Germany HR Information

Updated on: 2025/08/05 15:25 (UTC)

Overview

German labor law is not codified in a single chapter but composed of various federal statutes, court decisions and industrial practices. The Civil Code defines the employment relationship, but minimum labor standards are set forth in separate acts on various labor related issues. For example, the Works Constitution Act regulates cooperation between employers and employees, while the Act on Collective Agreements governs collective bargaining agreements.

Hiring

Employment Contracts

While an employment contract may be verbal, in most cases a written contract is concluded, since otherwise the employer has no evidence of the terms of the agreement. Whether or not a written agreement is required, a verbally concluded contract is valid and binding on both parties.

An employment contract must include at least:

• the employer’s and the employee’s names and addresses,
• the date work commenced,
• a job description,
• the place of work,
• the weekly hours of work,
• the amount and method of payment,
• leave entitlement,
• the required notice period,
• reference to applicable collective agreements, and
• length of service if the employment contract is concluded for a fixed term.

On June 23, 2022, Germany enacted an amendment (German) to the Notification Act (German) that contained new obligations that employers must meet with regard to terms in their employment contracts. From Aug. 1, 2022, employment contracts must specify terms such as the length of the probationary period, overtime requirements, and procedures to follow when terminating employment.

Most contracts are established for an indefinite period. In principle, fixed-term employment contracts are also allowed, but given that a fixed-term employment contract may deprive the employee of the protection of the mandatory provisions of the Act on Protection Against Unfair Dismissal and that consultation with the works council in the event of a dismissal is not required, there is a risk of unintentional evasion of the law. Under the Part-Time and Limited-Term Employment Act, limiting the length of an employment contract will only be accepted by the courts in the following cases:

• the contract does not exceed 18 months and the employee has not worked for the same employer during the previous three years, or
• the fixed term is justified by a sufficient cause and does not lead to a circumvention of the rights granted by the Act on Protection Against Unfair Dismissal.

Fixed-term contracts can be extended only one time. Employers with more than 75 employees are limited to having a maximum of 2.5 percent of their workforces on fixed-term contracts.

Fixed-term employment contract always needs to be justified by sufficient cause if the employee has worked for the same employer during the previous three years.

Sufficient cause to justify a fixed-term contract may also include (though these reasons are rarely accepted by courts):

• predictable limited need for operational reasons,
• fixed-term employment subsequent to a traineeship or university training in order to help the employee enter the job market,
• replacement of another employee who is unable to do the job (e.g., because of maternity leave),
• a temporary position,
• probation,
• employee desire for fixed-term employment,
• limited budget, and
• a court agreement.

A contract exceeding 18 months or not sufficiently justified will be considered an employment contract for an indefinite period. The same applies if the time limitation is not expressively stated in the contract.

A probationary period is permitted and commonly required but must be expressly agreed to. As a rule, the probationary period may not be longer than six months. Many collective bargaining agreements limit the allowable probationary period even further.

Probation is a fully valid employment relationship to which all acts, collective agreements and employment law apply.

In principle, employees may conclude several employment contracts with different employers. Prohibition of secondary employment is permitted if the employee enters into unfair competition with the employer, if the secondary employment affects the working ability to such an extent that the employee is no longer able to perform the contractually agreed to work or if the resulting working hours overrun the maximum provided by law.

Contractual clauses according to which the employee has to inform the employer about any secondary employment are valid, but the employer cannot forbid secondary employment if none of the above-mentioned prohibitions is applicable.

Employees are eligible for compensation in the case of a workplace accident that occurs during or in connection with the performance of services under their employment contracts. This definition also covers accidents occurring while employees are commuting between home and their places of work.

Employees vs. Independent Contractors. Both statutory and case law address the distinction between employees and independent contractors. Under the Act to Promote Self-Employment, workers are considered to be employees if they meet any three of the following criteria:

• they do not employ other employees,
• they work for only one employer,
• they carry out work normally performed by other employees,
• they have performed in the past work similar to that currently being performed, and
• they do not conduct entrepreneurial activities.

Under German case law, an employee is a worker who:

• is dependent on the employer’s instructions as to where and when to work and what to do,
• works fixed hours for fixed pay,
• uses the employer’s tools and other equipment, and
• fits within the employer’s organizational structure.

A worker does not have to meet all these criteria to be considered an employee, and a labor court will evaluate the applicability of the criteria on a case-by-case basis.

Restrictions on Hiring

The legal minimum age for employment in Germany is 15.

