Employment Regulations

German employment law appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. Other factors that complicate matters include the differences between regions and an inconsistent approach to adherence to laws in different districts.   For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Germany.

Key Factors to Consider When Employing in Germany:

There are several key areas to be aware of within Germany’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the German laws and rules for both German employees as well as foreign nationals.

Contracts

Germany requires that workers have employment contracts that meet local standards, and companies must have a professional who can draft local employment contracts.

Employee Entitlements

Working on Sundays

Under a five-day week, the average working time is between 35 and 40 hours. The daily productive working time generally may not exceed eight hours. A daily working time of up to ten hours productive working time is possible if, over a period of six months, the average daily working time does not exceed eight hours.

Working on Sundays and public holidays is generally prohibited. However, there are some exceptions

Medical Leave

Sick leave is available after 4 weeks of employment, and may be claimed for up to 6 weeks.

Annual Leave Accrual Entitlement

There are laws that regulate leave periods based on years of service and the type of leave requested.

Employees are entitled to 24 working days of annual leave, plus holidays.

Maternity Leave in Germany

Female employees are entitled to maternity leave throughout the entire pregnancy, as well as 4 months after the birth.

Male and female employees entitled to a maximum of three years’ unpaid parental leave per child. The employer may not terminate the employee, and employees have legal right to work part-time (up to 30 hours per week) during parental leave. After expiry of the parental leave, the employer has to offer an adequate working position to the employee.

Employment Termination

For Employees who have been employed longer than six months, unfair dissmisal protections apply. Employees can only be fired for particular reasons such as misconduct or redundancy. Employees who are on parental leave, handicapped or pregnant can not be fired without government approval.

A minimum of 4 weeks notice is required prior to termination. The notice period increases according to length of service, and after 5 years the notice period increases by one month in the 5, 8, 10, 12, and 15 years of employment.

Termination that adheres to the notice periods is Ordinary Termination.

Extraordinary Termination, which ends the employment contract immediately, may be used for serious misconduct.

Probation Period

Probation periods are permitted up to 6 months in length. During the probation period the employee is entitled to 2 weeks notice of termination.

Pension Requirements

The system of welfare and benefits is complex in Germany, and cover sickness, unemployment, disability and retirement. There are requirements for both employee and employer contribution rates based on a percentage of salary.

The categories of Welfare Contributions include:

  • Pensions: Employer and employee each contribute one-half of the rate of 18.7% of salary
  • Medical Insurance: Employer contributes one-half the premium.
  • Unemployment Insurance: Employer contributes 1.5% of salary and employee also contributes 1.5%