What Should Businesses in Germany Pay Attention to Avoid Million-Euro Fines?
Labor law in Germany is highly strict and requires special diligence from employers. At the same time, criminal law liability must not be overlooked.
“I’m not a criminal, I have nothing to fear.” Employers often don’t even suspect that they could find themselves at the center of legal troubles.
What Penalties Can Employers in Germany Face? The specific penalty depends on the violated law. The range is wide:
- Fines of up to €500,000 for violating minimum wage requirements;
- €50,000 fine for illegal employment of workers;
- Fines of up to €10,000 for improper interaction with the works council;
- Million-euro fines for breaches of data protection regulations;
- Up to 5 years of imprisonment for withholding or misappropriating wages (§ 266a StGB);
- Up to 5 years of imprisonment for fraud in the area of social security.
The court may even exceed the maximum fine if the benefit gained from the violation exceeds the fine (“crime must not pay,” § 17 Abs. 4 OWiG). Additionally, in cases of crimes committed in the interest of the company (e.g., bribery), confiscation of profits may be applied (§ 73b StGB or § 29a OWiG). Often, this involves not just net profit but total revenue. Employers can even face real prison time – up to 5 years for withholding wages or social security fraud. Of course, in most cases, a fine or probation is possible. However, with systematic violations, there is a risk of actual imprisonment.
What Should an Employer Do if They Receive a Fine or Criminal Order? The first rule is: “Get your hands out of the fire.”
What does this mean? The employer should immediately hire a competent lawyer and under no circumstances provide explanations to the police or regulatory authorities.
For example, a statement like “Yes, I know about the issue, we’re planning to fix it” could be interpreted by investigators as an intentional violation. Such an admission can significantly increase the penalty.
How to Avoid Fines? Most fines and criminal cases against employers stem from negligence. Intentional crimes are the exception. How to avoid trouble:
- Regular audits of internal processes with a consultant reduce risks;
- A data protection officer should not just be a formality but an active advisor to avoid million-euro fines;
- If there are doubts about personnel decisions, consulting a labor law expert is cheaper than fines and legal defense.
Given the strictness of German legislation, outsourcing workers can significantly reduce the risks of fines and other troubles for businesses. After all, the outsourcing company bears full legal and financial responsibility. VAV Synergy has been providing businesses in the EU with employee hiring and legalization services for over 8 years. Want to learn more? Request a free consultation via the link.
