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Germany

Introduction
 

General overview & country facts, as well as labour regulations.
Employer Contributions
 

These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Employee Contributions
 

These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Employment Terms
 

All you need to know about salary & bonuses, working hours & overtime, probation period, notice period & severance pay, as well as all leave types.

COUNTRY PLAYBOOK

Germany
Everything you need to know about payroll, benefits & hiring top talent in Germany

Currency

Euro (EUR)

Salary payment frequency

Monthly

Capital

Berlin

Time Zone

GMT +1:00

Official Languages

German

Is English spoken?

Yes
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Introduction

General Overview & Economic Facts
  • Germany (Deutschland), officially known as the Federal Republic of Germany (Bundesrepublik Deutschland), is a country located in Central and Western Europe
  • Germany has the largest economy in Europe, the world’s fourth-largest economy by nominal GDP, and the fifth-largest by PPP
  • As a global leader in several industrial and technological sectors, it is the world’s third-largest exporter and importer of goods
Why Employ In Germany?
  • The main exports from Germany are cars, vehicle parts and pharmaceuticals
  • 42.46% of the population is between the ages of 15 and 24 years, with 15.78% of the population being between the ages of 25 and 39. Germany has a fairly youthful population, making it a favourable country to employ young, energetic employees
Overview Of The Labour Law
  • Employment in Germany is governed by European Union legislation, statutory regulations codified in the German Civil Code and various Federal Acts
  • These Act include the Part-time and Fixed-term Work Act, Employee Leasing Act, Holidays Act, Act on Maternity Protection and the Dismissal Protection Act. Collective labour bargaining agreements and trade unions also play a role
  • German employment law provides strong labor conditions and protections for employees
Fun Country Facts
  • The first printed book was in German
  • The Christmas tree (Tannenbaum) tradition came from Germany
  • Most taxis in Germany are Mercedes
Why Use Playroll Services For Germany?
  • Employing in Germany requires companies to have their own legal entity in the country as well as to manage payroll, employee benefits, taxes and legal compliance
  • This can get quite complicated, especially with the complexity of employment laws in Germany. With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country
  • We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing a thriving team
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Employer Contributions

These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.

Unemployment Insurance Fund

Old Federal states (West Germany)

Calculated on a maximum salary of EUR 84,600.00 per year

1.20%

New Federal States (East Germany)

Calculated on a maximum salary of EUR 81,000.00 per year

1.20%

Pension Fund

Old Federal states (West Germany)

Calculated on a maximum salary of EUR 84,600.00 per year

9.30%

New Federal States (East Germany)

Calculated on a maximum salary of EUR 81,000.00 per year.

9.30%

Government Health Insurance (GKV)

Calculated on a maximum salary of EUR 58,050.00 per year

If an employee earns more than the maximum salary, they can elect to have private health insurance

Old Federal states (West Germany)

7.30%

New Federal States (East Germany)

7.30%

Supplementary Insurance

Varies by health insurance provider

±0.80%

Accident Fund

Varies by industry 

Long-Term Care Insurance
Calculated on a maximum salary of EUR 58,050.00 per year.

Employees with children

1.53%

Employees without children

1.53%

Employees resident in Saxony

1.025%

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Employee Contributions

These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.

Unemployment Insurance Fund

Old Federal states (West Germany)

Calculated on a maximum salary of EUR 84,600.00 per year

1.20%

New Federal States (East Germany)

Calculated on a maximum salary of EUR 81,000.00 per year

1.20%

Pension Fund

Old Federal states (West Germany)

Calculated on a maximum salary of EUR 84,600.00 per year

9.30%

New Federal States (East Germany)

Calculated on a maximum salary of EUR 81,000.00 per year

9.30%

Government Health Insurance (GKV)

Calculated on a maximum salary of EUR 58,050.00 per year

If an employee earns more than the maximum salary, they can elect to have private health insurance

Old Federal states (West Germany)

7.30%

New Federal States (East Germany)

7.30%

Supplementary Insurance

Varies by health insurance provider

±0.80%

Long-Term Care Insurance
Calculated on a maximum salary of EUR 58,050.00 per year

Employees with children

1.53%

Employees without children

1.88%

Employees resident in Saxony

2.025%

Income Tax
Income Tax is ‘Pay As You Earn’

Income bracket per annum

Single employee’s  

0.00 – 9,744.00  
0.00% 

9,745.00 – 57,918.00  
14.00%

57,919.00 – 274,612.00   
42.00% 

274,613.00 or more 
45.00% 

Income bracket per annum

Married employee’s  

0.00 – 19,448.00 
0.00% 

19,449.00 – 115,836.00 
14.00% 

115,837.00 – 549,224.00 
42.00% 

549,225.00 or more 
45.00% 

Solidarity Surcharge

Single employees

Calculated on income tax

0.00 – 16,956.00 per year
0.00%

16,956.00 – 96,802.00 per year
Sliding scale

96,802.00 and more
5.50%

Married employees

0.00 – 33,912.00 per year
0.00%

33,912.00 – 193,641.00 per year
Sliding scale

193,641.00 and more
5.50%

Church Tax
Calculated on income  tax

Bavaria and Baden-Wuettemberg
8.00%

Other states
9.00%

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Employment Terms

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General

Minimum Wage
  • EUR 1,621.00 per month
Working Hours
  • Maximum of 48 hours per week and 8 hours per day
  • Employees are entitled to a break of at least 30 minutes, if the total working time is between 6 and 9 hours. If the total working time is 9 or more hours, employees are entitled to a 45 minute break
  • Typical working hours are 09h00 to 17h30
Overtime
  • Maximum working hours of 60 hours per week
  • The average number of hours worked over a 6 month period may not exceed 48 hours per week
Notice Period
  • Employed between 0 and 24 months- 4 weeks
  • Employed between 24 and 60 months- 8 weeks
  • Employed between 60 and 96 months- 12 weeks
  • Employed between 96 and 120 months- 16 weeks
  • Employed between 120 and 144 months- 20 weeks
  • Employed between 144 and 180 months- 24 weeks
  • Employed between 180 and 240 months- 28 weeks
Severance Pay
  • There is no statutory severance pay
  • The severance will often amount to 50% of the monthly salary per year of service
Probation Period
  • There is no statutory probation period
  • Employees can usually expect a probationary period of 3 to 6 months
Bonus
  • There is no statuory bonus
  • It is common to provide a Christmas bonus
Public Holidays

Public holidays 2022

  • January 1st- New Year’s Day
  • April 15th- Good Friday
  • April 18th- Easter Monday
  • May 1st- Labour Day
  • May 26th- Ascension Day
  • June 6th- Whit Monday
  • October 3rd- Day of German Unity
  • December 25th- Christmas Day
  • December 26th- 2nd Day of Christmas
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Leave

Paid Leave / Vacation Days
  • Paid leave
  • Paid by employer
  • 20 working days per year if the employee works a 5-day work week
  • 24 working days per year if the employee works a 6-day work week
  • Most employers grant between 25 – 30 days per year
Sick Leave
  • Paid leave
  • Paid by employer
  • 6 weeks per year
Maternity Leave
  • Paid leave
  • Paid by employer and Social Security
  • Minimum of 14 weeks per year, 18 weeks per year in the case of a premature birth or multiple births
Paternity Leave
  • Paid leave
  • Paid by Social Security
  • 10 – 25 days for married parents, 20 – 50 days for single parents
Start hiring in Germany today!