Hiring guide in Germany

What should I know about hiring in Germany?

Legal framework

Types of employment contracts

In Germany, there are two main types of employment contracts — indefinite contracts and fixed-term contracts. The most common type is the indefinite-term contract, which offers permanent employment. If a contract doesn’t state how long it lasts, it’s assumed to be indefinite.

If the employment conditions aren’t already clearly included in the written contract, employers must provide a written statement detailing the key terms of the job.

Content of an employment contract

Every employment contract must include certain key details to ensure clarity and compliance with legal standards. Firstly, the contract should list the names and addresses of both the employer and the employee. It must also specify the starting date of the employment. For fixed-term employment, the contract should clearly state either the end date or the expected duration of the term.

Additionally, the location where the work will be performed needs to be mentioned. If the job isn’t tied to a single location, the contract should indicate that the employee may work from various places or choose their own work location. A brief description of the duties and responsibilities should also be included.

The contract should define any probation period along with detailed information about salary and other forms of compensation like overtime, bonuses, and allowances. These should be listed separately, along with payment schedules and methods. 

The typical work hours, including shifts, rest breaks, and any special working arrangements like on-demand work, should be clearly outlined. In cases of on-demand work, the contract must detail the minimum hours, the notice period for work, and how often the employee might be expected to work.

Download a free employment contract for Germany through Native Teams.

Oral, written or electronic employment contracts

Contracts can be written, oral, or implied by the situation, although fixed-term contracts must be written down. Employers are also required to give employees a written statement detailing the key conditions of their job unless these are already specified in the contract. Employment contracts frequently contain typical provisions set by the employer, known as “standard business terms.” These provisions become part of the contract if the employer clearly mentions them when the contract is being formed and allows the employee time to review them.

Probationary period

In Germany, indefinite-term employment contracts often include a probationary period agreed upon by both the employer and the employee. This period is designed to evaluate the fit of the employment relationship. According to the Civil Code, the probationary period cannot last longer than six months.

During this time, both the employer and the employee can end the contract with just two weeks’ notice without needing to give a specific reason for the termination.

Working hours

The usual working week varies between 36 and 40 hours, and the maximum working time is generally capped at 48 hours per week for those on a six-day schedule. Those who work less than 30 hours a week are considered part-time employees.

Breaks and night work

Workers are entitled to a break if they work for six consecutive hours. They get a 30-minute break for shifts that last between six and nine hours and a 45-minute break for shifts longer than nine hours. According to the Working Time Act, night shifts must include at least two hours of work between 11 p.m. and 6 a.m.

Annual leave

Employees are eligible for four weeks (20 days) of paid vacation each year after completing six months of employment. This vacation time must be used by June 30th of the following year and cannot be carried over beyond this date.

Holidays

There are eight national public holidays observed across the country. The only public holiday celebrated across the entire country is German Unity Day on October 3rd. The other public holidays vary by each of the 16 federal states. 

National holidays, when work is generally suspended, include New Year’s Day, Good Friday, Easter Monday, Ascension Day, Whit Monday (also known as Pentecost Monday), Labour Day, Day of German Unity, Christmas Day, and Boxing Day.

Salary

Employers are required to pay at least the National Minimum Wage (NMW), and often, industry-level agreements stipulate higher minimum rates. They can also provide bonuses like an annual “13th month” or Christmas bonus, as well as holiday bonuses. 

Once these payments become regular, they create a contractual right, although they can be subject to conditions for withdrawal.

To calculate the salary and taxes in Germany, click here.

Sick leave

Employers can request a certificate of unfitness for work, often called an ‘AU’ or ‘Krankschreibung’ (sick note), from employees to justify absences due to illness or injury. 

Regarding sick pay, employees who have been with the company for at least four weeks are entitled to their full regular salary for the first six weeks of sick leave. If they fall ill or get injured again, they are eligible for another six weeks of paid leave unless the illness recurs. In the case of recurring illnesses, a new period of paid leave can be granted after six or 12 months.

After the first six weeks, employer-funded sick pay ends, and employees may be eligible for sickness benefits from their healthcare fund. These benefits amount to 70% of their gross salary, with a daily cap of €116.88, and can be received for up to 78 weeks within a three-year period for the same condition.

