Postcard Series: Employing a worker in Germany

In this postcard series, members of our Sales team have provided helpful tips on international employment. So far, we have discussed employment rules in ChileDenmark, Brazil, Switzerland and Czech Republic.

We created this series to help businesses who are thinking of expanding internationally and hiring staff. In the latest post, Lucy discusses the rules on employing locals and expats in Germany. Lucy is based in our head office in Switzerland. She has a broad range of experience in advising clients on how to navigate their way through complex employment regulations.

Below, Lucy discusses the three most common questions asked by clients when they are considering expansion into Germany.

1. Contracts

Can I trial a worker using a fixed-term employment contract, as I am not sure whether it will work out in the long-term?

Germany is a country where fixed term contracts can only be issued in cases where a valid reason, such as a maternity cover, replacement due to sickness or a time-based project, exists. Unless a valid reason exists, I would not advise using a fixed-term contract. There is simply too much risk. Should the worker go to court; the client will be penalised.

What I suggest is: Probation periods at the start of an employment relationship are designed for this very purpose and can safely be used to trial a new worker.

2. Termination Rules and Costs

What do I need to know about termination and severance pay in Germany?

Terminations in Germany are extremely complex and specific advice should be sought in every instance. At will dismissals are not possible in Germany, just like in the rest of Europe. Furthermore, a valid justification must be given, or the termination might be classed as an “unfair dismissal” if challenged in a labour court.

The best suggestion I have in cases of dismissal is the following: firstly, seek expert advice. Secondly, favour less risky options, such as a negotiating a mutual contract termination agreement directly with the employee.

Regarding severance pay, it usually represents half a month’s salary per year of employment, as well as any untaken holiday entitlement that must be compensated.

3. Statutory Employee Benefits

What are the statutory employee benefits in Germany?

This is a common question I get asked by both workers and client. See below for information on the three most common employee benefits – paid holiday leave, parental leave and sick pay.

Paid Holiday Leave

Statutory paid leave entitlement in Germany is 24 days per year for a 6-day working week or 20 days in the case of a five-day working week. It is not uncommon for employees to be granted additional paid leave, in line with their level of seniority.

Maternity, Paternity and Parental leave

Maternity Leave

In Germany, mothers are granted 14 weeks paid maternity leave. Maternity leave includes 6 weeks before the birth and 8 weeks after the birth.

Paternity

Fathers are entitled to one day of paid leave for the birth of their child. Fathers are also entitled to parental leave.

Parental

In Germany, parental leave known as Elterngeld, entitles parents to a combined 14 months paid parental leave. Neither parent is allowed to take less than two months or more than 12 months leave.

Parental leave continues to be available for a maximum of three years, it can be claimed by either male or female employees is granted without pay.

Sick Pay

In Germany, an employee is entitled to sick pay. Sick pay is equal to regular remuneration and paid by the employer for the first 6 weeks, on the condition that the employee has been employed at least 4 weeks.

Following the 6-week period, employees are entitled to statutory/private insurance sickness benefits from the health insurance fund for a maximum of 78 weeks within a three-year period (for an incapacity caused by the same illness or disability). This allowance amounts to 70% of the employee’s normal pay.

How Capital’s Employer of Record Solution can help you hire workers in Germany 

If you are a business that is looking to expand internationally and hire staff in Germany, Capital GES can help.

Capital GES is an outsourced employment specialist that has been operating globally for over 25 years and have helped thousands of clients achieve their goal of employing their workers legally and compliantly overseas. Our team consists of dedicated international in-country specialists who are on-hand to provide round-the-clock support whenever our clients need them.

Capital GES provides many employment services such as managing the worker’s on boarding, HR, payroll and taxes. To establish what services you require, contact us at sales@capital-ges.com or phone +41 32 732 9700 or +1 833 972 6346, and a member of our team will be in touch.

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