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When hiring in Germany, it’s important to understand the statutory minimum wage, paid holiday, sick leave, working hours, notice periods and other employee rights.
Employers must provide employees with written information covering the key terms of employment. Written employment contracts are standard practice in Germany.
Employees and employers generally share the cost of Germany’s social security system. Contributions cover health insurance, long-term care, pension and unemployment insurance, while employers also pay accident insurance contributions.
Germany is worth considering if you want to build a remote team or expand your business into Europe. The country has a large, highly skilled workforce, strong digital infrastructure and a well-established business environment, making it an attractive location for international companies hiring specialised talent.
Germany has a strong pool of qualified professionals across areas such as technology, engineering, finance, research and business services. Its central location within Europe also makes it well connected to other major European markets.
For remote employers, Germany also offers a well-established employment and social security framework, giving employees access to statutory health, pension, unemployment and long-term care insurance.
Native Teams’ Employer of Record services help you hire and pay your team through an owned infrastructure in Germany. We handle everything from legal employment to ensuring your team is paid and managed compliantly and with care, without any third parties involved.
Hire your first German employee with Native Teams.
Employers need to follow certain legal requirements when hiring in Germany. The section below will present them in greater detail.
Germany’s employment law is based on the Basic Law (Grundgesetz) and a wide range of federal statutes, many of which are influenced by EU law. Rather than being consolidated into a single employment code, German employment legislation consists of numerous individual laws and regulations. Specialist labour courts interpret and apply these rules through case law.
Germany’s Basic Law establishes several principles relevant to employment, including:
These principles form part of the wider framework governing employment relationships in Germany.
Germany consists of 16 federal states (Länder). Employment legislation is primarily governed at the federal level, although the states have influence in certain areas, including educational leave and public holidays.
Several legal codes contain provisions relevant to employment, including:
However, employment law is not consolidated into these codes. Employers must consider numerous individual statutes governing different aspects of the employment relationship.
In Germany’s private sector, employment contracts generally fall into two main categories: indefinite-term and fixed-term contracts. Employment can also be structured as either full-time or part-time.
Under the Act on Written Evidence of Essential Employment Conditions (Nachweisgesetz), employers must document the essential terms of employment in writing and provide the employee with a signed document containing this information.
Each employment contract must include the following:
Download a free employment contract for Germany through Native Teams.
Employment contracts in Germany are typically written, but they can also be concluded orally or through the parties’ conduct. However, fixed-term employment contracts must be concluded in writing.
Employers must also provide employees with a written statement of the essential conditions of employment, unless these conditions are already clearly set out in the employment contract.
Employment contracts often contain standard provisions created by the employer, known as “standard business terms”. These terms become part of the employment contract when the employer:
Where a term has been individually agreed between the employer and employee, the individually agreed term takes precedence over a standard term.
Standard terms that impose unusually restrictive conditions may not become part of the contract. Where there is doubt about the interpretation of a standard term, it is interpreted in favour of the employee.
In Germany, a probationary period may be agreed between the employer and employee, particularly in indefinite-term employment contracts. It provides both parties with an opportunity to assess whether the employment relationship is suitable. The probationary period is regulated by the Civil Code and cannot exceed six months.
During the agreed probationary period, either the employer or the employee can terminate the employment contract with two weeks’ notice. Neither party is required to provide a specific reason for termination.
Employment in Germany can generally be divided into two categories based on working time: full-time and part-time work.
The standard working week in Germany typically ranges from 36 to 40 hours. For employees working a six-day schedule, weekly working time is generally limited to a maximum of 48 hours.
Employees working fewer than 30 hours per week are classified as part-time employees.
After six months of employment, employees working for a company with more than 15 employees have a legal entitlement to request a reduction in their weekly working hours.
Working hours may be distributed evenly or unevenly across days, weeks or months. The working schedule must be established through one of the following:
Employees must not work for more than six consecutive hours without a rest break. The minimum break entitlement is:
Breaks can be divided into separate periods of at least 15 minutes each.
Employees must generally receive an uninterrupted daily rest period of at least 11 hours. Exceptions may apply in specific sectors or where provided for by collective agreements.
Employees must also generally have one continuous day off each week, preferably on Sunday, unless operational requirements prevent this.
Night work covers a period of at least two hours between 11 pm and 6 am. For employees working in bakeries, the corresponding period is 10 pm to 5 am.
Under the Federal Leave Act (Bundesurlaubsgesetz), employees are entitled to paid annual leave of four weeks per calendar year:
Employees receive their full annual leave entitlement after six months of employment with the employer. During the six-month waiting period, employees are entitled to one-twelfth of their annual leave entitlement for each completed month of employment.
