Our Locations
Germany
Managing compliant employment and expanding your business in Germany can be particularly challenging.
To help you address these complexities, here is an overview of essential information in Germany, from employee benefits to tax rates.
Expanding into Germany
Key facts
Contract Types
There are various types of contracts in Germany including Permanent, Fixed term, Recruitment agency contracts (for a maximum of 18 months) Freelancer, and mini job (low paying and minimal hours’ jobs). All contracts must be in writing and include a German translation. Fixed Term contracts can only be renewed 3 times, for a maximum total length of 2 years without a valid reason. Valid reasons would be e.g., replacement for maternity cover. Note that in Germany contracts must not be electronically signed and original signed contracts must be physically sent for counter signature.
Probation
Maximum 6 months, subject to mutual agreement between both parties.
Working Hours
35-40 hours per week, with a maximum 48 hours per week. A requirement to track employees’ hours has recently been introduced.
Overtime
Not regulated by law but by the appropriate Collective Bargaining Agreement. Overtime conditions must be stated in the contract; maximum 48 hours per week or 10 hours per day.
Other Financial
Common additional perks are bonus or commission programmes which are discretionary and on top of salary. There is no mandatory 13th or 14th month salary payment. The actual day for paying salary is determined in the contract but is usually at the end of the month.
Corporation Tax 2024
15% + solidarity surcharge of 0.825%
Plus, trade tax of 7% to 17% depending on location of business.
Consumption Tax:
19%
Employers’ Social Security
7.3% health insurance plus an additional supplement of 1.7% on average, 9.3% pension insurance, 1.23% unemployment insurance, nursing care insurance 1.7%
Employees’ Contributions
7.3% health insurance, 1.525% long-term care insurance, 9.3% pension insurance, 1.2% unemployment insurance.
Income Tax Rates
Tax free allowance: To 11,604 – 0%
Lower rate: 11,604– 66,760 – 14-42%
Higher rate: 66,760 to 277,825 – 42%
Top rate: Over 277,825 – 45%
The rates above are for single people; there are higher thresholds for married couples. Church tax of 0% to 9% may also be payable by individuals and surcharges on income tax may also be made.
Notice
Notice runs from the 1st or 15th of the month
The applicable notice period rises with tenure:
- During probation – 2 weeks
- Up to 2 years’ service – one month
- Five years – two months
- Eight years – three months
- Ten years – four months
- Twelve years – five months
- Fifteen years – six months
- Twenty year – seven months
Dismissal
A termination agreement with a severance payment in lieu of notice is possible. This requires the agreement of both parties. However, should the employee receive more than 50% of a month’s salary for each year of service then they will not be entitled to unemployment benefit.
The German Dismissal Protection Act entitles workers to permanent employment after 6 months. Employees can only be terminated if it is “socially justified”, or by agreement. Thus, significant compensation will need to be offered to gain agreement. It is common to pay 50% to 150% of a month’s salary per year of employment in order to gain agreement to a dismissal. Employees with less than 6 months’ service have no unfair dismissal protection.
Special protection is given under the law to groups who face greater risk of dismissal, e.g., pregnant women and those who are disabled.
During Probation
Allowed with 2 weeks’ notice of termination, unless otherwise stated in the Collective Bargaining Agreement.
Paid Public Holidays
9-12 depending on the region
Public Holiday Days in 2024
January 1st – 1st January
No Day Given in Lieu
Epiphany – 6th January
No Day Given in Lieu
International Women’s Day – 8th March
No Day Given in Lieu
Good Friday – 29th March
No Day Given in Lieu
Easter Monday – 1st April
Day Given in Lieu – N/A
Labour Day – 1st May
No Day Given in Lieu
Ascension Day (Thursday 40 days after Easter) – 9th May
Day Given in Lieu – N/A
Whit Monday – 20th May
Day Given in Lieu – N/A
Corpus Christi (Thursday after Trinity Sunday) – 30th May
Day Given in Lieu – N/A
Assumption Day – 15th August
No Day Given in Lieu
World Children’s Day – 20th September
No Day Given in Lieu
German Unity Day – 3rd October
No Day Given in Lieu
Reformation Day – 31st October
No Day Given in Lieu
All Saints’ Day – 1st November
No Day Given in Lieu
Repentance Day – 20th November
No Day Given in Lieu
Christmas Day – 25th December
No Day Given in Lieu
Boxing Day – 26th December
No Day Given in Lieu
Employees have a legal entitlement of 20 days for a 5 day work week or 24 days for a 6-day working week. Most employees are given 25 to 30 days.
Carry over permitted
Carry over of statutory holiday (ie the first 20 days of leave) is allowed until 31 March of the following year. This is lost if not taken; however the employer has to give good notice in writing that leave should be taken at the end of the year and at the end of the carry over period. Failure to do so will result in the leave entitlement remaining. Leave above the statutory 20 days cannot be carried over. Statutory leave is considered to be used first.
Other
Can take full annual leave after 6 months
Payment in lieu allowed
No, only compensated for upon termination. Residual leave must be compensated in cash after termination of employment if it cannot be taken in kind.
Sick
Employees are entitled to 6 weeks at 100% of salary which is funded by the employer. Thereafter a reduced amount is paid by the employee’s health insurance. The employee receives 70% of gross salary, but not more than 90% of net salary for up to 78 weeks in 3 years for sickness caused by the same illness. There is no entitlement to sick pay until after 4 weeks’ service.
Maternity
Mothers are entitled to 14 weeks’ maternity leave for single births and up to 18 weeks for multiple births or those with complications. She can take 6 weeks before and 8 weeks after the birth and this is paid by the employer and partially reimbursed by health insurance.
Paternity
Employees are generally entitled to one paid day on the occasion of the birth of a child, unless otherwise agreed in the contract. However, during 2024 the law is expected to be changed to provide a mandatory 10 days. A birth certificate is required.
