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When a ‘mini-job’ is no longer mini: the risks of on-call work and how to adapt to the new German legislation

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Kliemt.HR Lawyers, the first port of call in employment law for top-class and future-proof advice.
New legislation on part-time work in Germany may result in part-time ‘mini jobs’ being reassessed, making them no longer eligible for tax and social security exemptions.

Since the amendment of the Part-Time and Fixed-Term Work Act on 1 January 2019, employers who employ their employees in on call roles without agreed weekly working hours are exposed to new, potentially costly risks. If they are not careful, a ‘mini-job’ can quickly become employment requiring insurance. The following article deals with the new legal situation and the question of what employers should consider and change.

On-call work

Part-time, low paid ‘mini jobs’ are widespread in practice and still very popular with employers due to their income tax and social security benefits, although the number of ‘mini-jobbers’ has fallen further compared with the previous year, as the mini-job head office in Essen registered in its current quarterly report dated 11 October 2019. However, despite this decline, a good 6.74 million people are still employed in mini-jobs. Since ‘mini-jobbers’ are often employed as temporary workers and work flexibly in terms of time, minor employment relationships often take the form of ‘on-call work’. This means that employees must perform their work according to the fluctuating actual workload and only work ‘on call’, for which they must be notified four days in advance. The employer thus unilaterally determines the duration as well as the situation of the working time. An on-call work agreement has the clear advantage for the employer that it is a method of ensuring flexibility, is not bound to fixed working times and has a degree of leeway with regard to working times.

The fiction of a 20-hour week

Section 12 (1) sentence 3 of the Part-Time and Fixed-Term Work Act was modified from 1 January 2019 in such a way that a weekly working time of twenty hours is deemed to have been agreed, unless the parties have stipulated an alternative specific weekly working time duration in the employment contract. The provision does not mean that the parties can no longer freely agree working hours. Rather, it stipulates a number of working hours in the event that the parties have not contractually determined a duration. This type of regulation is not new: if neither a weekly nor a daily working time was agreed until 31 December 2018, a weekly working time of ten hours was deemed to have been agreed. However, this assumption had little practical relevance in the past, since most part-time employees worked more than ten hours a week and therefore did not have to invoke the regulation. But even if the ten-hour fiction was applied, there was no danger of exceeding the de minimis threshold because of the (lower) minimum wage in force. The current situation changed after the legislator raised the notional number of weekly hours to be remunerated to twenty hours. On the basis of the current minimum wage, a monthly wage of more than EUR 450 euros is payable on the basis of a notional working time of twenty hours per week. This means the marginal earnings threshold will be exceeded. Former mini-jobbers became employees subject to social insurance and income tax ‘overnight’.

Consequences of exceeding the de minimis threshold

The employer cannot prevent the de minimis threshold from being exceeded by not paying certain amounts. The assessment under social security law does not depend on what amounts the employee actually received, but on what amounts the employee would have been entitled to. If it is therefore subsequently established that due to the 20-hour ‘fiction’ between the parties a minimum weekly wage of (currently) EUR 9.19 x 20 hours = EUR 183.80 and thus a gross monthly wage of EUR 735.20 euros (EUR 183.80 x 4) was deemed agreed, it is certain that the de minimis threshold was exceeded. As a result, the social security exemption no longer applies and the employer is exposed to additional demands for social insurance contributions and income tax, plus the corresponding surcharges for default. In addition, the employees may be entitled to claim the higher wage retroactively.

Legal problems and assessment

To what extent the courts will apply the provision in the absence of a working time agreement and base the employment relationship on a 20-hour week cannot yet be conclusively assessed. In its old version the provision was of little or no practical significance: in one case the Federal Labour Court did not apply the provision at all, but determined the weekly working time by a supplementary contract interpretation and referred to the actual execution of the contract in the past (judgment of 7 December 2005 – Ref. 5 AZR 535/04). The previous average working time was regarded as contractually agreed. A recourse to the legal fiction was not felt by the courts to be fair, since it contradicted the will of the parties. In contrast, however, in a further decision the Federal Labour Court did notuse the ‘lived employment relationship’ to determine the working hours, but based its decision exclusively on the statutory fiction (judgment of 24 September 2014 – 5 AZR 1014/12).

Therefore, since there is no uniform line of case law and in addition all these judgements concerned situations where a longer working time was provided, it is still unclear how courts will decide cases in which less than 20 hours were actually worked. Since the explanatory memorandum of the draft law explicitly mentions increased planning and income security for employees as an objective, there is much to be said in favour of not treating the provision as a ‘catch-all’ but taking its mandatory character into account.

Recommendation for employers

In view of the still-uncertain developments in case law and the risks mentioned, employers are advised to play it safe. If mini-jobbers are employed on call without agreed weekly working hours, employers are advised to take action and adapt their employment contracts immediately to the legal requirements so that a ‘mini-job’ stays a ‘mini-job’. It is recommended that the duration of the weekly working time be agreed in writing with the employee and that either minimum or maximum weekly working time be agreed. Care must be taken to ensure that the de minimis threshold is not exceeded, especially in view of the increase in the minimum wage as of 1 January 2020.

Katja Giese
Lawyer - Germany