Our Employer of Record Germany service enables clients to hire employees in Germany without the need to operate a local legal entity there.
FMC Group’s licensed EOR solution lets you hire in 1–2 days, stay 100% compliant with the German Employee Leasing Act (AUG), and keep full operational control of your team – all for a predictable monthly fee.
As an EOR provider, FMC Group hires employees on your behalf and handles payroll, taxes, employee benefits, and ensures compliance with German law, including the strict requirements of the German Employee Leasing Act (AUG). Direct employment and local payroll can lead to legal risks if not compliant with German labor laws.
Without this burden, you can fully concentrate on your core business.
If your local business grows large enough, you can easily transfer the employees to your own subsidiary. It also provides a quick exit strategy if necessary. Using an EOR can mitigate the financial risk until the local business has been sufficiently established.
If your business expansion requires it, you have the option to seamlessly transition leased employees to your own local subsidiary. EOR also offers a straightforward exit strategy when needed. Alongside our solutions in Germany, we provide employee leasing services in more than 50 countries. Our processes guarantee prompt and accurate salary payments, supporting compliance and promoting employee satisfaction.
What truly sets FMC Group apart is our commitment to personal partnerships and expert guidance. While we leverage advanced software tools to ensure efficiency and compliance, we’re not a platform provider. Our experience consistently shows that both our clients and the employees we support genuinely appreciate the direct, human interaction we offer.
We firmly believe that the Employer of Record (EOR) service is all about people, not automated solutions. Our clients and their employees frequently have detailed questions and specific needs that can’t be resolved by technology alone. That’s why they value our responsive, consultative approach so much. It’s an approach built on over 25 years of helping clients navigate foreign markets and more than 15 years of focused experience in hiring employees for them. We’re here to be your knowledgeable and accessible human connection.
We prioritize employee satisfaction as a fundamental aspect of our service. We implement user-friendly digital tools designed to simplify employees’ lives, such as enabling them to easily submit travel expenses through automatic receipt scanning or manage their leave seamlessly online via an app.
However, technology will never replace our personal touch. If an employee encounters an issue, they do not need to open a support ticket or navigate automated systems; they can call us directly and speak to a real person. Every employee matters to us, and we are committed to ensuring they always feel valued, supported, and more than just a number.
1. Getting started:
Schedule a free call with us, and we will guide you through the entire process.
2. Talent selection:
Choose your own candidate or leverage our international recruitment services.
3.Contracting and client onboarding:
We will discuss salary, benefits, contract options, and answer all your questions. After that, we prepare the contracts: A service contract between the client and FMC Group, and an employment agreement (employment contract) between the employee and FMC Group. Employment agreements are the legal documentation required for hiring employees in Germany, ensuring compliance with labor laws and outlining the rights, benefits, and obligations of both employees and employers.u
4. Employee onboarding & administration:
We hire the employee through our German entity with the salary and conditions you have defined. We manage all HR administration, including contracts, payroll, and health insurance, ensuring full compliance with relevant regulations.
5. Employee management:
You maintain functional control over the employees, while we manage employees by overseeing all administrative tasks such as onboarding, payroll, and compliance.
6. Company car (optional) & travel cost:
If your employee requires a company car, we will arrange all necessary steps and deliver the car to your employee’s home. All travel costs can be reimbursed through us, after your approval.
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More InformationThe contractual relationship in an Employer of Record (EOR) arrangement, like with FMC Group, involves two main contracts that define the roles and responsibilities between the client company, the EOR provider, and the employee:
This is a service agreement where FMC Group acts as the legal employer of the employee on behalf of the client. The contract clearly outlines FMC Group’s responsibilities, such as managing payroll, withholding taxes, administering statutory benefits, ensuring compliance with local labor laws, and handling employment contracts and terminations.
Meanwhile, the client retains control over the employee’s daily work, performance management, and operational decisions. This agreement specifies the scope of services, fees, liability, confidentiality, and dispute resolution terms to protect both parties and ensure a smooth partnership.
The employee signs a local employment contract directly with FMC Group GmbH in Germany, which is the legal employer. This contract includes all standard employment terms such as job duties, working hours, salary, leave entitlements, and dispute resolution governed by the local labor laws of Germany. Since FMC Group is the legal employer, it assumes responsibility for compliance with employment regulations, payroll, taxes, and benefits. However, the employee performs their day-to-day tasks for the client company, which manages their workflow and performance.
In summary, FMC Group legally employs the employee and handles all employment administration and compliance, while the client company directs the employee’s daily activities and business objectives.
Onboarding an employee in Germany through FMC Group can be completed very quickly, typically within 1–2 business days once all necessary documents are provided and the employment contract is agreed upon.
The day-to-day management and supervision of employees are handled directly by your team. You retain full control over task assignments, performance monitoring, and operational direction, ensuring your employees remain fully integrated with your business objectives.
