Germany
So you’ve found some great talent in Germany, but maybe a little less sure how you’re supposed to go about it? You’re in the right place. In the next few minutes, you’ll learn how to hire remote talent in Germany, quickly, without wading into months and thousands of dollars of legal red tape.
Country snapshot
CURRENCY
Euro (EUR)
EMPLOYER TAXES
20.82%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Kartvelian
It’s the fastest way to hire globally
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It’s a lot cheaper
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
It’s more flexible for you & your team
Can be less risky than hiring employees
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
Some people want to be employees
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
You might not have as much control over your talent
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
Germany’s known for having strict labor laws. If you want to hire someone there, you need to make a choice: Do I hire talent as employees, or do I hire people as contractors?
Hire talent as contractors
Hire talent as employees
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Germany than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Germany.
Employer tax
General Pension
Unemployment Insurance
Health Insurance
Additional Statutory Health Insurance
Care Insurance
Accident Insurance
Paid Time Off (PTO)
PTO is calculated by the:
- Minimum of 20 working days (with respect to a 5-day working week). Most employers grant 25-30 days per year.
- Normally, the employee must use his vacation days during each calendar year. Unless otherwise stated by the employer, the vacation days may be carried over until March 31st of the following calendar year.
- If any unused vacation days are left upon the termination of employment, the employer will compensate the employee for the unused days.
Public Holidays
German holidays differ based on the state. However, there are 9 national holidays that all states follow.
Sick Days
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
- The first 6 weeks of sick leave are covered by the employer and are paid at the rate of 100% of the regular salary.
- After 6 weeks, any additional payment will be paid by the health insurance (the amount will not be the full salary and will be determined according to personal criteria).
- Employees must notify their employers that they are ill if they take leave and must submit a doctor’s note if the leave is longer than three days.
Maternity Leave
Mothers are entitled to 6 weeks leave at full pay prior to their child’s birth, and 8 weeks at full pay after birth. In the case of premature or multiple births, 12 weeks of paid leave is permitted after birth.
During such maternity leave, the employer will continue to pay the employee’s salary, and the health insurance company shall fully reimburse the employer.
Paternity Leave
Paternity leave falls under parental leave.
Parental Leave
Parental leave is 36 months and can be divided between the parents as they see fit. The eight weeks of maternity leave (after labor) are counted as part of this leave.
In the case of the mother, the parental leave starts after maternity leave stops. During parental leave, parents can choose to work part-time for up to 30 hours per week.
At least 12 months of parental leave must be taken within the first 3 years after labor – the rest 24 of these 36 months can be taken until the child reaches the age of 8.
Parental leave does not start automatically, it must be requested in writing or submitted to the employer at least seven weeks before the start of the parental leave.
Other Leave
No additional mandatory leave.
Marriage Leave
None.
Bereavement Leave
None.
Termination Process
All employees are protected by the German Termination Protection Act after the first 6 months of employment. The employer should have a specific reason to dismiss an employee, and there are different types of reasons (related to the personal situation of the person to be dismissed, related to the behavior of the person to be dismissed, related to the employer’s business).
A dismissal notice must be in writing and signed by the employer’s authorized representative. Generally, terminating employment in Germany, without the employee’s consent is a complex process, hence many termination processes are made under mutual agreement.
Notice Period
The notice period in Germany should be at least 4 weeks and increases according to the length of service as follows:
- At least 2 years of employment: 1 months’ notice
- 2-5 years of employment: 2 months’ notice
- 5-8 years of employment: 3 months’ notice
- 8-10 years of employment: 4 months’ notice
- 10-12 years of employment: 5 months’ notice
- 12-15 years of employment: 6 months’ notice
- 15-20 years of employment: 7 months’ notice
Severance Pay
Severance payment is not mandatory if a justified reason and proper notice are given for the termination. However, severance payment must be given for termination caused by operational changes.
When severance payment is given, it is a half month of the employee’s regular wage for every year the employee was in the company.
Probation Period
The probation period is up to 6 months and is subject to mutual agreement between both parties.
Working Hours
38-40 hours average per week, up to 48 hours in exceptional cases.
Workdays are typically 8 hours and should not exceed 10 hours.
Overtime
Overtime payment is required when stated in employees’ individual contracts or collective labor agreements. The statutory maximum weekly working time is 48 hours.
The regular daily working time may be extended up to 10 hours, provided that on average 8 hours per working day are not exceeded within a reference period of 6 months or 24 weeks.
%5B1%5D.avif)
Run your global workforce on autopilot with Thera
Book a demo to get started.