Germany
Know everything about hiring and compliance in Germany.
The monthly minimum wage in Germany is set at EUR 2088.
Mandatory benefits for employees in Germany encompass the Pension Fund, Health Insurance, Accident Security (Worker Compensation Insurance), Unemployment Insurance, Nursing Care Insurance (Long-term Insurance Fee), and Maternity benefits.
Regarding overtime pay, it is not obligatory. Overtime is defined as hours worked outside the standard working hours, which typically amount to around 40 hours per week, from Monday to Friday. Employees receive the same hourly wage for overtime as they do for their regular working hours.
Legally, employees are not entitled to additional bonuses. However, employers have the option to grant voluntary bonuses, which will be subject to taxation as part of the employee's salary.
In Germany, employers usually handle payroll on a monthly basis, and many companies adopt the following schedule:
- Payroll cut-off date: 20th of each month
- Payment date: Last day of each month
Individual income tax in Germany follows a progressive rate system, ranging from 14% to 45%. The specific rate is determined based on the employee's tax class (which considers factors such as marital status and multiple income sources) and the amount of monthly wages.
The Federal Government updates these tax rates annually.
A comprehensive employment contract in Germany should include various essential details such as the names and addresses of both parties, the commencement date of employment, the designated workplace, a clear job description, the complete salary breakdown (including all supplements), the agreed-upon payment date, the stipulated working hours, the duration of annual holidays, and the notice period for termination.
The statutory notice period for employees in Germany is a minimum of four weeks, to be given either prior to the 15th of the month or before the last day of the following month. The specific length of the notice period will depend on the employee's tenure with the company.
Although there is no statutory requirement for severance pay in Germany, it is common practice at the local level to offer severance to employees who have been with the company for at least six months. This measure is taken to reduce the risk of potential litigation.
Typically, newly hired employees should anticipate a probationary period of three to six months. During this time, either party can terminate the employment with a two-week notice period.
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Frequently asked questions
What are the mandatory employee benefits in Germany?
Mandatory benefits in Germany include Pension Fund, Health Insurance, Accident security (worker compensation insurance), Unemployment insurance, Nursing care insurance (Long term insurance fee) and Maternity.
What is the maternity leave policy in Germany?
Pregnant employees are eligible for a 14-week paid leave, with six weeks to be taken before the child's birth and the remaining eight weeks to be taken after the child's birth. During this leave period, the employee will receive 100% of their average net salary from the last three months. Both the employer and health insurance company are responsible for contributing to the payment. However, the employer will be fully reimbursed by the health insurance company during the "U2-process." To avail this leave, the employee must provide the employer with a medical certificate indicating the expected date of birth. Special regulations are in place for premature or multiple births, as well as for children with disabilities, in which case maternity protection can extend up to 12 weeks after the birth. It's important to note that the employee cannot prolong the maternity leave beyond the stipulated 14 weeks. However, they do have the option to take unpaid parental leave if needed.
Do male employees have the right to paternity leave in Germany?
In Germany, no law specifically covers paternity leave. However, employees are entitled to parental leave.
How many sick leave days are employees entitled to in Germany?
In Germany, there is no set maximum limit for paid sick leave. During the period of sick leave, the employee will receive their full salary, amounting to 100% of their regular pay. The first six weeks, equivalent to 42 days, of sick leave are covered by the employer. After this initial period, the responsibility for payment shifts to the health insurance company.
What are the public holidays observed in Germany?
Germany observes a total of nine national holidays, and in addition to these, employees may also enjoy up to eight regional holidays depending on their location. The national holidays include: - New Year's Day - Easter Monday - Ascension Day - German Unity Day - Second Day of Christmas - Good Friday - Labor Day - Whit Monday - Christmas Day
What are the legal requirements for terminating an employee in Germany?
Terminations in Germany can be intricate, as employers do not have the freedom of at-will termination except during the probation period. Outside the probation period, terminations must be justified by valid reasons. Compliant terminations may occur in the following ways: - Voluntary resignation by the employee. - Termination by mutual agreement between the employer and employee. - Unilateral termination by the employer based on specific grounds, including: - Dismissal during the probation period. - Conduct-related dismissal due to a breach of employment terms. - Person-related dismissal if the employee is deemed unfit for work due to illness. - Business-related dismissal for operational reasons, such as when a job position is no longer required. - Termination by the expiration of the contract.
Is severance pay mandatory in Germany?
While there is no statutory severance requirement in Germany, it is local best practices to offer a severance after an employee has been with the company for 6 months to mitigate litigation risk.
Can employers have a probation period for new hires in Germany?
If hired, an employee must usually expect a probationary period of three to six months, during which time he or she can be dismissed with two weeks' notice.
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