The fuss around the 8.5 euros is in full swing. The parties are showing off their muscles. Germany has positioned itself so that one can get the impression that it is ‘defending’ itself, while Europe is ‘attacking’ the poor German economy, which is forced to raise defence even against … transit through Germany. I have pinpointed the absurdity of this claim in the report ‘8,5 Euro Does Not Apply to Transit Through Germany’ (http://kancelariaprawnaviggen.pl//news/351/40/Cz-III-8-5-euro-nie-dotyczy-tranzytu-przez-Niemcy/).
Meanwhile, from the Polish perspective it is, in fact, but an insignificant rebellion, since the overwhelming majority of Polish transportation companies have for a long time now been paying 8.5 euros before taxes in line with the German legislation without even realizing it. It results not only from the content of Article 3.7 of the Directive (EC) 96/71, but also from the case law of both the European Court of Justice as well as the German Labour Court (BAG).
Germany manages information (or, to be precise, misinformation) very skilfully, aiming at creating such conditions under which a German employer would be paying a minimum wage of 8.5 euros, and a Polish employer – 12 euros.
I. German legal regulations do not directly determine minimum wage components
Contrary to the Polish labour law, the German national regulations do not explicitly enumerate the components of the minimum wage. Neither the Mindestlohngesetz – MiLoG (Minimum Wages Act) nor Arbeitnehmer-Entsendegesetzes – AentG (Employee Posting Act) does not regulate this matter. The German legislator has implemented the provisions of the aforementioned Directive into its own legal system by virtue of the legislative act under the name Gesetz über zwingende Arbeitsbedingungen bei grenzüberschreitenden Dienstleistungen (Arbeitnehmer-Entsendegesetz – AEntG) of 26 February 1996 (BGBl. I S. 227) as amended on 19 December 1998 (BGBl. I S. 3843). This act has been replaced (amended by substitution) by a new legislative act of 24 April 2009 under the same name. Consequently, in the German law the minimum wage is currently regulated by two legislative acts which have been passed as a result of the obligation to implement the provisions of the Directive (EC) 96/71/2009 into the German law. This issue is explained by the German Ministry of Labour at its official website: http://www.bmas.de/DE/Service/Gesetze/aentg.html. It is a very important factor that confirms a direct link between these two legislative acts. It is a very important observation as internal regulations of individual countries may not depart from the wording of the EU directive (or be less favourable for one of the parties (an entity). At the same time, even if national legislation does not fully mirror the legal institutions laid down in the EU Directive (which did take place in few instances, for example in the Polish act on the working time of drivers), then the entity who intends to derive benefits from the given provision of the Directive has the right to directly invoke the provisions contained therein. This right stems from ‘the principle of indirect effect’, which originated from a judgment of the ECJ in two cases. For the first time the said principle has been articulated in the case of Sabine von Colson and Elisabeth Kamann v Land Nordrhein-Westfalen (No. 14/83). For the second time the principle of indirect effect was voiced in the Dorit Hartz v Deutsche Tradax GmbH case (No. 79/83). The ECJ referred to the principle of indirect effect with respect to regulations stemming from EU directives (as directives are not directly binding upon citizens and have to be further on implemented into national laws through appropriate procedures put in place by member state governments). It is therefore important that the ECJ derives the obligation to take into consideration provisions laid down in the directives by courts and administrative bodies in the process of interpreting the law for the purpose of passing judgements and issuing of administrative decisions.
Hence, if the German law itself does not regulate the components that could meet the attributes of minimum wage components, the European Union law that determines the minimum wage in Article 3.7 of the Directive (EC) 96/71, becomes of key importance.
II. Minimum wage components in the EU law
The EU Directive 96/71/EC lays down (amongst other things) components that the employer may include in the minimum wage. It is regulated in detail in Article 3.7 of the Directive, according to which ‘allowances specific to the posting shall be considered to be part of the minimum wage, unless they are paid in reimbursement of expenditure actually incurred on account of the posting, such as expenditure on travel, board and lodging’.