According to the Social Code, an employer with more than 20 jobs is obliged to employ severely disabled persons (with a degree of disability of at least 50 percent) in at least 5 percent of the jobs. If an employer fails to fulfill the quota, which is often the case, it will be required to pay compensatory tax.

Recordkeeping

With a few exceptions, employers are not permitted to retain information about employees. For example, employers must return documentation provided by job applicants to the applicants if they are not chosen for a job.

Records relating to the calculation of wages must be retained for at least two years.

Background Checks

Unless specified in the contract as a condition of employment, an applicant is not required to undergo psychological testing or a medical examination before employment unless required by law (e.g., in the food sector) or under the accident prevention regulations.

In tests and medical examinations, no questions may be asked that an employer would not be allowed to ask (e.g., about pregnancy or medical history). Doctors may only communicate the results of examinations by stating whether the applicant is suitable for the position in question.

Noncompetition Agreements

For the duration of employment, the employee is prohibited from entering into competition with the employer. This means that the employee must not act in the manner of a competitor toward the employer. Business activities outside the employer’s sector are thus allowed even without the employer’s consent provided that the secondary employment is not inadmissible for other reasons.

A post-employment noncompetition agreement can only be enforced if it:

• is in writing and one original has been presented to the employee;
• serves to protect only the reasonable interests of the company and does not represent a disproportionate hindrance to the employee’s career in temporal, geographical or substantive terms and
• does not exceed two years, and
• requires the employer to pay compensation for the duration of the prohibition of not less than 50 percent of the final annual salary of the employee for each year of prohibition.

In 2019, Germany adopted a trade secret law implementing the European Trade Union Directive 2016/943, which aims to harmonize trade secrets law across the EU. Under the law, the owner of a trade secret must take “appropriate” measures to ensure non-disclosure of trade secrets and, if a dispute arises, prove that such measures have been in place.

Reference Citations

Employment Contracts: Law of Proof of Substantial Conditions Applicable to the Employment Relationship, 1995, §§ 1-3 (German); Law on Part-Time Work, 2000, § 14

Restrictions on Hiring: Young Workers Protection Act, 1976 (German)

Recordkeeping: Working Hours Act, 1994, No. 33, § 16; Income Tax Act, § 147(3) (German)

Noncompetition Agreements: Commercial Code, 1897, § 74 (German)

Immigration and Work Permits

In General

Anyone intending to work in Germany must apply for a residence permit and a work permit. U.S. citizens can apply for a residence permit after entering Germany without a visa or can follow the more usual process for non-EU nationals of applying for a permit from the German embassy or a consulate in the U.S. before leaving for Germany.

Visas and Work Permits

Applicants from the following countries/blocs can enter Germany to seek a job without the need for a visa:

• EU,
• EEA,
• Switzerland,
• USA,
• Australia,
• Canada,
• Australia,
• New Zealand,
• South Korea,
• Israel, and
• Japan.

Although individuals arriving from these countries are not required to obtain a job seeker visa, they must register for a residency permit once they arrive in Germany. Residents of all the other countries must apply for a job seeker visa in order to be allowed to enter Germany.

Under the Skilled Immigration Act, applicant with requisite skills from outside the EU can qualify for jobs in Germany even if there are German or EU citizens available to fill the roles. The individual possess an employment contract or a specific job offer and a qualification recognized in Germany. Applicants are deemed to be qualified if they:

• have either completed qualified vocational training in Germany (for which a training period of at least two years is generally required) or have acquired a vocational qualification abroad which has been recognized as equivalent to German qualified vocational training; or
• obtained a degree in higher education that is comparable to a higher education degree in Germany.

Applicants with vocational training must be able to support themselves financially for the duration of their stay and have the necessary German language skills for the desired occupation. The Act allows prospective employees to enter Germany and seek employment for up to 18 months.

In addition to qualification as a skilled worker, residence titles can be issued for occupations regulated by the Employment Ordinance. These include management positions in companies, certain secondments, professional drivers, specialist chefs, artists, athletes, certain internships and people employed under contracts for work and services.

Applicants who have already found an employer can authorize the employer to submit a fast-track application for them as a skilled worker at the local foreigners authority. The foreigners authority will advise the employer and be of assistance in filing an application for recognition of the applicant’s foreign degree or certificate. The authority is also responsible for obtaining the necessary approval from the Federal Employment Agency.

Intracompany transfers. Germany has implemented the EU’s Intra-Corporate Transfer Directive (ICT), which is intended to ease the movement of highly qualified non-EU nationals into and within the European Economic Area. Under the directive, managers, specialists, and trainees from outside the EU can apply for work and residence permits if they are going to be on assignment in Germany for more than 90 days.

