Employer of Record in Germany

Business growth into Germany is simple and hassle-free with Employer of Record Germany (EOR) solutions. Without the need to establish a separate legal organisation, businesses may employ extraordinarily skilled workers in Germany thanks to our innovative HR platform. By taking care of payroll management, tax preparation, and other legal requirements, it accelerates the process of hiring and onboarding a remote crew. Find out more about us by scheduling a demonstration right away.

Overview of Germany

• Estimated Population: 83 million
• Currency: EUR Euro
• Capital: Berlin
• Languages frequently used: German, English, French
• GDP: USD 3.86 trillion

Employment Landscape in Germany

Germany has constructed a thorough collection of labour laws that include many different facets of employment, such as prohibitions on discrimination, provisions for maternity benefits, minimum wage rules, and policies governing working hours. Local businesses operating within the nation strictly abide by these restrictions.

These labour regulations are equally relevant in Germany when hiring foreign nationals. However, there are extra rules that apply exclusively to foreigners looking for work in Germany. It is essential to remember that these laws are less restrictive and nondiscriminatory than those in a number of other nations. Foreign nationals have a right to similar advantages as German citizens have.

It might be difficult to navigate and grasp Germany’s complex labor and employment regulations. As a result, working together with an Employer of Record (EOR) may be quite beneficial when growing your business into Germany. You may receive the essential assistance from our team of subject matter experts to help you comprehend German labour regulations. Please get in touch with us if you need any more help.

Some of the provisions of Employment Laws to note before hiring in Germany are as follows:

Title	Explanation
General Equal Treatment Act	Employers are prohibited from discriminating against workers or applicants on the basis of race, ethnicity, sex, gender, religion or philosophical views, handicap, age, or sexual orientation.
Part-Time and Limited-Term Employment Act	The law specifies the conditions and legal prerequisites for temporary employee hiring. period.
Continuation of Remuneration Act	An employee may request continuing compensation for up to six weeks if they have been employed for at least four weeks and are unable to work for medical reasons that are not their fault.
Minimum Wage Act	All workers in Germany are required to be paid a minimum wage of EUR 8.50 per hour by law.
Employee Protection and Anti-discrimination Rights	People are protected against discrimination in the workplace on the basis of gender, colour, religion, political opinion, national origin, national extraction, and other criteria by the Australian Human Rights Commission of 1986. Additionally, some of the above listed restrictions are covered under the Fair Work Act of 2009.
Protection Against Unfair Dismissal Act	Companies with more than ten workers are required to give a justification for the termination of an employment contract or the firing of an employee.
Minimum Vacation Act for Employees	The legislation mandates that employees receive a minimum of 24 working days of vacation or holidays per year.
Works Constitution Act	The employer-employee relationship is governed by the German constitution’s act. It enables staff members to take part in social, financial, and personnel matters.

Timings, Holidays, And Leave Policies In Germany

Entitlements	Explanation
Statutory Working Hours	In Germany, a typical workweek is 48 hours long, with a daily maximum of 10 hours.
Rest period	A worker is not allowed to labour continuously for longer than six hours. If an employee works between six and nine hours, a break must last at least 30 minutes; if they work more than nine hours, the break must last 45 minutes.
Public Holidays	German employees are entitled to nine public compulsory Public Holidays: New Year’s Day Good Friday Easter Monday Labor Day Ascension Day Whit Monday Day of German Unity Christmas 2nd Day of Christmas Other public holidays are decided as per the jurisdiction you are a part of.
Maternity leave	German law permits a maternity leave of six weeks prior to childbirth and eight weeks following it.

Contractors Vs. Full-time Employees

Germany has established a robust legal framework that distinguishes between independent contractors and full-time employees. Various methods, including court rulings and assessments by independent entities, are employed to determine the classification of individuals in terms of their employment status.

German laws exhibit a remarkable level of employee protection, offering generous provisions for workers. The legal system recognizes and regulates different work patterns, ranging from limited-duration contracts to part-time and full-time employment, with separate rules governing each category.

When an individual enters into an employment contract with a company, it is essential to clearly define the nature of the work involved. If the employment is full-time and not bound by a specific time frame, the employer cannot terminate the employee without valid grounds. By default, employment contracts in Germany are assumed to be indefinite in duration. However, if a specific period of employment is stipulated, the contract can be terminated without notice upon its expiration. The maximum duration for fixed-term contracts in Germany is two years.

It is important to navigate the intricacies of German labour laws to ensure compliance and protect the rights of both employers and employees. Seeking expert guidance can be beneficial in understanding and adhering to the specific regulations that apply to your particular circumstances.

Scope of Negotiating Terms

In Germany, there are two possible areas of bargaining. Employees may bargain individually with their employers about pay and benefits, and employee or worker groups may bargain collectively with employers. Most of the time, talks take place one-on-one between the company and the potential employee, particularly when it comes to higher-level positions and jobs that need hiring certain individuals. Age of the employee is one factor that affects the negotiation since it might be challenging for older employees to locate new positions.

The production industry, where more people are employed, is where most negotiations between employee or worker groups and companies take place. These employee groups bargain over every aspect of their employment, including pay, perks, and working hours. In addition to the legally required leaves, they have the option of negotiating other types of leaves.

Recruiting in Germany

With the widespread availability of internet access across the globe, the recruitment process has become increasingly similar in most countries. It begins with the company identifying the need to hire new employees and confirming that existing staff cannot fulfil the specific requirements.