According to the wording of the cited provision it is clear that should there exist such a component associated with the work performed that is not being reimbursed as ‘expenditure actually incurred’ during business travel (in particular the cost of lodging), then it can be accounted towards minimum wage. This so happens in a great majority of Polish transportation companies, because drivers sleeping in a vehicle cab do not pay for their lodging. For this reason, the entire 25% of the lump sum allowance for business trip in Germany can be allocated to the minimum wage for work performed in Germany (unless the driver had actually used this allowance to pay for lodging). It is so, under the Polish legal environment, given the case law of the Supreme Court and some other common courts of law, employers for the sake of safety apply such legal solutions in their intra-company labour law sources, based on which they pay out lump-sum lodging allowances although they are under no obligation to do so. As a result, drivers receive lump sum lodging allowance although they do not actually use it to pay for the lodging.
III. The lump-sum lodging allowance may not be used to cover liabilities (costs), but to increase assets (income)
One may get the impression that so far it has not been fully recognized that Polish employers paying out the ‘lump-sum allowance for lodging’, while the driver actually sleeps in a specialised vehicle cab (with beds), in line with the provisions of the Directive 96/71/EC (an particularly Article 3.7 thereof) may include this component into the minimum wage rate of 8.5 euros before tax, if the employer incorporates (includes) certain necessary formal requirements (pieces of information) in the intra-company sources of labour law (for instance in the Employment By-Laws or Salary & Wages By-Laws). Furthermore, the lump-sum lodging allowance must actually be paid out and such payment must be evidenced. It is worth noting that most probably during 99% of all rest periods on the territory of Germany the driver rests in a specialised vehicle cab equipped with couches, therefore, drivers do not pay for lodging. This component may be allocated as minimum wage component, since both the work as well as the rest takes place in Germany (in a given period of time during the performance of a transportation / carriage order in the Federal Republic of Germany), while the lump-sum allowance under the Polish legal environment comprises an increment of the driver’s assets, not coverage of his liabilities (costs). Individual benefits during the business trip must be very clearly distinguished, namely:
subsistence allowance is a benefit used to cover increased costs of foodstuffs and is used to cover costs, that is to reimburse driver’s liabilities,
reimbursement of lodging costs upon presentation of a hotel bill is intended to cover costs, that is intended to reimburse the driver’s liabilities,
the phrase ‘other minor expenses’ (§ 2 of the Regulation of the Minister of Labour and Social Policy) is intended to reimburse incidental expenses during travel, such as: toilets, showers, laundry, etc., thus it is intended to reimburse the driver’s liabilities,
‘lodging lump-sum’ referred to in § 16.4 of the Regulation of the Minister of Labour and Social Policy, as a result of Supreme Court rulings, is not intended to cover any costs of lodging (does not reimburse the driver’s liabilities) and plays a fully classical role of increasing the driver’s assets (assets increment).
For this reason, the lodging lump-sum allowance under the Polish legal environment has for many years been a wage component not because employers want it to be, but for the sake of prudence in the event of potential lawsuits instituted by drivers before Polish labour courts. For this reason, it can be assumed that majority of Polish employers have for many years been paying the minimum wage of at least 8.5 euros per hour of work. This view was shared by the ECJ and the German Labour Court.
IV. Case law of the ECJ and German Courts (C-522/12 of 2013 and judgment BAG 4 AZR 168/10 of 2012)
It is worth noting that judicial case law points to practical aspects, which should be referred to when including lump-sum lodging allowance as minimum wage component.
Minimum wage components must be constant and certain throughout duration of employment.
– According to the case law of German courts and the ECJ, a condition for classification of a given wage component as minimum wage component is its permanence and certainty. Evidently the lump-sum lodging allowance meets these conditions since it is always paid in a permanent ratio of 25% of the limit stipulated in the Regulation of the Minister of Labour and Social Policy. It is also paid throughout the entire period of employment (of course, if the employer so provides in the intra-company sources of the labour law).
Minimum wage components must be intended to increase assets, not reimburse liabilities (costs).
– This issue has already been clarified in the earlier part of the report and it may not give rise to doubt that if the employer includes precise and proper clauses (provisions) in the intra-company sources of the labour law or employment contracts, then the lump-sum lodging allowance may be included as a minimum wage component, if the remaining conditions are met.
In-kind benefits may not be included as a minimum wage component.
– There can be no doubt that lump-sum allowance is not an in-kind benefit, but a cash benefit, so inclusion of this benefit as a minimum wage component does not infringe judiciary case law.
Provision of unpaid space at work to an employee may not be included as a minimum wage component.
