Germany
Knowledge Base
Frequently asked question, important data and information on EOR.
General information
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Labor Law
Laws that regulate Labor Relationship
• Statutory laws,
• The employment agreement, and
• Collective agreements (if any), such as works agreements with the works council or collective bargaining agreements with the union.
Onboarding guide
Requirements for a labor contract
• Start date of the employment,
• Usual work location
• Brief job description
• Salary and other elements of the remuneration, and the due dates of such payments
• Working hours
• Rest times
• Annual holidays
• Notice period
• Applicable collective agreements
• Procedures in the event of termination
Pre-hire Medical exam
No
Types of contracts
• Indefinite-term contract
• Fixed- term contract
Probation Period
Probation periods are permitted up to 6 months in length. During the probation period both parties are entitled to give 2 weeks’ notice of termination.
Are offer letters mandatory in the country?
Are digital signatures in labor contracts valid?
Permitted.
Mandatory onboarding documents
• Copy of Passport or ID
• Proof of Address
• Work permit (if relevant)
• Bank statement/proof of bank account.
Statutory benefits
Annual Bonus
Customary, typically paid out to employees in November through payroll.
Additional bonus
Doesn’t apply.
Leaves (medical, maternity, paternity, etc.)
• Sick leave: In case of sickness the employee is entitled to full salary during absence due to illness for up to six weeks. If the employee is ill for a longer time than six weeks, the health insurance will pay the gross of the employees salary.
• Maternity Leave: Female employees are entitled to paid maternity leave, which is the time period 6 weeks before and 8 weeks after giving birth. The maternity leave after the birth has been extended to 12 weeks in case of multiple births, premature births and disabled children. Payments to the employee during this period are made partly by the statutory health insurance provider and partly by the employer.
• Parental leave: After the birth of a child, both male and female employees are entitled to a maximum of three years’ parental leave per child. During this period, the employer is not obliged to make any payments to the employee.
• Disability Leave: After six months of employment, a severely disabled employee may claim additional vacation in the amount of five working days, based on a 5-dayweek.
• Care leave: Up to 10 days off work to take care for close relatives who are in need of care. Employer is not obligated to make any payments to the employee.
• Compassionate leave: is subject to individual negotiations or is typically part of collective bargaining agreements/works council agreements.
Annual Leave (days per year)
Every employee is entitled to annual leave of 20 days, based on a 5-day-week pursuant to the Federal Vacation Act. This means that an employee can claim an annual leave of four weeks in a calendar year. However, most employers grant a longer annual leave; depending on the industrial sector, between 25 days and 30 days.
How do vacation days expire?
In general, employees must take their annual holidays/vacation during the calendar year. Otherwise, it is forfeited. However, unused holiday can be carried forward until the 31st of March of the next calendar year if the employee was unable to take the holiday due to operational or personal reasons. If any holiday entitlement still remains at the end of the employment, employees can claim financial compensation for the days not taken.
Official Holidays
•January 01 New Year’s Day
•January 06 Epiphany
•March 08 International Women’s Day
•April 07 Good Friday
•April 09 Easter Sunday
•April 10 Easter Monday
•May 01 Labor Day
•May 18 Ascension Day
•May 28 Whit Sunday
•May 24 Whit Monday
•June 08 Corpus Christi
•August 15 Assumption Day
•October 03 German Unity Day
•October 31 Reformation Day
•November 01 All saints Day
•November 22 Repentance Day
•December 24 Bank Holiday
•December 25 Christmas Day
•December 26 Second Day of Christmas
•December 31 Bank Holiday
Working on holidays and Sundays
If employees are required to work on a holiday that falls on a working day, they must have a day of rest in compensation, which must be granted within a period of 8 weeks including the day of employment. Employees are not entitled to extra pay if they are required to work on a public holiday.
Number of Working hours
An average working week is considered to be 38-40. Workdays are typically 8 hours and should not exceed 10 hours. There is a statutory maximum
of 48 work hours per week as average in any 6-month period. There must always be an uninterrupted minimum break of 11 hours after every
workday. Work on Sundays and official holidays requires special permission.
Overtime
Overtime pay and overtime surcharges are not expressively regulated by law, instead subject to contractual agreement, collective bargaining agreements or works council agreements. which is largely regulated by standard contract term provisions. The agreement needs to be fair; any provision incorporating overtime into overall wages needs to be related to a defined amount of overtime. It is possible to contractually agree that overtime of 10 – 20 % of the regular working time shall be deemed as compensated by the regular remuneration.
Social Security (what does it cover)
The statutory social security system is regulated in the Social Security Codes. It coversthe following principal areas: health insurance, unemployment insurance, nursing care insurance, pension and accident insurance.
Payroll
Salary payment currency
Euro (EUR)
Can salary be paid in a different currency other than the local currency?
No.
