Employment contracts Germany

What should an employment contract in Germany include?

The following elements should be included in every German employment contract:

• Names, addresses, and contact information of the employer and the employee.
• The job position and a detailed description of the responsibilities and rights.
• Salary, wage, or hourly rate and benefits entitlements.
• Work schedule, including the hours and days the employee is expected to work.
• Terms under which each party may terminate the employment, including notice periods and severance pay if applicable.
• Non-compete and confidentiality provisions to safeguard the employee’s interests.

Both parties must read, understand, and accept the terms of the employment contract before signing it. 

What types of employment contracts exist in Germany?

The following is a list of the most important employment contracts that can be established in Germany:

1. Employee contracts

Employee contracts in Germany can be divided into two major categories:

• Permanent contracts: Permanent or unlimited employment contracts are common for long-term employment. They don’t define a fixed end date and require adherence to strict legal procedures to terminate it. In addition, permanent employment contracts should define compensation, working hours, notice period, and other important terms.
• Fixed-term contracts: Fixed-term employment contracts feature a predetermined end date and are used for temporary or project-based job arrangements. To provide better legal protection, fixed-term contracts can only be used in certain circumstances and can be renewed a limited number of times.

2. Contracts for services

Contracts for services, commonly known as freelance contracts, are used by self-employed individuals who provide services to clients. Freelance contracts should define the scope of the service, responsibilities and rights, and the time duration. The employer is not responsible for submitting taxes, social security, medicare, insurance, and other contributions for the individual providing services. 

3. Minijob contracts

Minijob employment contracts are limited to a certain amount of hours per week, which should be defined within the contract. This type of contract imposes reduced social security contributions and a limited wage threshold for employees. 

How to hire employees in Germany?

In Germany, workers are entitled to the minimum wage set by the country and additional benefits provided by their employers. 

To operate a business legally in the country, obtaining a tax number and registering a company with the relevant German authorities is necessary. Companies are also obligated to adhere to the current employment laws in force.

In a situation like this, it’s advisable to seek assistance from a company that offers Employer of Record services on a global scale. With Native Teams’ EOR solutions, you can skip the difficulties of global payroll processes, tax and risk management, HR administration, and compliance with local employment laws.