How did you deal with late payments

Late payment of wages by employer: what to do?

If the boss does not pay the salary on time, the employee may not be able to meet his obligations, such as paying rent etc., on time.

It happens again and again that wages and salaries are paid too late in companies. This can be a big problem for employees, because they too have to punctually meet their payment obligations to their landlord or their insurers and, last but not least, make a living from something. Today, however, workers are no longer entirely defenseless.

What are the consequences of a late salary for the employee?


The most important point here is the rent. This normally has to be in the account of the landlord by the third working day of each month. If the rent is not paid on time, the landlord can issue a warning to the tenant. If the tenant still does not pay on time after being warned several times, he is threatened with termination without notice. There is also a risk of trouble with insurance: If the first premium is not paid on time for a new insurance policy, the insurer can withdraw from the contract. If a claim then occurs, the customer remains seated on the damage. This also applies to contributions that are only due once a year. In the case of ongoing contributions, the insurer must first write a reminder. The payment period is at least two weeks. If the customer still does not pay, they risk losing insurance cover. Loan installments paid late can also lead to warnings and, in the event of repetition, to the termination of a loan agreement. But the unplanned ebb in the cash register is also causing trouble in many other areas. For example, late payment fees and interest on arrears can be due for outstanding payments, municipal utilities can levy reminder fees or turn off the water in the event of longer outstanding debts. And at the bank, juicy overdrafts are due.

What to do if the salary does not arrive on time?


Employees should first seek an interview with their employer. Maybe something went wrong in the accounting department. If this is not the case, there is the possibility of requesting the employer to pay in writing by setting a deadline. A warning from the employer is also an option, but this step is more recommended if you want to terminate the employment relationship quickly. The unsuccessful warning may give the employee a reason for termination without notice, but this must then be announced in the warning in the event that payment is still missing.

Damage caused by delay: Often unsatisfactory


For a long time, the only other option for employees was to sue for their salary, possibly to apply for an injunction - with the corresponding effort - or to claim default interest or damage caused by default. After all, in such cases the employer is usually in default of payment. The employee can therefore demand default interest of 5 percent above the base rate. This regulates ยง 288 of the civil code. The base rate in 2017 is -0.88 percent. The default interest rate is thus 4.12 percent. The calculation is based on the gross salary. In relation to the delay period, however, you usually get very small amounts. Any further damage caused by delay could only be asserted if this was specifically proven and quantified - e.g. overdraft interest incurred or late payment surcharges.

Flat rate compensation: 40 euros


In the meantime, the legislature has introduced its own right to flat-rate compensation for such cases. This amounts to 40 euros for each case of late payment. All creditors of a payment claim have this right in the event of default by the debtor, as long as the debtor is not a consumer. This is regulated in Section 288 (5) of the German Civil Code (BGB). The amount is intended to motivate the employer to pay on time - and on top of that to compensate the employee, who also has inconveniences due to the delay in payment that cannot easily be expressed in money - such as asking one's own creditors to defer payments. The regulation initially only applied to employment relationships that began after July 28, 2014. It has been applicable to all employment relationships since June 30, 2016. The right to default interest also continues to exist.

How can compensation be claimed?


The lump-sum compensation for late payment of wages must be requested in writing from the employer. The employee must make sure that the wages were actually paid much later than the employment contract stipulates. As a rule, payment is agreed at the end of the month. Compensation is only available if the employer was responsible for the delay. If it was a mistake by his bank, he does not have to pay. The employee does not have to prove any damage incurred for the 40 euro flat rate. In order not to jeopardize the relationship with the employer, this means should only be used when the late payments accumulate.

Can you stop working?


Refusal to work can also be used as a means of pressure. However, this method should be used with extreme caution. A refusal to work should first be threatened in writing, combined with a deadline for payment of the outstanding wages. By refusing to work, the employee asserts a right of retention to his part of the contractual service. This is regulated by law in Section 273 of the German Civil Code (BGB). But: In a number of cases, refusal to perform work is inadmissible. This applies, for example, if the arrears are less than two months' wages, if only slight delays are to be expected, if the employer can suffer high damage as a result of refusal to work or if the outstanding salary payments are insolvency claims. The refusal to work can only last until the outstanding amount has been paid. If only a small remaining amount is outstanding, the employee has no right to withhold his work. An unjustified refusal to work can constitute grounds for dismissal. In the event of a justified refusal to work due to a wage arrears, the employer may not give notice.

Practical tip: maintain proportionality!


If the salary is not in the account on time, the first thing you should do is talk to the boss and try to find out what the cause is in a friendly manner. If this remains unsuccessful and the salary is still not paid, the next stage ignites: The employer is asked to pay in writing with a deadline (verifiability! I.e. registered letter with acknowledgment of receipt). If the salary still does not come in, a refusal to work comes into play. However, this should also first be threatened in writing, with a further deadline for payment of the salary. Refusal to work is only permitted after this period has expired. But be careful: there are cases where refusal to work is out of the question. In addition to the measures listed above, the employee is entitled to a lump-sum compensation claim of 40 euros for each delayed salary payment.

(Bu)