jointly and severally liable if the subcontractor fails to pay the minimum wage. Therefore, it is advisable to check contractors carefully and require proof of payment of the minimum wage from them.
How to avoid MiLoG problems?
a) fair analysis of contracts - before entering into a contract, it is worth assessing whether it is actually a work/service contract or an employment relationship. If the latter - apply the provisions of MiLoG.
(b) record-keeping - accurate recording of working time and payments.
(c) Legal consultation - it is worth working with a lawyer familiar with German labor law.
Summary
Germany's MiLoG minimum wage law is designed to protect workers from low wages and also covers those employed on commission contracts if they meet the criteria for an employment relationship. This is important information for Polish entrepreneurs operating in Germany, as failure to comply with MiLoG can result in serious financial and legal consequences. Adherence to the MiLoG, proper qualification of contracts and accurate documentation are the basics for safely conducting business using mandate contracts in Germany.
W przypadku jakichkolwiek pytań w kwestiach związanych z niemiecką płacą minimalną zapraszamy do kontaktu pod adresem e-mail kontakt@kancelaria-pozniak.pl lub pod numerem telefonu +48 665 246 969.