Parental
36 months’ leave can be divided between the parents. The 8 weeks post birth maternity leave are included in this leave. Of this parental leave, 12 months has to be taken before the child is 3. The remainder is available until the child is 8 years of age. This leave must be applied for 7 weeks in advance in writing and is paid at a capped rate for 12 months by social security.
Medical
Private medical benefits are very rarely offered except amongst the largest employers, though prevalence is increasing. Where offered such plans will provide supplementary benefits over the statutory health insurance, eg dental, specialists, preventive check ups and superior accommodation.
Life
Death in service is usually provided through the company pension
scheme. All multinationals and leading employers provide short term sickness supplementary to the state provision for typically 3 – 6 months. This is self insured. Long term disability benefits are typically incorporated in pension schemes.
Pensions
Multinationals and the majority of other employers provide supplementary retirement benefits through a company pension plan in addition to the state pension provision. Some plans require employee contributions and it is becoming more common for employers to contribute matched contributions. Contributions for a hybrid plan are typically 1.5% to 4% of salary up to the Social Security Contribution Ceiling (SSCC) which is Euro 84,600 pa in the Western states and Euro 81,000 in the East. After the SSCC it is usual for employers to contribute 2% to 9%, sometimes up to 15%. For Defined Contribution plans contributions vary between 2% and 4% with some increasing contributions above the SSCC up to 10%. Pensionable salary does not usually include bonuses.
Employers may offer employees the opportunity to sign up to a BAV pension which has tax benefits. Employers do not have to contribute but most will choose to make contributions.
We make expansion in Germany simple
Employing people compliantly across international borders can be challenging but we make it simple, bringing down barriers and making light work of the complexities. We offer the full range of compliant global expansion solutions so that wherever, whenever and however you want to employ people, we can support you.
EOR Services
Employ people compliantly in 180+ countries – without setting up new entities. We’ll shoulder responsibility as Employer of Record (EOR), making sure all your international employment is fully compliant.
We can also take care of your global HR from multi-country payroll to onboarding and offboarding.
Payroll Solutions
Getting global payroll right is one of the hardest challenges for any business expanding into new countries. We can shoulder this burden, freeing up valuable in-house resource to focus on growing your business.
Consider us an extension of your HR team, ready to answer all your questions large and small.
Global Mobility
Mobilise your people across borders with ease. Relocating to work abroad can feel daunting. But with Leap29 at your side, your employees can feel safe and supported.
We’ll guide your employees through the complexities of working in another country, helping them settle in fast.
Entity Services
Follow the opportunities to grow your business – wherever they take you.
We lighten the load of establishing and managing foreign entities and can help you solve all your entity challenges from running compliant, accurate multi-country payroll to local accounting and financial reporting.
PEO Solutions
Employ international talent wherever and whenever you need it – and enjoy the peace of mind of knowing you’re fully compliant. Our Professional Employer Organisation (PEO) services allow you to focus on growing your business while we handle compliance, multi-country payroll and your global HR.
Support & Advisory
The help you need to make your global growth effortless – trusted guidance and advice on your expansion challenges large and small.
HR Support
When you’re employing people in lots of different countries, answering just a simple query can take a disproportionate amount of time for your in-house HR team. Our HR Support service reduces this burden, saving you time and money and giving you the confidence of knowing your employees are well looked after, whatever their location.
Contractor Payroll
Enjoy compliant contractor payroll that meets all local requirements for tax, social security and employment legislation. We understand the importance of compliant contractor payroll to the success of your business and will pay your contractors on time, every time.
Start hiring today – and onboard within hours.
Pricing
Budget confidently with transparent, competitive fees and no hidden costs.
Want us to shoulder employer liability and take care of your global HR through our EOR solution? No problem. Just want global payroll? You can have that too. Pick the solutions that your individual business needs.
We’re a people business with employee management software, not a software business that works in employee management!
At Leap29 we offer access to the latest technology and software to easily and effectively manage your employees from anywhere in the world.
Our bespoke online portal LeapForward helps ensure a smooth onboarding process, manages monthly payroll and easily facilitates additional bonuses and expenses. By streamlining your processes through our online portal, it will help you attract and retain great talent and take the pain out of payroll management.
Integrated fully with our global EOR services, LeapForward comes at no additional cost to you but is guaranteed to save you time and money whilst simplifying your employee management procedures.
Germany
Expansion Resources
Want to learn more about employment and expansion into Germany?
Check out our Germany resource pages below for more information about the employment market in Germany.
Our Recruitment Services
A global recruitment partner you can trust
We solve global recruitment challenges for businesses large and small. Whether you’re building out a new team, expanding into another country or looking for a confidential executive level hire, you can trust us to deliver.
Need 80 contractors in Brazil? Looking for just one very special permanent hire? Want us to take care of your global HR? It’s all in a day’s work at Leap29.
Whatever and wherever your mandate, we can help.
Permanent Recruitment
Connect with great permanent talent to drive your business forward. We help you find both key strategic hires to lead organisational growth and project specialists to deliver on deadlines and budgets.
Workforce Management
Reduce the complexity of managing workers in different countries and save yourself time, energy and money.
Local expertise, global reach
Employ people compliantly in 180+ countries – with or without your own foreign entities. We can help you set up and manage foreign entities – or act as an Employer of Record. We can also help with multi-country payroll and all your HR management. Wherever, whenever and however you want to employ people, we can help.
180+
Cyprus
Italy
Malaysia
Portugal
France
Belgium
India
New Zealand
Australia
Spain
Talk to an expert today
Whatever stage you’re at in your global expansion journey, we can help.
Contact us today to see how Leap29 can be the trusted partner that supports your global expansion.