OREANDA-NEWS. May 20, 2015. The European Commission decided today to launch an infringement procedure against Germany, concerning the application of the Minimum Wage Act to the transport sector. Following an exchange of information with the German authorities and a thorough legal assessment of the German measures, the Commission has sent a Letter of Formal Notice to Germany. This constitutes the first step in the infringement procedure.

Whilst fully supporting the introduction of a minimum wage in Germany, the Commission considers that the application of the Minimum Wage Act to all transport operations which touch German territory restricts the freedom to provide services and the free movement of goods in a disproportionate manner.

In particular, the application of German measures to transit and certain international transport operations can in the Commission's view not be justified, as it creates disproportionate administrative barriers which prevent the internal market from functioning properly. The Commission considers that more proportionate measures are available to safeguard the social protection of workers and to ensure fair competition, whilst allowing for free movement of services and goods.

What are the next steps: The German authorities now have two months to respond to the arguments put forward by the Commission, in the letter of formal notice.

The Commission's letter of formal notice only concerns the specific case of the German law and is without prejudice to further initiatives that the Commission may take to clarify the rules, for example in the context of the labour mobility package scheduled for adoption later this year.

Background

The Commission supports the introduction of minimum wage in Germany, which is in line with the social policy commitment of this Commission. However, as Guardian of the Treaties, the Commission must also ensure that the application of the national measures is fully compatible with EU law, notably the posting of workers directive (Directive 96/71/EC), transport acquis and the Treaty principle of freedom to provide services, the free movement of goods, and having regard to the principle of proportionality.

Germany is the 22nd country in the EU which introduced a minimum wage. The law entered into force on 1 January 2015. The German minimum wage is set at €8.50 per hour. The law also applies to companies outside of Germany which provide services in Germany. Companies outside Germanyin certain sectors, including transport are obliged to notify the German customs authorities via specific forms provided by the German authorities. The German customs authorities are competent for controlling the execution of such notifications. Penalties for a breach of these notification obligations can be as high as €30 000, and €500 000 in case where the remuneration paid does not comply with the German law.