How to hire and pay employees in Germany
With Instahirin, your business can easily hire employees in Germany. No more worrying about local laws, complex tax systems, or managing international payroll.
Before hiring
EMPLOYEES IN The Germany
Before hiring employees in Germany, one key thing employers should be aware of is the country’s strict data protection laws under the GDPR. You are legally required to handle employee personal data securely and transparently—especially when transferring it across borders. Failing to comply can result in severe penalties, so it’s essential to understand these rules before making an international hire.
Another critical factor is understanding Germany’s employee benefits and labor laws. Employers are expected to provide contributions to health insurance, pension, unemployment insurance, and long-term care insurance. In addition, employees are entitled to paid vacation, sick leave, and strong job protection. Germany also has a strong culture of collective bargaining and co-determination, which means employee representation (like works councils) plays an important role in workplace decisions.
At a glance
CURRENCY
Euro (EUR)
OFFICIAL LANGUAGE
German
PAYROLL FREQUENCY
Monthly
EMPLOYER TAXES
22.0% to 22.5%
of gross salary
13th / 14th SALARY
N/A
Good to know
Germany has a universal multi-payer healthcare system. Employees are automatically enrolled in public health insurance (Gesetzliche Krankenversicherung), with contributions split between employer and employee. Higher earners can opt for private health insurance. Employers may subsidize private plans for added benefits.
The standard workweek is up to 48 hours (8 hours/day over 6 days), but most full-time jobs are 35–40 hours/week. Overtime is regulated, and total working hours must not exceed 48 hours per week on average over 6 months. Sunday work is generally prohibited, and rest time of 11 hours/day is mandatory.
Labor laws in The Germany
Working hours and overtime
Under the Working Hours Act, daily working hours must not exceed eight hours. Based on six working days per week, employees can't exceed 48 hours per week.
Employment contracts
When employing an individual in Germany, the terms of employment are usually agreed to in a written employment agreement. Except for fixed-term employment and non-compete obligations, which must be in writing, verbal agreements are permissible but not recommended.
Probationary period
Probationary periods in Germany are fairly common. They usually last no longer than six months but are not required by statute.
Calculate costs to hire internationally
Benefits and leave in The Germany
Annual leave in Germany
Under the Federal Holiday Act (Bundesurlaubsgesetz), the minimum annual leave entitlement is 20 days issued upon a five-day working week and 24 days issued upon a six-day working week. However, most employers usually give between 27 and 30 days of annual leave in Germany.
Sick leave
The Continued Remuneration Act (Entgeltfortzahlungsgesetz) grants employees six weeks of statutory sick pay upon four weeks of employment. Employers with fewer than 30 employees can apply to the employers’ cost-sharing fund (Aufwendungsausgleichsgesetz), where they can recover sick pay.
Parental leave
Maternity protection is for employees who are pregnant or breastfeeding a child. This includes the protection of health in the workplace combined with a right to working conditions that are appropriate for maternity care, protection against dismissal, and income protection.
The maternity leave period in Germany is the time during which employees are not allowed to work before and after birth. This usually begins six weeks before the expected due date and ends eight weeks after the birth.
Employers must allow employees to leave for medical examinations related to pregnancy. Employers are not able to reduce wages or salary for this leave.
Until the child’s first birthday, employers must give employees time off to breastfeed if they wish.
In addition to maternity leave, both female and male employees are entitled to take a supplementary parental leave up to each child’s third birthday. The employee and employer can agree to transfer up to 24 months of parental leave up to the child’s eighth birthday.
Holidays
Germany has 13 public holidays, which are not included in the minimum paid leave entitlement. However, employers generally give their employees all of Germany’s public holidays off work.
Employer tax
In Germany, employer payroll contributions are significant and standardized across most industries. Employers typically contribute about 20%–22% of an employee's gross salary to various social security and insurance programs.
Individual tax
In Germany, individuals pay progressive income tax ranging from 14% to 45%, plus solidarity surcharge and optional church tax, with total deductions (including social contributions) often reaching 35%–45% of gross income.
Termination in The Germany
Terminations in Germany can be complex. There is no at-will termination in Germany for employers, outside the probation period, and termination must be done for just cause.
Notice period
The statutory notice period an employer must observe when terminating employment varies. It can range from two weeks during a six-month probation period to four weeks for employees on passing their probation and up to seven months after 20 years of service. The employment agreement can allow for longer notice periods, and collective bargaining agreements can allow for shorter notice periods.
An employer cannot pay an employee instead of providing notice. If a severe breach of contract occurs, the employer can immediately terminate employment. This immediate termination notice must be served within two weeks of the employer gaining knowledge of what caused the dismissal.
Start hiring employees in
Germany
To start hiring employees in Germany, first ensure your business is properly registered and complies with German labor laws, including contracts and social security registration. Then, post your job openings on popular local platforms like StepStone or LinkedIn, conduct interviews, and set up payroll according to German regulations.
With InstaHirin, you can easily manage HR, payroll, and automate compliance in Germany and 180+ countries all from one user-friendly platform so you can hire quickly and confidently without setting up a local entity.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While InstaHirin yster strives to provide current and accurate information, InstaHirin makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
