Minimum wage 2027: updating master data and costing

The legal basis is clear. The Fifth Minimum Wage Adjustment Ordinance sets two steps: 13.90 euros from 1 January 2026 and 14.60 euros from 1 January 2027, each gross per hour (Fifth Minimum Wage Adjustment Ordinance, Sec. 1). Across both steps this is an increase of 13.88 percent (Federal Government). The second step at the turn of the year amounts to 5.04 percent (BMAS). It is based on the proposal the independent Minimum Wage Commission presented in June 2025, which the federal government made binding by ordinance (Federal Government).

The Federal Statistical Office has estimated how many employment relationships are affected: based on the April 2025 earnings survey, at most 7 million jobs are affected by the second step, roughly 18 percent of all employment relationships (Destatis). The figure is an upper limit, because pay rises after April 2025 are not included; apprentices, interns and minors are not counted (Destatis). For a business this means that even an employer who pays above the minimum wage today may well have individual positions, temporary staff or premium rules that the new value touches.

Three rules from the Minimum Wage Act belong in every review. Sector minimum wages under the Posted Workers Act or the Temporary Agency Work Act take precedence, provided they are not below the general minimum wage (Minimum Wage Act, Sec. 1(3)). Anyone paying a sector minimum wage therefore maintains it as a separate rate with its own date. And the entitlement cannot be contracted away: agreements that fall below it are invalid to that extent (Minimum Wage Act, Sec. 3). Exceptions include apprentices, volunteers, minors without completed vocational training, certain mandatory internships and people who were long-term unemployed, for the first six months of employment (Minimum Wage Act, Sec. 22). These exceptions belong in the personnel master record as flags, so that a later check does not report them as errors.

For mini-jobs the turn of the year counts twice, because the earnings limit is tied to the minimum wage. The Social Code defines the marginal employment threshold as the monthly pay for ten hours a week at the minimum wage; it is calculated by multiplying the minimum wage by 130, dividing by three and rounding up to the full euro (Social Code IV, Sec. 8(1a)). From 14.60 euros this gives a limit of 633 euros a month, after 603 euros in 2026 (Federal Government). The annual limit rises to 7,596 euros (Minijob-Zentrale).

The link is meant to ensure that working hours do not have to be cut when the hourly wage rises (Federal Government). At exactly the minimum wage, the maximum therefore stays at about 43 hours a month (Minijob-Zentrale). Anyone paying more than the minimum wage has less room: the possible working time shrinks accordingly (Minijob-Zentrale). This calculation rarely lives in the payroll software; it lives in the roster, which allocates shifts before anything is paid.

The worked example shows a detail with consequences: anyone who used the full hour limit in 2026 is just above the monthly limit in 2027 with the same number of hours. The amounts are cents, but a planning rule that works with a fixed number of hours instead of hours multiplied by rate calculates wrongly from January. At an hourly wage of 15.50 euros, above the minimum wage, it is roughly two and a half hours less per month.

Fluctuating months are allowed as long as annual earnings do not exceed the limit (Minijob-Zentrale). An unforeseeable overrun, for example when covering for a sick colleague, does not end the mini-job if it happens in no more than two calendar months within a twelve-month period (Social Code IV, Sec. 8(1b)); earnings in those months may be at most 1,266 euros (Minijob-Zentrale). For the roster this means it needs the limit as a value with a valid-from date, the hourly wage per person and a counter for months with an overrun.

Mini-jobs also come with a record-keeping duty. Employers must record the start, end and duration of daily working time no later than the end of the seventh calendar day after the working day and keep the records for at least two years; the same applies to the sectors listed in Sec. 2a of the Act to Combat Undeclared Work (Minimum Wage Act, Sec. 17(1)). Missing or late records can be fined up to 50,000 euros, failure to pay the minimum wage up to 500,000 euros (Minimum Wage Act, Sec. 21(3)). How digital recording meets these deadlines without rework is described in Digital time tracking 2026; which further rules a planning tool can check is covered in Shift rosters that check rest periods upfront.

In running contracts, higher wages can go unnoticed for a long time: maintenance contracts, cleaning and service flat rates, framework agreements with fixed hourly rates. Whether and how a price can be adjusted is governed by the contract, and the law sets limits. The Price Clause Act prohibits an amount of money from being determined directly and automatically by the price of goods or services that are not comparable (Price Clause Act, Sec. 1(1)). Permitted, among others, are cost element clauses, where the amount depends on prices insofar as these directly affect the creditor’s own costs of providing the service (Price Clause Act, Sec. 1(2) no. 3). A clause that links the labour share of a price to the supplier’s own labour costs typically falls into this group.

Towards consumers, a further limit comes from the law on standard business terms: a term that provides for a price increase for services to be delivered within four months of the contract being concluded is invalid, with continuing obligations excepted (German Civil Code, Sec. 309 no. 1). Towards businesses this prohibition does not apply directly, but the general fairness review under Sec. 307 of the Civil Code still applies (German Civil Code, Sec. 310(1)). Whether a specific clause holds is, in case of doubt, a matter for legal advice. The process question is a different one: will the clause be found in time for the effective date at all?

With these fields a list can be produced for the effective date: all contracts linked to wages whose next adjustment date has been reached, sorted by notice period. Without a register this information sits in folders and mailboxes, and the missing adjustment only shows when the post-calculation in spring reveals losses. The register is not a legal opinion but a working list that makes sure every clause is on the table in time.

A list of places is the start; only a check rule shows whether it was complete. It does not ask whether someone thought of everything but searches the data for values that must no longer fit after the effective date. Six queries cover typical gaps:

The second point is often overlooked. With a fixed monthly salary there is no hourly wage in the system, and yet the minimum wage applies per hour. A position with 40 hours a week comes to about 173.33 hours a month, calculated as 40 hours times 13 weeks divided by three months, the same logic as the mini-job formula. A salary of 2,450 euros therefore gives about 14.13 euros per hour: enough in 2026, no longer enough from January 2027. At least about 2,530.67 euros are then needed (own calculation). The check rule works this out for each person instead of relying on an empty field in the master record.

The rule runs twice: in early December on master data and rosters for January, and after the first January payroll on the amounts actually paid, divided by the hours recorded. The second run finds what the first could not see, for example overtime that pushes down the effective hourly wage on a fixed salary. Such a report can be set up to recur, as described on the page Metrics and reporting.

For many businesses the changeover is not a question of payroll software but of the many places around it. We start by taking stock: where is an hourly rate stored, who maintains it, and how does it reach the other systems today? The result is a list of places with responsibilities, as we also produce in a process analysis.

We then define the lead source, set up the hand-over into time tracking, rostering and costing, and store the check rule as a recurring report. Where programs cannot share their values, we build a checked reconciliation instead of creating yet another spreadsheet. How we merge data sets and define a lead system per field is described on the page data integration. The result is a procedure that handles the next effective date with the same list and the same rule.