Table of Contents
Introduction
Key Considerations for Employing in Germany
Benefits
Employment Contracts
Onboarding
Leaves
Payroll & Taxes
Termination Process
Invoice Schedule
Get Started with Omnipresent
1. Introduction
Hiring employees in Germany requires compliance with strict labor laws and regulations. Omnipresent’s Employer of Record (EOR) service ensures that businesses meet all employment, payroll, and benefits obligations in Germany.
2. Key Considerations for Employing in Germany
Currency: Euro (€)
Language: German
Employer Costs: High (~20-25% of salary)
Termination Complexity: High (strict labor protections)
Onboarding Timeline: Approximately 15-20 calendar days
Payroll Frequency: Monthly
3. Benefits
Types of Benefits Offered
Mandatory Benefits: Public healthcare, pension contributions, unemployment insurance, workers’ compensation.
Supplementary Benefits: Private healthcare, additional pension schemes, life & disability insurance.
Healthcare
Public healthcare (Gesetzliche Krankenversicherung - GKV) is mandatory for employees earning below a salary threshold (~€66,600 in 2023).
Private healthcare (Private Krankenversicherung - PKV) is optional for higher earners.
Employers must contribute 50% of healthcare premiums.
Retirement
State Pension (Deutsche Rentenversicherung): Mandatory contributions shared between employer and employee.
Company pension plans (Betriebliche Altersvorsorge - bAV): Optional but common.
4. Employment Contracts
Contract Types
Indefinite-term contracts (Unbefristeter Arbeitsvertrag)
Fixed-term contracts (Befristeter Arbeitsvertrag, max 2 years)
Part-time contracts
Requirements
Written employment contracts are required.
Language: German (bilingual contracts are recommended).
Signature Requirements: Wet ink or digital signature.
Backdating: Not permitted under Omnipresent’s policy.
Probation Period
Maximum probation period: 6 months.
Employers can terminate employment with shorter notice during probation.
Contract Customisation
Optional clauses for customization, such as additional vacation days.
Certain elements cannot be customized due to compliance risks (e.g., restrictive covenants, minimum statutory notice periods).
5. Onboarding
Timeline
The onboarding process in Germany typically takes 15-20 calendar days, including:
Platform Setup
Right-to-Work Check
Employment Contract Processing
Benefits & Payroll Enrollment
Registration & Approvals
Employers must register employees with the German Social Security System.
Immigration & Visas
Omnipresent can support visa sponsorship.
EU citizens do not require work permits.
Right-to-Work Verification
Employers must verify work authorization before employment begins.
Employee Transfers from Another EOR
Transfers require careful compliance assessment and should be reviewed case-by-case.
6. Leaves
Leave Entitlements
Annual Leave: Minimum 20 days (for a 5-day workweek) under German law. Many employers offer 25-30 days.
Annual Leave Carryover: Generally not allowed, unless due to special circumstances (e.g., sick leave).
Maternity & Paternity Leave
Maternity Leave (Mutterschutz): 6 weeks before and 8 weeks after birth (100% salary paid by statutory health insurance).
Parental Leave (Elternzeit): Up to 3 years unpaid leave, with the option of parental allowance (Elterngeld).
Public Holidays
Varies by federal state (Bundesland) (9-14 public holidays per year).
Sick Leave
Employers must pay full salary for the first 6 weeks of illness.
After 6 weeks, statutory health insurance covers up to 70% of salary.
7. Payroll & Taxes
Payroll Cycle
Frequency: Monthly
Cut-off Date: 15th of each month.
Payment Date: Last working day of the month.
Compensation
No mandatory bonuses.
Christmas bonuses (Weihnachtsgeld) and vacation pay (Urlaubsgeld) are common but not required.
Minimum Wage
As of 2023: €12 per hour (subject to annual review).
Standard Work Schedule
40 hours per week, Monday-Friday.
Maximum workweek: 48 hours (including overtime regulations).
Employer Costs
Estimated 20-25% of salary. Use the OmniCalculator for a detailed breakdown.
8. Termination Process
Notice Period
Minimum statutory notice (depends on tenure):
0-6 months: 2 weeks
7 months - 2 years: 1 month
2-5 years: 2 months
5+ years: 3 months
Termination Grounds
Strict labor protections apply.
Employers must provide valid reasons for dismissal (e.g., misconduct, redundancy).
Severance Pay
No mandatory severance unless specified in Collective Bargaining Agreements (Tarifvertrag).
Typical severance formula: 0.5 months' salary per year of service.
9. Invoice Schedule
Initial Fees
Setup Fees: Due upon signing Terms.
Deposit: Payable when the local employment contract is ready for signature.
First Salary Prepayment: Invoiced on the first day of employment.
Ongoing Monthly Payments
Labour costs invoiced monthly in arrears after payroll calculations.
Each invoice includes:
Monthly service fee
Deposit insurance (if applicable)
FX fee (if applicable)
10. Get Started with Omnipresent
We simplify international hiring, legal compliance, payroll, benefits, and more. Contact us to start your journey towards hassle-free global employment.