Germany: Employer Guidance

Where you need to engage professional staff on a freelance, temporary, or permanent basis in Germany. Or where you’re establishing a local presence and need support with legislation, tax, and local payroll. Project Recruit provides tailored solutions for you.

You’ll be supported by our Global Workforce Management team. We help make onboarding a matter of days rather than months. You can be sure that your payroll is compliant with local legislation and that your contracts comply with the relevant legislations and local labor laws. The new recruits are ready to go to work for you…

Global Workforce Management

Need to run payroll in Germany? Ensuring that HR services, tax, and compliance matters are taken care of?

Our comprehensive Global Workforce Management service can help. Whether it’s one person, two people, or a whole team, we will provide reliable and legally complaint payroll for you.

Your workforce management in Germany will be legally compliant from the start and will remain compliant as laws and legislations change in the future. You will be kept appraised of changes to local employment laws in Germany, so you don’t have to have an in-house country-specific expert. We will do it all for you.

You can be up and running in Germany sooner, with a better hiring experience, and with a dedicated recruitment and payroll team at your fingertips. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Project Recruit allows you to find the best and brightest talent, fast, in 32 countries around the world.

AUG Licensing Requirements for Germany

From April 2017 strict laws were put in place regarding people working in Germany. Companies that are hiring on behalf of other companies in Germany, as part of a global workforce management (or PEO Professional Employer Organisation) solution, are legally required to have an AUG or temporary agency license. While the licensing requirements can be complex to define, our services enable you to be confident of your absolute compliance to the laws in Germany. As an employer, recruiting staff in Germany, according to the law, you are responsible for ensuring you or the Global Workforce Management service you contract, is licensed to operate in Germany. As far as we know, Project Recruit is one of only two global professional employer organisations providing a fully-compliant solution in Germany. 

Hiring in Germany

It can take up to 6 months to get started in Germany. The country ranks 114th in ease of setting up a new business. A tax advisor is strongly recommended. There are numerous financial filings to make on the journey. Including the type of business you’re trying to open, two sets of tax registration, and the obtainment of a certificate of registration, to name just a few.  For this reason, our Global Workforce Management service can facilitate easy access to the market. By using our German Global Workforce Management service, you can have new employees set up and working for you in Germany, within a few days of finding your perfect candidate.

Employment Contracts in Germany

A locally compliant employment contract is a legal requirement in Germany. This contract should include the terms of an employee’s compensation, benefits, and termination requirements. In Germany, the offer letter and employment contract should always state the salary and any compensation amounts in Euro rather than a foreign currency.

Working Hours in Germany

The working week in Germany averages between 36 and 40 hours. Most full-time staff expect to work seven or eight hours a day, five days a week. In Germany staff expect to work with an hour or 30 minutes break at lunchtime.

There are strict legal limits on working hours. Employees are not permitted to work in excess of 8 hours per day. German Employees must not work in excess of 48 hours in one week. This working week runs from Monday to Saturday. Daily hours can be extended to up to 10 hours in a day, if within 24 weeks (or 6 months) the total average working time is not over 8 hours per day.

Annual Leave Days in Germany

Vacation allowance by law in Germany varies depending on the number of days in the working week for that individual. A staff member with a 6 day working week is legally entitled to 24 days of vacation or annual leave. A staff member with a 5 day working week is entitled to 20 days holiday per year. Most employees receive between 25 and 30 days annual leave or vacation in Germany. Annual leave is not reduced by sick leave or public holidays.

German Holidays

There are 9 national public holidays celebrated in Germany and additional public holidays that vary in each state. The national holidays are:

    • New Year
    • Good Friday
    • Easter Monday
    • Labour Day
    • Ascension
    • Whit Monday
    • Day of German Unity
    • Christmas
    • St. Stephen’s Day

Maternity and Paternity Leave in Germany

Maternity leave in Germany starts 6 weeks before birth and continues until 8 weeks after birth. For a multiple birth, mothers receive 12 weeks paid leave after the birth. This leave is at full pay.

In Germany, either parent is entitled to up to 3 years of unpaid leave, if they choose to stay at home with their child. During this 3 year period of parental leave, parents can choose to work part-time up to 32 hours per week or not work at all. In the instance of a premature birth, additional parental leave is given.

German federal taxes now fund a program called Elterngeld. This program provides parental subsidies for the first 12 to 14 months of the child’s life. The amount of the subsidy provided is calculated based on the income of the main caretaker parent.

