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Employer of Record Germany

Our Employer of Record in Germany service enables clients to hire employees without the need to operate a local legal entity there.

It makes a big difference to develop a new market with your own personnel on the ground. Particularly for functions related to sales & marketing, business development, distributor management, and service & maintenance, our customers are very satisfied using our Germany Employer of Record Service. 

Our customers and their local teams can be free of the distractions of administrative tasks and complex local requirements. So you can fully focus on the development of 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. In addition to Germany, we offer Employer of Record services in several other countries.


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Stephan Dorn FMC Group

Employer of Record Germany - FMC Group's Approach

  • Quick, flexible, and easy entry into Germany in compliance with local employment laws
  • Complete control over business development with your own team
  • Good option for building up, managing, and supporting your distributors and key accounts by directly observing local developments and adjusting the strategy whenever necessary
  • Using our comprehensive recruitment experience for international clients, we can form a local team that fits your corporate culture.
  • Focusing on your core business instead of dealing with the time-consuming and complex local administrative tasks
  • Allowing for easy market exit if necessary
  • Integrating your employees into our team through motivational events and special meetings

EOR Germany Management & Reporting Flow

Management and Reporting Flow Chart

Hiring an Employee

Germany has comprehensive labor laws that encompass various aspects of employment, such as discrimination, maternity benefits, minimum wage, and working hours. Local companies strictly adhere to these laws.

When foreign nationals are employed in Germany, they are also subject to these labor laws. However, there are additional regulations specific to foreign nationals. Unlike some other countries, laws in Germany regarding foreign employment are not as strict or discriminatory, ensuring that foreign nationals can enjoy the same benefits as German employees.

Employment Contract – indefinite vs. fixed term

In Germany, it is a legal requirement to have an employment contract that complies with local regulations. This contract should clearly outline the terms of the employee’s compensation, benefits, and termination conditions. When drafting an offer letter and employment contract in Germany, it’s important to specify the salary and any compensation in euros, as opposed to any other currency.

Typically, employment contracts in Germany are open-ended or for an unlimited duration. However, it is possible to have a fixed-term contract, provided that the duration is agreed upon in writing before the employment begins. A fixed-term contract automatically concludes without requiring written notice when its specified term expires.

To justify a fixed-term employment relationship, objective grounds must exist, some of which are outlined in statutory law (e.g., temporary workload increase, substitution of an employee during parental leave).

In cases where no objective grounds exist, a fixed-term employment contract can last a maximum of two years, as long as there was no prior employment contract with the same employer. If the parties decide to continue the employment beyond the fixed-term contract’s expiration, the agreement is considered to be for an indefinite period.

Probation Period

Typically, candidates in Germany can anticipate a probationary period that ranges from three months to possibly even a year. If an employer wishes to extend this probationary period, it must be documented in writing within the employment contract, and the employee’s consent is required for such an extension.

German labor laws provide protection to employees against unjustified termination by their employers. If a company has employed an individual for more than six months and has a staff of more than ten employees, it is obligated to provide a valid reason for terminating the employee’s contract. Termination of a contract may also occur when the contract’s specified duration expires, when either the employee or employer provides notice, or when both parties mutually agree to the termination.

Work Week, Overtime & Maximum Working Hours

The standard workweek in Germany typically falls within the range of 36 to 40 hours. Full-time employment in the country typically entails 8 hours of work per day, spread over 5 days a week, with a lunch break lasting either an hour or 30 minutes. Germany has stringent legal regulations governing working hours, with a maximum daily limit of 8 hours for employees.

Any work beyond the 40-hour weekly threshold in Germany is categorized as overtime work.

Income Tax

Germany’s income tax system operates on a slab-based structure, where specific tax rates apply to the income difference between one tax bracket and the next, rather than taxing the entire income at a single rate.

Taxable Income (EUR) Tax rate( %)  2024
0 – 11,604 0%
11,604– 66,760 14% – 42%
66,760– 277,825 42%
277,825+ 45%

Typical Benefits

Compulsory Employee Benefits in Germany: Germany’s social welfare system encompasses various essential social security benefits, and it is mandatory for employers to provide insurance for all employees. Contributions to these benefits are shared equally between the employer and the employee. The key components of the social insurance system in Germany include:

  • Pension Fund
  • National Health Insurance
  • Unemployment Funds
  • Long-Term Care
  • Accident Insurance (Note: Only employers make contributions to this fund.)