Employees register their travel costs using our dedicated expense management software. Each expense submission includes a summary sheet and copies of all relevant receipts. These are sent by your employee to you for review and approval. Once you approve the expenses, FMC Group processes and pays out the reimbursements promptly to the employee.
All leave requests are submitted by employees through our HR software platform. Employees send their requests directly to you for approval. After you grant approval, FMC Group finalizes the leave in the HR system and ensures accurate tracking. We also monitor leave balances and provide you with regular, transparent reports on leave usage.
For any salary adjustments or bonus payments, your team simply informs FMC Group of the approved changes, with the employee’s salary serving as the basis for calculating these adjustments and related benefits. We then handle the implementation and ensure that all payments are processed accurately and in a timely manner. This structured approach ensures clear communication, efficient HR administration, and full compliance, while you maintain control over your team’s daily activities in Germany.
Germany is part of the European Union. Citizens of European Union states can work in Germany without needing a visa or work permit.
Citizens of non-EU countries are required to obtain a work permit. The process for obtaining a work permit varies depending on the employee’s job profile and nationality.
The portal “Make it in Germany” provides an overview of various visa types. For candidates with an academic qualification, the EU Blue Card is often a suitable option.
The total cost of employment is calculated based on the employee’s gross salary. German employees are typically paid monthly.
German employees must be registered with the German social security system. Contributions to these benefits are shared equally between the employer and the employee. The components of the social insurance system in Germany are:
Social security contributions are automatically deducted through the monthly payroll.
The mandatory social security contributions make up a substantial part of the total cost of employment.
| Contribution Type | Employer Share (2025) | Employee Share (2025) |
|---|---|---|
| Pension Insurance | 9.3% | 9.3% |
| Health Insurance | 7.3% + 1.45%* | 7.3% + 1.45%* |
| Long-Term-Care Insurance | 1.8% | 0.8-2.4% |
| Unemployment Insurance | 1.3% | 1.3% |
| Accident Insurance | 1.2–3% (industry-specific) | 0% |
*Health insurance includes a provider-specific supplementary rate.
You can find more details in our summary on Understanding the Total Cost of Employment in Germany
Statutory health insurance (GKV) is a core pillar of the German social security system, providing healthcare coverage to approximately 90% of the population. It primarily covers employees, retirees, and trainees, provided they do not exceed certain income thresholds or have alternative insurance arrangements.
Employees, retirees, and trainees with an annual income below €73,800 (in 2025) are mandatorily covered by the GKV. Other groups, such as students and those receiving social benefits, are also included.
Employees earning above the annual threshold (€73,800) can choose to opt out of GKV and enroll in private health insurance. In such cases, employers provide the equivalent contribution directly to the employee.
Insured individuals can freely select their statutory health insurance provider and switch providers annually for potential advantages in contributions or extra services. As of January 1, 2025, there are 94 statutory health insurance funds (Krankenkassen) operating in Germany.
Optional benefits in Germany depend on the industry and the job profile, e.g. performance bonus, 13th salary. We have summarized them in our Benefits Guide Germany for you.
Full-time employees typically work 35 to 40 hours weekly (Monday to Friday). The limit is 8 hours per day, 6 days per week (Monday-Saturday). Working on Sundays and on public holidays is permitted in exceptional cases only.
Working up to 10 hours on certain days is possible, but overtime must be compensated by time off. On average, 8 hours per day must not be exceeded over a six-month period.
Employers are generally required to record their employees’ working hours.
The statutory minimum wage in Germany is €12.82 as of January 2025. The minimum wage serves as a critical benchmark for employer compensation strategies, ensuring fair pay and compliance with labor laws.
Depending on the federal state, employees in Germany benefit from 10 to 12 public holidays per year.
In Germany, the statutory minimum paid leave is 20 days for a 5-day workweek and 24 days for a 6-day workweek. However, most full-time employees typically enjoy between 25 to 30 days of paid leave per year.
In the event that an employee is absent from work for more than three consecutive days due to illness, they are required by law to provide their employer with a doctor’s note as documentation. For absences of less than three days, there is no general requirement to provide a medical certificate. However, employers may request one from the first day.
The Continued Remuneration Act (Entgeltfortzahlungsgesetz) in Germany provides employees with six weeks of statutory sick pay if they have been employed for at least 4 weeks. During these initial six weeks, employees receive their full salary from the employer.
After the initial six weeks, employees receive sickness benefits directly from their health insurance provider. These benefits typically amount to 70% of the gross salary (up to the social security ceiling), but not more than 90% of the net salary.
Either parent is eligible for parental leave until the child reaches the age of three. During this parental leave period, parents may either take full leave or work part-time for up to 32 hours per week. Parents of premature infants are entitled to additional parental leave.
It is unlawful to terminate the employment of an employee during pregnancy and up to four months after childbirth in Germany, providing protection to pregnant employees and new mothers.
