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Real risk of fines being imposed on Polish employers posting their workers to work in Germany

The aim of this article is to discuss the possibility and manner of enforcing fines imposed on Polish employers for violation of their obligations related to remunerating their workers posted to Germany in compliance with the minimum hourly rate applicable in that country.

Obligations of Polish employers posting their workers to work in Germany

Pursuant to the German Act of 11/08/2014 on the generally applicable minimum wage, BGBl I p. 1348 (in German: Gesetz zur Regelung eines allgemeinen Mindestlohns; hereinafter as: "the Minimum Wage Act"):

  • an employer with the registered office abroad (for example, in Poland) or an employer with the registered office in Germany must pay his workers who work in Germany a remuneration in the amount based on the minimum hourly rate applicable in Germany (currently: EUR 8.5);
  • under certain circumstances the employer is obliged to record the beginning, the end and the duration of the work performed by the worker, as well as to store those records; the obligation to record the working time of the worker(s) applies to some industries (such as construction industry, technical organisation of fairs and exhibitions, transport of people, catering industry, cleaning of buildings) or low-paid workers. 

The German Minimum Wage Act applies also to Poles working in Germany

When it comes to the first of the above-mentioned obligations, Polish employers posting their workers to work in Germany, but also those sending their workers there on a business trip, must decide to adjust the salaries of such workers so that the remuneration that they are paid for the period of performing work in Germany was based on the minimum hourly rate. Therefore, they develop their own procedure for calculating and comparing the contractual hourly rate of the worker with the minimum hourly rate applicable in Germany. 

A good procedure is worth the trouble

Practice shows, however, that before taking any measures aimed at developing such a procedure, it would be better to contact the German company linked by equity to the employer, or the German entity for which the Polish workers will perform work, and find out about its corporate procedure used to ensure compliance with the obligations under the Minimum Wage Act. If there is a corporate procedure in place, it is worth considering its application. It is also possible that in order to avoid high fines, the German entity will require from the Polish employer to follow their procedure. Using the procedure of the German entity is advisable first and foremost due to the fact that these entities have up-to-date information on the most recent interpretation of the Minimum Wage Act regulations (for example, when it comes to facts and circumstances subject to the Act) and on the practice most favoured by German authorities. 

Liability for violating the regulations of the Minimum Wage Act rests also with the Polish employer

The opinion that it is only the German entity that will be liable for violation of the regulations of the above-mentioned Minimum Wage Act, or that it is the German entity that will be fined and maybe have a recourse against the Polish employer, is wrong. That is because pursuant to the German Minimum Wage Act, the obligation to pay a fine of EUR 500,000.00 applies to:

  • an employer with the registered office abroad (for example, in Poland) or an employer with the registered office in Germany who does not pay his workers performing work in Germany a remuneration based on the minimum hourly rate applicable in Germany, but also
  • an enterprise commissioning the performance of a service or work to another enterprise of which the former knows, or as a result of negligence does not know that:
    1. the latter does not pay the minimum hourly rate for the performance of the commissioned work, or pays the minimum hourly rate but is late with the payment, or
    2. that that enterprise engages a subcontractor who does not pay the minimum wage or pays it but is late with the payment.

So, if the Polish employer does not remunerate his worker working in Germany on the basis of German minimum hourly rate, then both the Polish employer and the German entity for which the Polish worker performs work, may be fined.

Failure to record the working time is also punishable

For breaching the second of the above-mentioned obligations, a fine of EUR 30,000 will be imposed on the employer who in the situations provided for in the Minimum Wage Act fails to record the beginning, the end and the duration of the work performed by the worker, or fails to store such records. 

The regulations allow for enforcement of fines from Polish employers posting their workers to work in Germany

When it comes to the enforcement of the fines imposed by German authorities, the belief that there are no legal provisions that would enable the enforcement of the fines from Polish employers is also wrong: Pursuant to the (Polish) Act on the posting of workers in the framework of the provision of services, dated 10/06/2016 (Journal of laws of 2016, item 868; hereinafter as: the "Act on posting of workers"), the scope of powers of the Polish Labour Inspection (in Polish: "PIP") has been extended to include:

  • informing the employer posting a worker from Poland about a decision to impose an administrative penalty or fine for violating regulations on the posting of workers;
  • informing the employer posting a worker from Poland about the request to enforce the administrative penalty or fine imposed for violating regulations on the posting of workers, as well as verifying the motion and forwarding it to the head of the tax office; the said penalties and fines are enforced in compliance with the regulations on enforcement proceedings in administration; 
  • applying to competent authorities / employers posting workers from Poland / enterprises in the meaning of the Freedom of Economic Activity Act with a justified request for information concerning the posting of workers from Poland or to carry out an inspection; 
  • providing necessary information concerning the posting of workers from Poland in response to legitimate requests from competent authorities, pertaining especially to those workers, their employment conditions and the employer posting the workers from Poland, as well as requests to carry out an inspection on the request of such authorities; in order to obtain the necessary information, PIP may also enquire with the Social Insurance Institution (in Polish: ZUS), tax offices and other public administration authorities.

The Internal Market Information System provides an opportunity to notify of the fines imposed and apply for their enforcement

PIP's collaboration with the applying authorities from other Member States, related to the implementation of applications filed by those authorities for notifying the employer posting the worker from Poland of the decision to impose the abovementioned fine or for enforcement of such a fine, is implemented through the internal market information system referred to in the Regulation (EU) No 1024/2012 of the European Parliament and of the Council of 25 October 2012 on administrative cooperation through the Internal Market Information System, repealing Commission Decision 2008/49/EC ("the IMI Regulation"). 

Particular attention should be paid to the fact that pursuant to the Polish Act on posting of workers the amounts of the above-mentioned fines imposed on employers posting their workers from Poland constitute the state budget income. That is a rule which can be a strong incentive for PIP to exercise its new powers.

To be remembered: Polish employers must pay their workers in Germany a remuneration matching the standards in a given country

Polish employers posting workers to Germany (including sending them there on a business trip) should pay them a remuneration in the amount based on the minimum hourly rate applicable in Germany (currently: EUR 8.50), and record their working time under certain circumstances. If they fail to meet those obligations, competent German authorities may impose a fine on such employees and it may be collected in Poland through PIP and/or tax authorities. Since other countries are also introducing similar protective laws, it is worth bearing in mind the above principles arising from the Polish Act on posting of workers. 

In the case if you are interested in our assistance in this issue, our attorneys at law, provide assistance and legal advice in the field of labor law in Poland at the Rödl & Partner offices in: Cracow, Gdansk, Gliwice, Poznan, Warsaw, Wroclaw.