EOR country Germany is among the most developed and advanced economies in the European Union, a status that the country obtained through its industrialized economy and educated population. Despite having mainly been devastated by the Second World War, Germany has remained a strong economy in the past 60 years. Germany is a very sophisticated country compared to other European countries, and it has complex labor laws and progressive HR policies. That being said, working in Germany is not an easy task since you’re required to fulfill numerous conditions and requirements before being able to work in the country properly. In our series of EOR country reviews we made similar observations to other European countries.

kaplan english school in Berlin 0 1024x576 - Employer of Record (EOR) in Germany

German Labor Law

As one of the world’s most advanced and developed economies, Germany has some of the world’s most progressive and sophisticated labor laws that prioritize maximizing worker safety and wellbeing. Some of the guiding principles of German labor law include equal treatment, no forced labor, and gender and ethnic equality in labor employment. The German Federal Legislation, collective agreements, work agreements, and case laws provide the bulk of German labor law. Workers in EOR country Germany are protected against exploitation from employers, guaranteed a minimum wage, and equipped with paid vacations and sick time.

Since Germany is one of the most important members of the European Union (EU), the EU exerts considerable influence over German law, primarily through EU case law. The European Union jurisprudence also has binding power over German law, and EU directives are fully implemented in the country. As a result, you can expect to experience generally liberal but strongly enforced labor laws in EOR country Germany. These labor laws are oriented towards protecting workers, so you can be sure that you won’t be exploited in Germany, even as an international worker. You will also have to carefully maintain your observation of the law to prevent any employment problems.

German Contracts 

According to German contract law, an employment contract must have set conditions, including details on the completion of work, the intended date of the work’s completion, and other information. German contract law also states that if an employee claims ineffectiveness of a limitation from their contract, they must take legal action no later than three weeks after the contract ends. When a labor contract ends in country EOR Germany, both the employer and employee are often required to agree to a probationary period of as much as 6 months. During the probationary period, you can be fired with only a 2-week notice. During continued employment (after probation), the statutory notice period depends on the maturity of the job:

Full-Time/Part-TIme Distribution

There are also rules regarding part-time and full-time employment. For instance, after working for six months, full-time employees are permitted to become part-time employees. Employers can choose whether or not they accept changing an employee’s status to part-time from full-time. Part-time workers are also given preferential treatment if they want to become full-time employees at the same company they worked part-time for. Unequal treatment of part-time and full-time employees is officially banned in EOR country Germany, so your employer cannot discriminate against you if you change your employment status from part-time to full-time.

Germany has progressive tax rates ranging as follows:

Picture 1 - Employer of Record (EOR) in Germany

Social Security contributions are mandatory; costs of approx. 23% are mostly shared between employer and employee. The employee contribution will be deducted from the salary before the payout.

The employer is legally obliged to comply with an employee’s wish for deferred compensation into a pension contribution. However, the employer can decide which type of investment or which method of implementation (e.g., pension fund or direct insurance) he offers to the employee in order to enable the deferred compensation.

Suspension of Contract 

Employers in Germany are permitted to suspend contracts if employees are on a legal strike. When a contract is broken, employers are not obligated to pay employees. If you’re a part of a trade union during the strike, you may receive assistance from your trade union, which will normally provide you with 2/3rds of your regular income. Suppose your employer decides to make lay-offs in their company due to any justifiable reason, like decreased profits. In that case, you can work under work or collective agreements for short-time periods. But, during collective or labor contracts, you will receive reduced wages.

Employment Termination

German labor laws differentiate between ordinary termination, which is given with notice, and extraordinary termination, which is given without any notice. There are numerous Civil Codes and a Protection Against Dismissals Act, but it is only applicable if you’ve been employed for at least six months. Regardless of the type of termination you experience, German labor law reduces your employer’s power to terminate you. For example, you’re legally required to receive a minimum statutory leave period of 4 weeks. The statutory influence is also increased by the number of years you’ve worked in the company. Extraordinary dismissal from employment in Germany is only legally possible when the employer can cite a justifiable reason, like serious misconduct. Your employer will even have to consult a works council when applicable.

Paternity / Maternity Leave

Pregnant women are not allowed to work in the last 6 weeks of their pregnancy and at least for 8 weeks after giving birth. These periods might be longer with multiple or premature births. Also, in some workplaces, pregnant women are not allowed to work in order to protect the unborn child. During these times, the employee will continue to receive her full net salary which the employer and the health insurance will partly pay. The health insurance pays EUR 13 per day during the period and the employer will contribute the difference to the amount of the average net salary (based on the previous three months). The employer can then be reimbursed for the contribution by the health insurance provider. Additionally, parents are eligible to go on parental leave for a maximum of 36 months. For the first 12 months of parental leave the employee will also receive financial support from the government.

Working hours 

The legal working day in EOR country Germany is 8 hours every day except for Saturdays and public holidays. The legal working week is 48, but it can often be between 35 and 38. Daily working times can be extended up to 10 hours a day unless you’re a minor, suffering some specific medical issues, or are pregnant.

Statutory holidays depend on the state an employee works in, but the nationwide holidays are nine days. As of 2021, there are nine countrywide Public Holidays with 1- 5 additional days per district.

PEO partners in EOR country

Professional Employee Organizations (PEO), like Acvian, are global employment organizations that make it possible for ambitious professionals like you to work in great countries like Germany. PEO companies provide you with all the labor information you need, including payroll cost calculator (payroll estimator). These companies will inform you of your payroll cost, help you find employment in countries like Germany, and improve your knowledge of your new country of professional work. Acvian is an outstanding partner PEO for you to work with to get the knowledge and information you need in the German professional field. As an example, use our payroll cost calculator to get the estimated payroll cost there. Additional benefits of working with partner PEO are that they simplify getting you an international worker in Germany, as it does have a complex legal system with a high degree of nuance, and the country has a solid legal system that regulates work. Working with Acvian is one of the best ways for you to understand how the German labor system works.