Parental and maternity leave

Both biological and adoptive working parents are entitled to up to three years of parental leave (Elternzeit) for each child. Parents can use this leave entirely before the child’s third birthday or can spread up to 24 months of leave between the child’s third and eighth birthdays.

Methods of employment termination

In Germany, employment can be terminated through mutual agreement, the end of a fixed-term contract, or a notice given by either the employer or the employee. 

A dismissal can be considered invalid if it is socially unjustified, which can be due to personal reasons like inability to perform duties due to illness or loss of a necessary permit, conduct-related reasons or operational reasons like internal reorganisations or economic downturns.

Ordinary dismissal by employer

Three primary categories of reasons for terminating employment exist personal reasons, conduct-related reasons, and changes in business operations, which are often related to redundancy. 

Personal reasons may include factors like repeated or long-term illness that impacts job performance, lack of necessary qualifications, loss of required licenses, or legal issues such as imprisonment or addiction problems. Conduct-related reasons involve behaviours such as continuous refusal to work, insubordination, and making offensive comments towards employers or colleagues.

Redundancy due to changes in business operations can lead to terminations when a role is no longer needed because of organisational changes or restructuring.

Notice period

The minimum notice period for terminating an employment contract, whether by the employer or the employee, is four weeks following any probationary period. This period must extend to either the 15th day or the end of a calendar month.

The statutory notice periods vary based on the length of employment. For those with less than two years of service, the notice period is four weeks up to the 15th or the end of a calendar month. 

From there, the notice extends incrementally: one month after two years of service, two months after five years, three months after eight years, four months after ten years, five months after twelve years, six months after fifteen years, and finally, seven months after twenty years of service, all extending to the end of a calendar month.

Rights and obligations of unemployed individuals

When someone becomes unemployed, they are required to report to the employment service where they last worked. They also get financial support and access to services like job search assistance and training provided by the Federal Employment Agency. Additionally, basic income support is available for those who are job-seeking but do not qualify for sufficient unemployment benefits.

Severance pay

Severance payments are made under certain conditions when employment is terminated. First, severance may be paid if it is specifically mentioned in the employment contract, though this is not very common. Alternatively, severance might be agreed upon by both parties or through a court decision. Lastly, severance payments can also be part of a social plan negotiated with the works council during collective redundancies.

Prohibition of competition

The main types of restrictive agreements include the non-compete clause and the non-solicitation clause. The non-compete clause prevents employees from participating in activities that compete with their former employer, while the non-solicitation clause stops them from approaching former colleagues for business purposes.

Remote working policy

There are two primary forms of remote working: “teleworking” and “mobile working.” Teleworking typically means employees work solely from home or alternate between home and an office workstation. Mobile working, however, involves using mobile devices to work from various locations, such as at home or while travelling.

Currently, there is no legal right in Germany to work from home or engage in mobile work. Employees may only work remotely if their employment contract allows it, if there is a company agreement in place, or if they receive individual approval from their employer.

When employees work from home, also known as “home office,” they must follow regulations related to working hours and rest periods. Employers are also encouraged to provide the necessary equipment and sometimes even office furniture to facilitate an effective home office setup.

Health and safety at home

While German law does not specify particular measures for remote workers, such as addressing physical health or psychological stress, it does require employers to conduct a risk assessment (Gefährdungsbeurteilung) to identify necessary precautions. This is crucial to ensure that the remote workplace is set up safely.

What are the advantages of hiring employees from Germany vs other countries?

Hiring employees from Germany offers several unique advantages compared to other countries. This is mostly because of the high educational standards and strong work ethic prevalent in the German workforce. German education and training systems are renowned worldwide, particularly in fields like engineering, IT, and manufacturing.

There’s also a strong emphasis on efficiency, precision, and reliability, traits that are highly valued in any business setting. Businesses can benefit from this diligence and quality to obtain superior work outputs.

Finally, Germany’s strategic location in Europe and its role as an economic leader make it an attractive base for companies looking to expand in the European market. Employing German workers can provide easier access to and a better understanding of European regulations and business practices, which can be beneficial for companies navigating international expansions.

Why use Native Teams for hiring in Germany?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.