Payment frequency
The date of wage payment depends primarily on employment agreements. If there is no agreement and if a payment schedule is not established by the circumstances, remuneration must be paid after the employee has performed work. If the wage is calculated on a time basis—weekly or monthly, for instance—it must be paid after the expiration of the period. In general, the wage payment interval may not exceed one month.
VAT percentage
19%
Income Tax
Germany has progressive tax rates ranging from 0% to 45%, depending if individuals are married or not, and their general income. For more information see https://taxsummaries.pwc.com/germany/individual/taxes-on-personal-income
Tax Payer Identification Number
Tax Identification Number – SIdNr (Steuerliche Identifikationsnummer)
Offboarding
Voluntary resignation
Termination agreement: A mutual agreement is reached to terminate the employment relationship with a termination agreement or a judicial agreement in or out of court. Termination agreements must be in writing. This means that both parties must sign the agreement on their own, an attorney must be retained before a termination agreement is concluded.
Contract termination
Under German law, the employment relationship can be terminated by mutual consent, by expiry of a fixed-term contract or by notice given by one of the two parties. Protection against dismissal is divided into general and special protection. See Justified dismissal.
Justified Dismissal
A termination is justified only if it is based on reasons related to:
1) the person;
2) the conduct of the employee:
• criminal actions or serious misbehaviour against employer/colleagues/customers, e.g. abuse, theft or fraud, (sexual) harassment, assault
• repeated late arrival at work
• repeated refusal to fulfil obligations from work contract
• breach of confidentiality
• feigning illness.
3) urgent operational requirements which preclude the continued employment of the employee in the undertaking.
Person-related reasons include, in particular physical or mental impairments, extensive absenteeism due to illness and reduced working capacity. Conduct-related reasons include a willful orseverely negligent breach of contract
Unjustified Dismissal
These include pregnant employees, mothers during maternity leave, employees on parental leave, works council members, candidates during elections, data protection officers and severely disabled employees.
Severance payments are paid at the end of employment in the following cases:
• the employment agreement provides for a contractual severance payment (which is very unusual);
• the parties agree upon a severance payment (in or out of court) to settle a termination dispute;
• the court dissolves the employment against payment of severance if it finds that despite the invalidity of the termination, continued employment would be intolerable either for the employer or the employee;
• a social plan concluded with the works council in connection with a collective redundancy provides for severance payments.
The following (non-binding) formula is often used by labour courts and is regularly incorporated into separation agreements as well as social plans, to calculate severance:
monthly gross salary multiplied by years of employment multiplied by factor x X is generally a factor between 0.5 and 1.5 and may be lower or higher, depending on the circumstances, business sector and region of Germany.
Minimum Notice Period
The Employer is obliged to give the Employee the following notice:
• During the probationary period: two weeks’ notice at any time
• After or without probationary period: four weeks’ notice to the 15th of the month or to the end of the calendar month
• After two years’ service one month’s notice to the end of the calendar month
• After five years’ service two months’ notice to the end of the calendar month
• After eight years’ service three months’ notice to the end of the calendar month
• After ten years’ service four months’ notice to the end of the calendar month
• After 12 years’ service five months’ notice to the end of the calendar month
• After 15 years’ service six months’ notice to the end of the calendar month
• After 20 years’ service seven months’ notice to the end of the calendar month
• Length of Employment Length of Notice
The Employee is obliged to give the Employer the following notice:
• During probationary period: two weeks’ notice at any time
• After or without probationary period: four weeks to the 15th of the month or to the end of the calendar month
Immigration
Visa process
The step-by-step application process for a Germany Work visa goes as follows:
• Get a job offer in Germany.
• Check if you need a visa to Germany for long stays. • Find out where you need to submit your visa application.
• Collect all of the required documents according to the instructions.
• Make an appointment for a visa interview.
• Pay the German Employment Work visa fee.
• Attend the interview. • Wait for a response on your visa application.
Visa documents
• Two fully completed application forms. Printed and signed at the end.
• Two passport photographs (see our page on photo requirements for more info as there are strict requirements).
• Valid national passport (more information on passport requirements).
• Proof of residence. Your driver’s license and/or utility bill in your name as proof of residence in the territory of the consulate where you plan to apply.
• Health insurance. Compulsory certificate from German employer, valid from date of employment. If not already included in the compulsory health insurance, separate travel insurance has to be presented for the time frame from arrival in Germany until the beginning of employment. If you are looking for great coverage for a good price, then your working health insurance awaits here!
• An employment contract / binding job offer with details of gross annual salary and a detailed description of the employment in Germany.
• Approval by the Federal Employment Agency (If applicable).
• Curriculum Vitae. Your updated CV, which indicates your academic qualifications and your job experience.
• Proof of Qualification. Diplomas, Certificates, Mark-sheets etc., or anything similar that proves your qualifications.
• Personal cover letter explaining the exact purpose and duration of stay.
• Proof of a clean criminal record.
• Proof of paid visa fee. The visa fee for a German long-stay visa is €75.
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