Additional benefits provided by companies in Germany are often influenced by factors such as Collective Bargaining Agreements (CBAs), corporate culture, and the specific industry. These supplementary benefits may include items like Christmas bonuses, 13th-month bonuses, home office opportunities, flexible working hours, coverage of telephone expenses, life insurance, public transportation subsidies, and gym memberships.

It’s important to note that bonus or commission programs are typically at the discretion of the employer and are offered on top of the regular salary. Unlike some countries, Germany does not have mandatory 13th-month or 14th-month salary payments.

Visa for the Employees

Germany does not have specific work permits designed exclusively for foreign nationals to commence or maintain employment within the country. The primary means for foreign nationals to secure employment in Germany is by obtaining a work visa, which can be sought at the nearest German embassy or consulate.

Germany offers various types of work visas, with the most common categories including the EU Blue Card, Jobseeker Visa, Skilled Worker Visa, and EU Permanent Residence Permit.

Time off Policies

Public Holidays

Germany celebrates a total of 9 national public holidays, and there are also additional public holidays that vary by federal state:

  • New Year
  • Good Friday
  • Easter Monday
  • Labour Day
  • Ascension
  • Whit Monday
  • Corpus Christi
  • Corpus Christi
  • World Children’s Day
  • Day of German Unity
  • Reformation Day
  • All Saints’ Day
  • Christmas
  • St. Stephen’s Day

Annual Leave

In Germany, the statutory minimum paid leave for employees on a 6-day workweek employment contract is 24 days, while it is 20 days for those on a 5-day workweek. However, in practice, the majority of full-time employees typically enjoy between 25 to 30 days of paid leave per year.

Employers have the option to grant additional leave to employees engaged in demanding or hazardous occupations. Furthermore, severely disabled employees are entitled to an extra 5 days of paid time off. It’s important to note that paid leave entitlement is not reduced by the duration of sick leave or public holidays.

Sick Leave

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, and it is not necessary to specify this in the offer letter or employment agreement as it is mandated by German law.

Following the initial six weeks, employees will receive sickness benefits directly from their health insurance company. These benefits are typically equivalent to 70% of the gross salary (up to the social security ceiling) but no more than 90% of the net salary.

In the event that an employee is absent from work for more than three consecutive days due to illness, they are required to provide their employer with a doctor’s note as documentation.

Other Leave Types

Maternity leave for pregnant employees in Germany comprises 6 weeks before the expected birth date and 8 weeks after the birth, all paid at full salary. In cases of premature births or the birth of multiples, employees are entitled to 12 weeks of paid leave following the birth.

Either parent is eligible for parental leave until the child reaches 3 years of age. During this parental leave period, parents have the option to either not work or work part-time for up to 32 hours per week. Parents of premature infants receive additional parental leave.

It is against the law to terminate the employment of an employee during pregnancy and up to four months after the child is born in Germany, providing protection to pregnant employees and new mothers.

Terminating an Employee

The German Employment Protection Act (Kündigungsschutzgesetz) oversees employment terminations and safeguards employees by ensuring that dismissals are well-founded. In Germany, there are two types of dismissal: ordinary and extraordinary.

Ordinary dismissal necessitates that the company adhere to the statutory minimum notice period, which varies depending on the duration of the employee’s tenure, or the contractual notice period if it is longer. Extraordinary dismissal allows the employer to terminate the employment contract immediately, typically in cases of severe misconduct.

Here are the notice periods for different employment scenarios in Germany:

  • During a probationary period of up to 6 months: 2 weeks’ notice.
  • After the probationary period or in cases without a probationary period: 4 weeks’ notice, with effectiveness on either the 15th or the end of a month.
  • After 2 years of service: 1 month notice
  • After 5 years of service: 2 months’ notice

Disclaimer: Although we carefully researched and compiled the above information, we do not give any guarantee with respect to the actuality, correctness, and completeness.