Germany: Eligible expenses to meet minimum salary limited

On or after January 1, 2016, non-cash benefits such as housing, cars and meals provided by the employer and travel expenses, among other allowances, will likely no longer be included in the minimum salary calculation for foreign workers in Germany, according to a published decision by the German Federal Employment Agency (FEA). The decision has not yet been fully interpreted and is subject to change.

Payments Eligible for Minimum Salary Calculation

Employers will still be able to include the following types of payment toward the minimum salary calculation:

  • Actual take-home salary; and
  • Allowances without conditions paid directly to the assignee for the entire duration of the assignment.

Background

The FEA responsible for the International Staff Exchange visa category was the most recent and last of the FEA units to officially adopt this position.

Other FEA units retain discretion to approve applications that contain non-cash benefits as part of the minimum salary on a case-by-case basis.

What This Means for Employers

Employers hiring foreign workers will likely not be able to take into account costs of housing, meals and cars provided by the company, or travel expenses, when determining whether a foreign worker’s salary complies with the minimum salary rules.

Stuart Beaty

Celsium, Birmingham, UK