Onboarding employees in Germany will require employers to have knowledge of employment laws, statutory regulations, benefits, leaves, and allowances. This section will have the necessary information on the items previously mentioned.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
According to the German statutory laws, employment contracts are mandatory and to be provided by the employer with one month of employment. This contract will include all the information about the terms and conditions along with the benefit details to the employee. Employment contracts may be in any language but a German translation must always be provided and readily available.
Probation Period
According to section 622, paragraph 3 of the German Civil Code, the maximum duration for a probation period is six months.
13th Month Pay
There are no laws for 13th-month pay. The employer can determine to pay in mutual agreement.
Employee Benefits
Employers in Germany may provide the following benefits to their employees:
According to Germany Statutory laws, the payroll cycle is Monthly.
The minimum wage in Germany is 12.82 EUR per hour.
The standard working hours in Germany are 8 hours per day and 48 hours per week. Overtime pay is to be determined by the employer.
Employer Payroll Cost:
| Scheme |
Employer’s Contribution |
| Health insurance |
7.3% |
| Pension insurance |
9.3% |
| Unemployment insurance |
1.3% |
| Long-term care insurance |
1.70% |
| LTC 1 Child |
1.70% |
| LTC 2 Children |
1.70% |
| LTC 3 Children |
1.70% |
| LTC 4 Children |
1.70% |
| LTC 5+ Children |
1.70% |
Employee Payroll Cost:
| Scheme |
Employer’s Contribution |
| Health insurance |
7.3% |
| Pension insurance |
9.3% |
| Unemployment insurance |
1.3% |
| Long-term care insurance |
1.525% |
| LTC 1 Child |
2.30% |
| LTC 2 Children |
1.70% |
| LTC 3 Children |
1.45% |
| LTC 4 Children |
1.20% |
| LTC 5+ Children |
0.70% |
Employee Income Tax
| Taxable Income (Euros) |
Income Tax Rate |
| Up to 12,096 |
0% |
| From 12,097 to 68,480 |
14% – 42% |
| From 68,481 to 277,825 |
42% |
| Above 277,826 |
45% |
VAT
The Standard rate of Value Added Tax in Germany is 19%.
The employer has to provide a valid reason for termination of the employment. Moreover, after 6 months of employment, the employee is protected by the German Termination Protection Act. According to this act, an employee can be terminated based on the following categories;
- Personal situation (e.g., Long term Sickness)
- The behavior of the individual (e.g., fraud, theft)
- Business of the employer (if the employer decides to decrease the number of employees)
The notice period in Germany depends on the years of service provided by the employee;
- For employment lasting less than 2 years, the notice period is 4 weeks.
- For 2 to 4 years of employment, the notice period is 1 month.
- For 5 to 7 years of employment, the notice period is 2 months.
- For 8 to 9 years of employment, the notice period is 3 months.
- For 10 to 11 years of employment, the notice period is 4 months.
- For 12 to 14 years of employment, the notice period is 5 months.
- For 15 to 19 years of employment, the notice period is 6 months.
Severance pay
There are no statutory laws for severance pay. However, the employer has to give severance pay if the employee was terminated without notice.
A Long term visa is mandatory for any individual. If the individual has an employment offer based in Germany, they can avail of a work authorization and residence permit. However, the following countries can directly apply for residence permits in Germany;
- EEA and EU Members
- Canada
- Israel
- Australia
- Japan
- New Zealand
- Korea
- Switzerland