Chapter 8 Pay and Benefits

Abstract

Remuneration of employees can be regulated by individual contract of employment as well as by collective bargaining agreement. Salary can be negotiated between employer and employee. However, an agreement on salary may be deemed to be null and void if the work performed and the salary agreed are grossly disproportionate (i.e. salary extortion) (Lohnwucher). A salary will be found to be grossly disproportionate if the employee is paid less than two thirds of the amount agreed by way of collective bargaining or of the comparable customary remuneration. In cases of salary extortion the employee has a right to receive the customary remuneration.

It should be noted that remuneration can be grossly disproportionate even when it is at the level of the statutory minimum wage (Mindestlohn). This may be the case where the indications of gross disproportion between the work performed and the salary paid, as stated above, are given.