Annual leave generally cannot be carried over beyond 30 June of the following year.
During annual leave, employees are entitled to holiday pay from their employer. This is calculated based on the employee’s average remuneration over the previous 13 weeks, excluding overtime pay.
If an employee still has unused holiday entitlement when their employment ends, they can claim financial compensation for the days of leave they have not taken.
Employers must ensure that employees receive at least the National Minimum Wage (NMW). Collective agreements at industry level may establish higher minimum rates.
Employers commonly provide additional payments such as annual “13th month” or Christmas bonuses and holiday bonuses. Where an employer makes such payments regularly, this can establish a contractual entitlement, subject to any applicable provisions allowing the payment to be withdrawn.
To calculate the salary and taxes in Germany, click here.
To document an absence, an employer may request an Arbeitsunfähigkeitsbescheinigung (certificate of incapacity for work), commonly known as an AU or Krankschreibung (sick note), issued by a medical professional.
When an employee becomes ill or is injured, they must promptly notify their employer and state the expected duration of their absence. If the absence lasts more than three days, the employee must consult a doctor. Where the employee is covered by statutory healthcare, the doctor’s diagnosis is automatically transmitted to the employer.
Employees who have completed at least four weeks of service are entitled to their full regular pay for the first six weeks of incapacity for work. A further period of up to six weeks of paid sick leave may apply for subsequent illnesses or injuries. For a recurring illness, a new period of paid sick leave is granted after six or 12 months, as applicable.
Once the employer’s obligation to pay sick leave ends after the initial six weeks, employees may receive sickness benefits from their healthcare fund. Sickness benefits amount to 70% of gross pay, subject to a maximum of €116.88 per day, and can be paid for up to 78 weeks within a three-year period for the same condition.
Biological and adoptive working parents have the right to take up to three years of parental leave (Elternzeit) per child. For mothers, this entitlement excludes the postnatal maternity leave period covered by maternity leave provisions.
Parental leave can be taken entirely before the child’s third birthday, or with up to 24 months of the entitlement postponed and taken between the child’s third and eighth birthdays.
Employees can take parental leave in one continuous period or in up to three separate periods. The employee must notify the employer:
An employer may refuse a third period of parental leave between the child’s third and eighth birthdays where there are urgent operational reasons. Any changes to the planned duration of parental leave require the employer’s consent.
Eligible employees can work part-time during parental leave by reducing their working hours to between 15 and 32 hours per week, for a minimum period of two months. This option is available where:
Employees can request a reduction or redistribution of their working hours. Employers must respond to the request within four weeks and provide reasons if they reject it.
Under German employment law, an employment relationship can end through mutual agreement between the employer and employee, expiration of a fixed-term contract, and notice of termination from either the employer or employee.
The Civil Code allows an employment relationship to be terminated without notice for compelling reasons, including circumstances such as criminal actions, fighting or persistent refusal to work.
The employer must issue the termination within two weeks of becoming aware of the relevant facts. The employer must also provide the reasons for the termination in writing if the employee requests them.
Collective dismissals involve terminating multiple employment relationships within a specified period. In such cases, employers have obligations to inform and consult the works council and the Federal Employment Agency.
Special procedures apply to collective dismissals resulting from organisational changes in larger establishments.
An employer can terminate an employment contract by giving the agreed notice period, known as ordinary dismissal, provided there is a valid reason for the termination. The reasons for termination generally fall into three categories:
Personal reasons concern circumstances affecting the employee’s ability to perform their role. These may include:
Conduct-related reasons arise from an employee’s behaviour or breaches of their employment obligations. Examples include:
An employer may also terminate an employee where changes in business operations make their position obsolete, such as following organisational changes or restructuring.
In these circumstances, termination may be justified where:
For employer-initiated terminations, the statutory notice period generally increases with the employee’s length of service, from four weeks to up to seven months.
Under the Civil Code, after any probationary period, the minimum notice period for termination by either the employer or employee is four weeks, ending on either the 15th day or the end of a calendar month.
For employer-initiated terminations, the statutory notice period increases according to the employee’s length of service:
Employers with 20 or fewer employees may agree to a notice period of four weeks, regardless of the employee’s length of service. In all cases, the notice period applicable when an employee resigns must not be longer than the notice period applicable to dismissal by the employer.
When becoming unemployed, individuals must personally report to the employment service in the country where they last worked. Special rules apply to cross-border workers, who may need to comply with requirements in both their country of residence and their country of employment.
Individuals must:
People who last worked in Germany may be entitled to unemployment benefits, subject to certain conditions, including a minimum period of previous employment.