Once the need is established, a comprehensive job description is crafted. This document undergoes multiple iterations and revisions before being published on various job portals and platforms. In Germany, LinkedIn serves as a popular avenue for job advertisements, although other platforms such as  monster,europa , and even the Federal Employment Agency are also utilised.

Once the application period ends or a sufficient number of applications are received, the HR team initiates the process of screening and shortlisting candidates. Shortlisted applicants then proceed through a series of rounds and interviews to assess their qualifications and knowledge base for the job.

In today’s digital age, a significant portion of the hiring process takes place through online portals, particularly for corporate positions. Online hiring streamlines the candidate search, as potential candidates actively seek out job opportunities. These candidates often possess considerable talent and qualifications.

However, one challenge of online job advertising is the large volume of applications received. Sorting through hundreds of applications can be a daunting task, even with a sizable HR workforce. This is where the expertise of an Employer of Record (EOR) becomes invaluable. Our company specialises in the laws and regulations of Germany, making the process of expanding into a new country considerably smoother. We handle essential tasks such as payroll management, employee record keeping, and compliance, allowing you to focus on more significant aspects of your expansion efforts.

Probation & Termination

In Germany, there are no specific laws that directly address the issue of probationary periods. As a result, employers have the flexibility to determine the duration of probation for newly hired candidates. Typically, the probation period in Germany can range from three months to as long as a year.

German labour laws provide protection to employees against unjust termination by their employers. If an individual has been employed by a company for more than six months and the company has more than ten employees, the termination of the employment contract must be based on valid reasons. Termination can also occur when the specified period of the contract expires, when notice is given by either the employee or the employer, or by mutual agreement between both parties.

When an employer decides to terminate an employee, it may be due to the employee’s behaviour or certain unavoidable circumstances within the company that necessitate a reduction in the workforce. Redundancy can also be a valid reason for terminating employment.

It is important for both employers and employees in Germany to be aware of the legal requirements and provisions surrounding termination of employment. Seeking legal counsel or expert advice can ensure compliance with labor laws and protect the rights of all parties involved.

EOR Solution

Expansion of a business is a drawn-out process that needs careful preparation, particularly when doing it internationally. Although it is difficult and may take many months to complete, you may hasten the growth process by using the EOR way when employing staff in Germany. Employer of Record Germany (EOR) solutions may greatly simplify and speed up your business development in Germany. Our extensive network and technologically advanced HR platform guarantee that your workers’ job-related obligations in Germany—such as monthly payroll, work permits, employment contracts, and taxation—are managed in accordance with local labour rules.

Types of Visas in Germany

Visa Category	Explanation	Duration
Tourist Visa	A tourist visa is required for short-term visits from nationals of countries other than those with whom Germany has visa-free agreements.	Up to three months.
Business Visa	Except for citizens of exempt nations, this visa is intended for foreign nationals travelling to Germany on business.	Up to 90 days.
Work Visa	The German work visa is intended for those who wish to work in Germany for pay.	As long as your job contract specifies, up to four years

Work Permits

There are no specific work permits available in Germany that allow foreign nationals to begin or continue working there. The only option for a foreign individual to work in Germany is with a work visa, which you may apply for at the German embassy or consulate closest to you.

Payroll & Taxes in Germany

Different laws and regulations apply to taxes and payrolls in various nations. These are crucial components of your international expansion and need to be thoroughly explained by legal professionals. Your EOR partner may offer this kind of knowledge. Our business provides EOR solutions to assist you handle payroll and taxation while cutting down on the time it would take you to decide the format of your employment contract.

Payroll Details

Process	Details
Tax ID	To complete payroll, all businesses must get the tax account number of each employee. At the federal level, it is through this number that employees’ personal income taxes are identified.
Choosing a Payroll System	The selection of a payroll system depends on the availability of healthcare facilities, social security, and other legal requirements.
Basic Employee Information	The employee record must contain all information about your personnel. This can help you comply with legal requirements while also streamlining a number of office procedures.

Taxation in Germany

Tax	Explanation
Income tax rate	The income tax system in Germany is based on a system of slabs. This implies that rather than taxing the total income, only the difference between one tax level and the next is taxed. income. Taxable Income Rate 0 – EUR 9409 No Tax EUR 1450 – EUR 14532 14% – 24% EUR 14533 – EUR 57051 25% – 42% EUR 57052 – EUR 270500 42% EUR 270500 and over 45%
Financial Year End date	31st December
Corporate tax	30%
Social Security rate	40%
Social Tax	20%
Sales Tax	State and Central GST ranging from 0% to 28%
Employer Contribution Towards Social Security	20.33%
Employees’ Contribution Towards Social Security	19.68%

Germany has long been known as a country that embraces businesses of all kinds. Establishing a subsidiary in Germany can be a straightforward process if you are familiar with the local laws and regulations.

To begin, you will need a registered address or business domicile in Germany in order to apply for registration. During the registration process, you will be required to select the type of company and choose a unique name for your business.

Next, you will need to approach the nearest local or regional court to register your entity. During this registration, you will be asked to provide certain documents that demonstrate your identity as the owner and the legitimacy of your business. Additionally, it is necessary to register your company with the tax office.

Navigating the intricacies of German company laws can be simplified with the assistance of our team, who possess extensive experience in this field. By leveraging our expertise, you can streamline the process of setting up a subsidiary in Germany, ensuring compliance with local regulations and facilitating a smooth establishment of your business presence