Collective Agreement and Minimum Wage Act 2026 – Procurement Requirements

State collective agreement and minimum wage acts: obligations for bidders on public contracts, declaration requirements and current legal position 2026.

Definition: The Collective Agreement and Minimum Wage Act (named differently across federal states) regulates the obligation of contractors of public contracts to pay their employees, when performing the contract, at least the wages agreed in the relevant collective agreements and the statutory minimum wage.

Last updated: January 2026 · Legal status: State-specific collective agreement and procurement laws, MiLoG, § 128 GWB

What is the Collective Agreement and Minimum Wage Act?

The Collective Agreement and Minimum Wage Act combines two labour-law protection instruments with public procurement law: the obligation to comply with sector-specific collective agreements and the obligation to pay the statutory minimum wage. There is no nationwide federal regulation of this name; rather, numerous federal states have enacted their own laws, which have different designations, scopes and requirements depending on the federal state.

The aim of these laws is to foster fair competition among bidders and to prevent public contracts from being won by undercutting wages. They protect both employees against exploitation and collective-agreement-compliant companies against unfair competition.

Overview of state legislation

The federal states have enacted collective agreement and minimum wage acts to varying degrees, each setting its own minimum standards.

Among the best-known regulations are:

Berlin: Berlin Procurement and Award Act (BerlAVG)
Baden-Württemberg: State Collective Agreement Compliance Act (LTTVG)
Bavaria: Bavarian Collective Agreement and Minimum Wage Act (BayTMG)
North Rhine-Westphalia: NRW Collective Agreement and Procurement Act (TVgG NRW)
Hamburg: Hamburg Procurement Act (HmbVgG)
Hesse: Hessian Procurement and Collective Agreement Act (HVTG)

Requirements vary considerably regarding contract value thresholds, the types of contracts covered (supply, works and services), the applicable collective agreements and the control mechanisms.

Substantive requirements

Typically, the laws oblige contractors to submit a collective agreement and minimum wage declaration as part of the bid or, at the latest, when concluding the contract. This declaration usually includes:

The assurance to pay all employees deployed in the performance of the contract at least the statutory minimum wage under the MiLoG
The obligation to comply with the collective agreements named in the contract notice
The obligation to require subcontractors and temporary work agencies to make equivalent declarations

Relationship to federal law

The state Collective Agreement and Minimum Wage Act supplements federal law but may not supersede it. The federal Minimum Wage Act (MiLoG) applies directly and sets the statutory minimum wage (from 2025: EUR 12.82/hour). State laws may set requirements going beyond this, provided they are compatible with EU law and the GWB.

Monitoring and sanctions

Contracting authorities are obliged to monitor compliance with collective agreement and minimum wage obligations and to impose sanctions in the event of breaches. This includes:

Contractual penalties (typically 1–3 % of the contract value per breach)
Termination of the contract for good cause
Exclusion from future procurement procedures (entry in prequalification or suitability registers)
Cooperation with the Financial Control of Illicit Employment (FKS)

FAQ

Does the Collective Agreement and Minimum Wage Act also apply below the threshold? This depends on the respective state law. Many federal states allow exceptions for contracts below certain contract value thresholds. Contracting authorities should examine the relevant state regulation carefully.

Do subcontractors also have to comply with collective agreement compliance? Yes, the obligation to pass on requirements to subcontractors is expressly regulated in most state laws. Contractors are obliged to contractually require their subcontractors to comply.

What is the difference between collective agreement compliance and the minimum wage? The statutory minimum wage is an absolute floor for all employees in Germany. Collective agreement compliance additionally requires adherence to the (usually higher) collective wages applicable in the respective sector.

Last updated: January 2026 All information without guarantee. For legally binding advice, please consult a law firm specialising in procurement law.