Sick Leave in Germany

Employees in Germany are entitled to 6 weeks of sick leave at full salary. This is on the condition that the employee can provide a medical certificate from their doctor. It is not necessary to include this information in the offer letter or the employment contract as it is a legal matter covered by employment law in Germany.

Following 6 weeks of paid sick leave, the employee may access sickness benefits directly from their health insurer. The reimbursement for the employee in this situation is 70% of their gross salary (up to the social security limit) but not more than 90% of net salary.

Social Security and Health Insurance in Germany

Typically, as an employer you can expect to contribute an additional 21% of the employee’s salary to social security. The German Social Security System has 7 components. Contributions to the following 4 of these insurances are shared equally between the employee and the employer:

    • unemployment insurance
    • nursing care insurance
    • pension insurance
    • health insurance

Contributions to the further 3 insurances in the Social Security System are covered by employer contributions only.

    • accident insurance
    • maternity insurance
    • insolvency insurance

In Germany, social security contributions have a maximum limit. In 2021, the monthly maximum amount was set at €7,083 in West Germany and €6,667 in East Germany for statutory pension and unemployment insurance. For statutory health insurance it was set at €4,837.

It is common in Germany for employers to provide additional insurance benefits beyond those provided by the Social Security System.


Any bonuses or commissions provided by employers is discretionary and will depend on the job role and the company.  In Germany, there is no compulsory 13th or 14th month salary payment.

Additional Benefits and Expectations in Germany

Additional benefits are often provided by companies. The nature of these benefits depends on the industry, the employer agreements, and the company culture.

Termination / Severance in Germany

In Germany the termination of a contract can be complicated and there are many factors to consider.

A minimum notice period of 2 weeks must be provided in the event of a standard dismissal. This notice period is extended with the length of employment as detailed below.

During probationary period (maximum duration of six months): two weeks’ notice.

    • After or without probationary period: four weeks’ notice, effective at the 15th or the end of a month.
    • After two years’ service: one month’s notice, effective at the end of a month.
    • After five years’ service: two months’ notice, effective at the end of a month.
    • After eight years’ service: three months’ notice, effective at the end of a month.
    • After ten years’ service: four months’ notice, effective at the end of a month.
    • After 12 years’ service: five months’ notice, effective at the end of a month.
    • After 15 years’ service: six months’ notice, effective at the end of a month.
    • After 20 years’ service: seven months’ notice, effective at the end of a month.

Full salary is payable during the notice period, as well as the opportunity to work. If there is reasonable cause, an employee can be placed on garden leave. In Germany, payment in lieu of dismissal is not permitted. 

If there is a mutual agreement between employer and employee is it possible to waive the notice period. However, in this situation the employees unemployment benefits will be negatively affected.

A termination with justified cause can have immediate effect and terminate the employment relationship immediately. However, it can be difficult for the employer to prove a termination is justified. Any termination must comply with the Dismissal Protection Act. 

Employees have the right to claim unfair dismissal. Whether the dismissal is deemed valid or not, there is no statutory obligation to pay severance in the case of an individual dismissal. However, if an employee was made redundant or in the instance of collective dismissals, the individual circumstances will have an impact on the obligation to pay severance.

As such, in Germany, employers and employees typically agree on a severance payment.  These severances are often in the range of half a month’s salary per year of employment. The amount of the severance payment can vary depending on the strength of the reason for termination.

It is not unusual in Germany for employment contracts or Work Agreements and Collective Bargaining Agreements (CBAs) to provide for more favorable termination periods.

Why Project Recruit?

Your skills and talent needs are our priority. We take the time to understand your needs, your culture, and your priorities.

Experience a seamless and efficient recruitment process. Remain informed at every step of the way. Rely on our Global Payroll Management service for efficient payroll, onboarding, time, and expense management.

The service provides sourcing, vetting, referencing, and full background checks. We support you with engagement onboarding and induction to make your hiring process as effective and efficient as possible. You will have informed options of permanent, temporary, or contract engagement. All clearly explained and with total transparency. 

You can rely on our international team to help organise, pay and hire workers around the world. We assist your business by providing an efficient payroll, onboarding, time and expense management as well as providing workers with consistent and reliable payments.

Whether you are managing a team of international freelancers or salaried staff we can help. We manage the entire freelance contracting process ensuring compliance with local and international legislation. We provide employer of record (EOR) services taking care of the necessary local payroll, employment and HR tasks. This leaves you free to focus on business as usual. Our service is tailored to you and your workers’ needs every time. So please contact us to discuss further how we can help.