Basics

Currency: Euro (EUR) (Rate)

Public Holidays: 9 public holidays (plus additional holidays depending on the state; see here).

Employer Taxes: Max. of ~21% of gross salary

Official Language: German

Payroll frequency: Monthly, paid around 25th of the month.

13th / 14th Salary: Not mandatory, 13th salary paid as end of year bonus in some agreements

3 things to know about employing in Germany

  1. German companies are only allowed to employ someone on behalf of another company under their Labour Leasing Law called the AÜG ("Arbeitnehmerüberlassungsgesetz") - this gives the employee the same rights as any other, but has a limit of 18 months contract length. However, you can have an unlimited contract length if you are employed by a non-Germany company who is licensed to work in Germany. Oyster is able to provide both options.
  2. Health insurance is mandatory in Germany and can provided through either a public or private scheme. It is uncommon, however, to reimburse additional private insurances e.g. dental, vision, etc as these would be taxable. Pensions are common and employers often contribute to private pension funds on behalf of their employees.
  3. Overtime payments are required to any worker who works over 48 hours per week, unless the employee already earns over a certain amount (~€70-80K p.a. depending on the region)

Employment in Germany

Paid Holidays

Full-time employees in Germany are entitled to a statutory minimum of 20 days of paid holiday per year, based on a five-day working week, or 25, based on a six-day working week.

It is common for companies to grant their employees additional vacation of up to a further two weeks.

Sick pay and time off

An employee is entitled to receive sick pay up to 100% of their salary for up to six weeks. German national health insurance compensates employers for 80% of sick pay as long as the employer does not employ more than 30 employees.

For longer than six weeks, the employee will receive a sickness allowance from the national health insurer amounting to 70% of the employee’s salary for a period of up to 78 weeks.

Minimum Wage

Minimum wage in Germany is €9.82 per hour.

Statutory Notice Period

The employee must be informed in writing 4 weeks in advance of separation during the first 2 years of employment. After that the notice period increases depending on the employment duration.

Probation period

A common probation period is 3 months. It can be up to 6 months.

Non-compete agreements

Non-compete agreements must be limited in scope and duration, and must include a compensation for the entire non-compete period and must amount to at least 50% of the latest salary of the employee (including any bonus payments and gratuities).

The employer may waive the non-compete before termination, but the obligation to pay the necessary compensation continues for a period of 12 months following the declaration of the waiver.

Health Insurance

We can support German Private Health Insurance where the the policy is being transferred over from the previous employer. All we require is the name of the provider, health insurance number and the “Bescheinigung zur Erlangung des Arbeitgeberzuschusses” from the private health insurance provider

If employees hired in Germany choose to join the German government system, they can register with any of the 103 Krankenkassen which are non-profit associations administrating the government health scheme. Some (for instance AOK, TK, SBK, BARMER, DAK)

Employer pays (7.3%) and the employee pays the other half 7.3% (out of gross salary).

Working Hours

Maximum of 40 hours a week. Typically 8 hours a day. Employees must be given at least 11 hours of resting time between two working days.

Overtime

Overtime has to be specifically stated in employee's contract.

Higher wage earners are not eligible for overtime payments. The gross salary at which the right to overtime payments ends is ~€80K p.a. in Western Germany or ~€70K p.a. in Eastern Germany.

Parental leave

Mothers get 6 weeks of fully paid leave prior to a child's birth, and 8 weeks of fully paid leave after the childbirth.

In addition to maternity leave, parents are offered a combined leave of up to 36 months, which can be divided between the father and mother, and is paid for up to 12 months by the government. Parents can choose to work part-time during this leave period.

Termination & Severance

Employees who have worked in a company with more than 10 employees for more than 6 months can only be terminated for certain causes.

An employer must provide written notice of termination of an employee

The decision of the employer can be legally challenged by the employee in court. Even thought there is no statutory severance in Germany, in practice, many employers and employees will agree on severance pay provisions to avoid lengthy court proceedings concerning the effectiveness of the termination.

This severance will often amount to 50% of the monthly salary per year of service. However, this can vary significantly depending on the strength of the case for dismissal and the previous practice of the employers. Companies pay severance packages of up to 6 months of salary to settle termination of employment.

Employee taxation

Social security

Income tax

Employer taxation

These are maximum values - there is a cap on the absolute amount for social security

Social security