For further information, you can refer to our Guide on Terminating Employees in Germany.
The maximum probation period for an unlimited employment contract is six months. An extension is only possible under certain conditions (e.g., prolonged illness).
The probation period must be proportionate for a fixed-term contract. A general guideline is one-quarter to one-third of the contract duration (e.g., a 3–4 month probation period for a 12-month contract).
During probation, the employee and employer can terminate the employment relationship with 2 weeks’ notice.
After the probation period, the termination of employment must observe statutory notice periods, which vary depending on the length of employment:
Employment Duration | Notice Period | Effecive date |
During probation period | 2 weeks | 2 weeks after notice |
During the first 2 years | 4 weeks | the 15th or to the end of calendar month |
After 2 years | 1 month | end of calender month |
After 5 years | 2 months | end of calender month |
After 8 years | 3 months | end of calender month |
After 10 years | 4 months | end of calender month |
After 12 years | 5 months | end of calender month |
After 15 years | 6 months | end of calender month |
After 20 years | 7 months | end of calender month |
The German Employment Protection Act (Kündigungsschutzgesetz) oversees employment terminations and safeguards employees by ensuring that terminations are well-founded. During the probation period, the contract can be terminated without giving a reason.
Ordinary terminations must be socially justified, and employers are required to provide a valid reason for termination. There are three possible reasons: behavioral, personal, and operational.
Extraordinary termination, which permits immediate dismissal without notice, is limited to exceptionally severe cases, such as fraud.
There is no general legal entitlement to severance pay upon termination. Rather, it is a voluntary benefit of the employer. An exception applies to operational terminations. The employer may offer a severance payment to the dismissed employee, provided the employee waives the right to file a wrongful termination claim before the labor court. A typical severance amount ranges from one-half to one monthly salary per year of employment
Registering your own legal entity in Germany is generally a straightforward process, even for foreigners – legal firms offer comprehensive “package” services to streamline the setup. However, once your company is established, maintaining compliance becomes considerably more complex, especially when you start hiring local employees. As the legal employer, you bear responsibility for conducting occupational health and safety training, ensuring access to a company doctor, accurately recording working hours, and fulfilling a range of mandatory employer obligations. These legal requirements can quickly become challenging to manage without local expertise.
In Germany, the key difference between an employee and an independent contractor is the level of control the company has over the worker. Employees are directed by the employer, integrated into the company, and usually work for one employer, while independent contractors work autonomously, take on business risk, and typically serve multiple clients.
Misclassifying a worker as a contractor when they function as an employee can lead to serious legal and financial consequences, including back payments for social security, fines, and retroactive employee status. If a contractor works mainly for one client and follows their instructions, German authorities may reclassify them as an employee. To avoid penalties, companies must ensure contractors are genuinely independent and regularly review their working relationships.
| Criteria | EOR | Local GmbH | Independent Contractor |
|---|---|---|---|
| Setup Time | 1–2 days | 8–12 weeks | 1 day |
| Up-front Cost | Low (security deposit) | High (share capital €25k + legal & notary) | None |
| Compliance Risk | Low – handled by EOR | Medium – all on you | High – risk of misclassification |
| Scalability | Ideal for 1–15 employees | Best for 15+ long-term | Limited control |
| Exit Flexibility | High | Low | High |
Yes, they do. The Employer of Record (EOR) model qualifies as employee leasing under German law. According to the German Employee Leasing Act (AUG), EOR providers must hold an AUG license to comply with the regulatory framework and avoid legal issues.
Yes, FMC Group GmbH in Germany has a valid license from the German Federal Ministry of Labor in Nürnberg. Our License number is 60101/010923/11901.
The time limit for using an Employer of Record (EOR) in Germany is 18 months. After that employees need to take a “cool down period” for 3 months plus 1 day before they can be assigned for 18 months again.
An Employer of Record (EOR) is a third-party provider that hires employees for a company, handling all aspects of employment such as payroll, benefits, taxes, and legal compliance. This arrangement allows businesses to focus on their core operations while ensuring adherence to employment regulations.
Utilizing an EOR in Germany significantly minimizes compliance risks and reduces administrative burdens while offering flexibility in hiring and compensating employees according to local regulations. This approach allows companies to navigate the complex work environment more efficiently.
In Germany, mandatory employee benefits encompass retirement pensions, unemployment insurance, healthcare, long-term nursing care, and workers’ compensation. These benefits are essential for ensuring employee welfare and security.
An EOR effectively manages payroll taxes in Germany by accurately calculating them and ensuring timely submission to the local tax authority, thereby avoiding potential penalties. This diligent process safeguards compliance with legal obligations.
Employing individuals as independent contractors in Germany may breach employment laws if they work exclusively for one company.
Read more about EOR Germany
FMC Group GmbH
Johannesstr. 69
D-70176 Stuttgart
stuttgart@fmcgroup.com
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