Minimum wage and social security obligations for foreign employers in Germany

Employers from the EU who employ or post employees in Germany must comply with the German Minimum wage and social security obligations must be complied with. Violations of these regulations can lead to high penalties and additional payments. Here you can find out which rules apply and what you need to pay particular attention to as a foreign employer.

1. minimum wage in Germany: What EU employers need to know

1.1 Statutory minimum wage: Also applies to posted employees!

Since As of January 1, 2024, the statutory minimum wage is €12.41 per hour (as of 2025 it may rise).

The most important thing for employers from the EU:

• The minimum wage applies for all employeeswho work in Germany - regardless of whether they are working there permanently or only temporarily.
• Posted employees must also receive at least the German minimum wage, even if they would earn less in their home country.
• The minimum wage also applies to marginally employed persons (mini-jobs).

Practical example:
A Polish transport company sends drivers to make deliveries to Germany. Even if the drivers are based in Poland, they must be paid the German minimum wage while working in Germany.

1.2 Sector minimum wages: higher wages in certain sectors

In some industries Collective agreements with higher minimum wageswhich must be complied with.

Examples of sector-specific minimum wages (2024):

• construction industry: 14,50 € - 15,60 € (depending on qualification)
• Electrical trade: 14,15 €
• Building cleaning: 13.50 € - 16.70 € (depending on activity)
• care sector: 14,15 € - 18,25 €

Important:
Foreign employers must also ensure that their employees in Germany receive the collectively agreed industry minimum wage.

Practical example:
A Romanian construction company sends workers to Germany. They are paid €8 per hour in Romania, but in Germany the minimum construction wage is at least €14.50. The company must pay the German rate.

1.3 Minimum wage reporting obligations for foreign employers

Companies from the EU that employ staff in Germany must comply with certain reporting obligations:

• Notification to German customs: In certain sectors (e.g. construction, cleaning, care, freight forwarding), employers must register employees with German customs before they start work.
• Documentation obligation: Employers must keep precise records of working hours, wage payments and length of employment.

Practical example:
A Spanish cleaning company forgets to register its employees with customs before they start work in Germany. A check could result in heavy fines.

2. social security obligation: Where do foreign employers have to pay contributions?

2.1 Principle: compulsory social insurance in Germany or in the country of origin?

In principle, the following applies:

• Anyone who works permanently in Germany is subject to the German social security system.
• Anyone who is temporarily posted remains insured in their country of origin (with A1 certificate).

Practical example:
A Hungarian IT company has a developer working in Germany for 3 months on a German project. With the A1 certificate he remains covered by social insurance in Hungary. Without an A1 certificate, the company would have to register him in Germany and pay social security contributions.

2.2 Exception: A1 certificate for secondments

What is the A1 certificate?
The A1 certificate ensures that a posted employee remains insured in their home country and does not have to pay social security contributions in Germany.

Requirements for an A1 certificate:

• The employee remains employed by his/her original employer during the posting.
• The secondment is limited in time (maximum 24 months).
• The employee is already covered by social security in their home country.

Practical example:
A Czech mechanical engineer works in Germany for 6 months. His employer applies for an A1 certificate so that he remains socially insured in the Czech Republic. Without A1, the company would have to pay social security contributions in Germany.

3. sanctions for violations: High penalties for foreign employers

EU employers who do not comply with German minimum wage or social security regulations can face severe penalties:

Minimum wage violations:

• Fines of up to 500.000 €
• Exclusion from public contracts

Lack of social security:

• Back payment of social security contributions for up to 4 years retroactively
• Fines of up to 50.000 €

Missing A1 certificate:

• Immediate social security obligation in Germany
• High additional claims for the employer

Practical example:
A Slovenian transport company pays its drivers in Germany just €10 per hour. An inspection reveals that this is below the minimum wage. The company has to make high back payments and is fined.