– There can be no doubt that lump-sum lodging allowance is not tantamount to provision of unpaid space at work to an employee, since the allowance is paid out regardless of the provision to the driver to the vehicle cab adjusted for sleep/rest purposes.
Additional benefits to a wage may not be included as a minimum wage component.
– There can be no doubt that lump-sum lodging allowance is not an additional benefit to wages, since there is an enumerative list of additional benefits to wages and payment of lump-sum lodging allowance is not included on the said list. Specifically, lump-sum lodging allowance is not paid out as a compensation for particularly difficult conditions of work, nuisance at work, night work, overtime hours, etc. Lump-sum lodging allowance is paid under § 16.4 of the Regulation of the Minister of Labour and Social Policy as an actually abstract benefit, directly linked with ‘regular’ work, if such a provision is contained in the intra-company sources of the labour law.
Motivating components or any ‘extra’ components constituting the employee’s share in the employer’s profits may not be included as a minimum wage component.
– There can be no doubt that lump-sum lodging allowance does not have the slightest connection with payments related to employee motivation purposes.
Bonuses (monthly, annual, special bonuses) may not be included as a minimum wage component.
– There can be no doubt that lump-sum lodging allowance is not a bonus of any kind, since it is constant, regular, monthly and independent of the employee’s performance.
If we were to assume under the Polish legal environment that the lump-sum lodging allowance paid out in the amount of 25% of the limit provided for in the Regulation is not a minimum wage component, then it would mean in practice that Polish employers are discriminated against, since on the one hand they are forced to pay this lump-sum allowance in order to secure their own interests against claims of drivers before labour courts, and on the other hand they would be forced to pay an additional benefit under the German legislation. In practice this would mean that they would be paying not 8.5 euros, but over 40% higher hourly rate than German employees receive. Hence, assuming that the driver would work in Germany with merely 22 nights in a month and an average work time of 168 hours of work and the base gross wage being equal to 1750 Polish zloty, the hourly rate would then reach the value of 7.39 euros (at the exchange rate of 4.2 Polish zloty). It might appear that the value of the lump-sum allowance is lower, but it should be kept in mind that many variables may affect the above rule due to differences in the lodging limit in individual countries (for instance, in France it is 180 euros, while in Germany it is only 150 euros). However, it is worth noting that this simulation has been made for 100% of the work performed in Germany. Nonetheless, if a driver works on the territory of Poland, France, Switzerland and many other countries, then the employee has an overpaid component per hour in relation to the minimum wage in Germany. Overpaid component from other countries may be dedicated (shifted) to work hours within Germany, but only if the internal labour law regulations exclude third country law for the benefit of the Polish law.
V. Intra-company regulations are the key
Evidently, assuming that the driver receives the lump-sum lodging allowance of 25% of the German limit and base gross wage of 1750 Polish zlotys, then still the hourly value of his work, with an average of 168 hours a month and 22 nights per month, is lower than 8.5 euros (approx. 7.5 euros). Nothing stands in the way of the lump-sum lodging allowances being increased above 22 or this particular component of the gross wage being increased or the value of the non-gross limit (lump-sum lodging allowance) being increased above the limit of 25%.
Regardless of the selected solution, it is worth noting that in line with the ECJ case law, the lump-sum lodging allowance must always be constant and certain as well as long-term, preferably closely related to the whole period of the employee’s employment. This requires precise regulation in the intra-company labour law sources, which must cater for the conditions enumerated earlier in this report. This aspect not just important – it is the key issue.
It should be recognized at this point that fixing a lower limit of the subsistence allowance (flexible, but not lower than 30 Polish zloty) and a high limit of the lump-sum lodging allowance (of at least 25% of the limit specified in the Regulation) is a highly preferable solution also in view of drivers’ claims for payment of lump-sum lodging allowances before domestic courts of law. It should be borne in mind that this solution guarantees rejection of a potential claim while maintaining high profitability of the transportation company and its business without an increase in its staff costs (due to a high proportion of non-gross component). It is also a perfect solution from the perspective of our economy as it guarantees maintaining a competitive edge of Poland’s transportation industry over foreign competitors. Besides, it ensures a further rise in the number of foreign transportation companies that will be moving their headquarters to Poland. Defending and safeguarding such structure of wages is also beneficial for Polish drivers to whom the expanding labour market in our country offers attractive terms of employment.
President of the Viggen sp.j. Law Office
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