Employment periods completed in other EU countries may also count towards eligibility. These periods can be verified using the PD U1 form. Unemployment benefits provide financial support and access to employment services through the Federal Employment Agency, including assistance with job searches and training opportunities.
Unemployment benefits received in Germany can be transferred to another EU country for a limited period of three to six months to allow the recipient to look for work there.
Basic income support provides financial assistance to people seeking work, including those who do not have sufficient entitlement to unemployment benefits.
Eligibility under the Second Social Code (SGB II) depends on factors including the individual’s income and previous employment history. Special rules apply to EU citizens accessing social benefits in Germany, including provisions concerning single parents and people who are exclusively seeking employment.
German employment law does not generally require employers to pay severance when an employment relationship ends. However, more than 85% of dismissal disputes end in severance agreements.
Severance payments may arise in the following circumstances:
The main forms of restrictive agreements in Germany are non-compete clauses and non-solicitation clauses. Non-compete clauses restrict employees from engaging in competing activities, while non-solicitation clauses restrict them from soliciting former customers or colleagues.
German employment law places strict limits on restrictive covenants in employment contracts. For a post-contractual restrictive covenant to be legally binding, it must meet several requirements.
A post-contractual restrictive covenant must:
The restriction may apply for a maximum of two years after the employment relationship ends. The employer must also pay the employee compensation of at least 50% of their previous overall earnings for the duration of the restriction. If the scope of the restrictive covenant goes beyond what is considered justifiable, the employee can either:
An employer can waive a restrictive covenant. However, the employer’s obligation to pay compensation continues for 12 months after termination, unless the employment was terminated immediately for cause.
Non-compete clauses commonly restrict employees from working for competing companies, either in activities related to the employer’s business or to the employee’s specific area of work.
Non-solicitation clauses can prevent employees from:
Customer-related non-solicitation clauses are treated as non-compete agreements and therefore require compensation. Non-solicitation clauses relating to other employees do not require compensation.
In Germany, remote working arrangements generally fall into two categories:
Germany currently provides no general legal entitlement to work from home or engage in mobile working. Employees may work remotely only where this is permitted by their employment contract, a company agreement, or an arrangement approved by the employer on a case-by-case basis.
When employees work from home, they must comply with working time and rest-period requirements. Employers are responsible for ensuring compliance with the Working Time Act, including required breaks and rest periods, as well as maintaining appropriate occupational health and safety standards in the home office.
Employers are also encouraged to provide the equipment needed for remote work and, where appropriate, office furniture to support a suitable home working environment.
Employers are responsible for protecting employees’ health and safety, regardless of whether they work remotely or on-site.
German law does not prescribe specific health and safety measures for remote workers, such as measures addressing physical health risks or psychological stress. Instead, employers must carry out a risk assessment (Gefährdungsbeurteilung) to determine the appropriate precautions and ensure that the remote workplace is set up safely.
Employees must promptly notify their employer in writing when they make an invention. The notification should include a detailed description of the technical problem addressed, the solution developed, and the process that led to the invention.
After receiving the notification, the employer has four months to claim the invention. The claim gives the employer either exclusive or non-exclusive rights to the invention. The employer is then responsible for initiating patent protection proceedings in Germany to protect the invention.
If the employer claims the invention, the employee is entitled to remuneration under the AEG. The amount takes into account factors including the economic value of the invention, the employee’s role within the organisation, and the employer’s contribution to the invention.
Remuneration is generally paid annually, although a one-off payment may be appropriate in certain circumstances. The Compensation Directive provides guidance on calculating remuneration, including methods based on hypothetical royalties and benefits that can be attributed to the employer.
Employers must have a lawful basis for processing employees’ personal data under the GDPR. This may include:
Employees have several rights regarding their personal data, including the right to access their personal data, rectify inaccurate data, erase their data where applicable, restrict processing, object to processing, and data portability.
Under the GDPR, certain organisations must appoint a Data Protection Officer (DPO) to oversee data protection compliance. While appointing a DPO is not mandatory for every employer, having one can support proactive management of data protection risks and help demonstrate compliance with applicable requirements.
Hiring employees from Germany offers several advantages for businesses looking to access a highly skilled workforce and operate effectively across European markets.
As Europe’s largest economy and a major business hub, Germany provides access to a large, highly educated and skilled talent pool across industries including technology, engineering, manufacturing, finance, and business services. Its central location in Europe also makes it well connected to other major European markets.
Germany’s central European time zone supports convenient collaboration with teams across Europe, while its strong infrastructure and established business environment make it well suited to international companies.
German professionals also commonly have experience working in structured, regulated business environments, which can support collaboration with multinational teams and companies operating across borders.
Native Teams helps you employ and pay your team in Germany directly through owned entities and infrastructure.
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