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EU rules German minimum wage law on foreign truckers is illegal

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, May 13, 2015. REUTERS/Francois Lenoir

By Julia Fioretti

BRUSSELS (Reuters) - A German law ordering foreign truck drivers be paid the German minimum wage for any hours spent driving across the country is illegal, the European Commission said on Tuesday.

Germany introduced a minimum wage of 8.50 euros (5.48 pounds) an hour in January this year and would apply that to any employee working within German borders, whether or not the worker or the employer is based in Germany.

The provision angered many EU countries such as Poland, Denmark and Hungary.

The German minimum wage is higher than many earn in the Polish trucking industry, which has taken advantage of low costs to take a big share of the trans-European road freight business.

The Commission said applying the minimum wage to all transport operations that touch German territory runs counter to the EU principle of freedom to provide services.

Germany put the rule for foreign truckers on hold late in January pending the Commission's decision.

Berlin has two months to respond to Brussels. If the two sides are unable to find an agreement, the case may eventually be settled in court.

A spokeswoman for German Labour Minister Andrea Nahles said the German government would consider how to proceed.

The Commission in its statement said forcing foreign firms to pay drivers the German minimum wage for any hours spent crossing the country without stopping could not be justified.

Applying the law to deliveries either beginning or ending in Germany would in certain cases also run counter to the EU treaty guaranteeing the free movement of goods and services, it said.

More proportionate measures could protect workers and ensure fair competition, while allowing for free movement of services and goods, it added.

The German law obliges foreign firms in some sectors, such as transport, to register drivers' employment details with German authorities. If they fail to pay their drivers in line with the German minimum wage they risk fines of up to 500,000 euros.

(Additional reporting by Holger Hansen in Berlin; Editing by Philip Blenkinsop/Tom Heneghan/Susan Fenton)