ICT work and residence permits are limited to three years for managers and specialists and one year for trainees. Managers and specialists must have worked for their employers for at least nine months, trainees for at least six months to qualify for ICT permits. Once an intracompany assignment is completed, the employee must serve a cooling-off period of six months before becoming eligible to obtain a new ICT card.

Holders of ICT permits can apply for a Mobile ICT Permit allowing them to work in an EU/EEA country other than the one into which they were initially transferred.

Non-EU nationals holding an ICT permit issued by another EU country are not required to obtain a mobile ICT card if they are sent to Germany by their employer on a short-term assignment of up to 90 days within any 180-day period. The sending company in the EU country must notify the Federal Office for Migration and Refugees of the assignment to Germany in advance of the trip.

Post-Entry Requirements

A limited residence permit will initially be issued, which includes an expiration date, generally coterminous with the offer of employment but in any case valid for no longer than three years. A limited residence permit can generally be renewed if the holder works for the same employer and there are no other major changes in his or her circumstances.

After five years of residence in Germany, a foreign national may apply for an unlimited residence permit, which does not expire. In the case of highly qualified individuals—senior managers, for example, or highly skilled professionals—an unlimited residence permit may be granted on initial application.

Under the European Blue Card program, non-EU citizens, including U.S. nationals, holding university degrees or similar qualifications and meeting specific salary requirements qualify for a permanent residence permit after living in Germany for three years provided they remain in an employment relationship. Applicants fluent in German can qualify for permanent residence after 21 months of employment, and those whose skills are particularly needed in Germany (the medical sector, for example, and the “MINT” disciplines of mathematics, information technology, natural science, and engineering) can qualify for resident status earning a lower salary. Qualifying for a Blue Card can be easier than going through the usual residence permit process, and a German residence permit authorized by a Blue Card can be valid for up to four years rather than the usual three.

Reference Citations

Visas and Work Permits: Residence Act, 2017

Nondiscrimination

In General

Employers may not discriminate against employees or prospective employees on the basis of race, ethnic origin (language, culture, tradition, customs, etc.), gender, disability, age, religion or ideology (including political or other beliefs) and sexual orientation/identity.

Types of Discrimination

German employment law contains provisions that protect employees against discrimination and harassment. The most important provisions are set out in the General Equal Treatment Act. All phases of the employment relationship—beginning with the job description, continuing through the hiring and advancement process, and ending with termination—are subject to this act. Under the act, unequal treatment may not be based on age, disability, gender, race or ethnic origin (language, culture, tradition, customs, etc.), religion or ideology (including political or other beliefs), or sexual orientation/identity.

Pay Equity: The Wage Transparency Act requires companies with over 200 employees to ensure that their male and female employees are paid equally if they perform the same work. Individuals working in these companies also may request information on the salaries of their co-workers in similar positions and the criteria and the procedure for determining their salaries. Specifically, the law allows these employees to discover the average monthly gross salary of at least six colleagues of the opposite gender who perform the same or comparable work.

Gender Pay Reporting: Companies that have more than 500 employees and are subject to reporting obligations under the German Commercial Code must include information about their measures to achieve pay equity in this report.

Large, publicly listed companies must conform to new ‘female quota’ provisions on their boards. Specifically, such companies with a board of directors consisting of more than three directors must include at least one female director.

EU Pay Transparency Directive: As a member state of the European Union, Germany has until June 2026 to transpose the minimum requirements of the EU Pay Transparency Directive into its national law or amend any current pay equity laws to conform with the directive, which aims to promote pay equity between men and women. The directive introduces requirements on gender pay gap reporting, salary history bans during the hiring process, and wage disclosure in job vacancy listings. The national law may go beyond the minimum requirements of the directive, but the law may not directly conflict with the directive requirements.

Reference Citations

Nondiscrimination: Wage Transparency Act, 2017, §§ 4-7 (German); General Equal Treatment Act, 2006, § 1

Employee Privacy

Employee Data

On May 25, 2018, the General Data Protection Regulation (GDPR) superseded the Data Protection Directive as the primary law governing data privacy in the EU. The GDPR establishes minimum requirements for the processing of employee data and allows EU member nations to introduce more restrictive local legislation. Stricter requirements can also be established in collective bargaining agreements or work contracts. For more information, see the In Focus: International Privacy Laws.

The German Data Protection Act was amended in 2018 in order to align it to the GDPR. Some of the new provisions contained in the GDPA include a requirement that employers seeking to process employee data in order to investigate a crime must have documented evidence that the employee has committed an offense.

The amended law also states that employee consent must be in writing and will be considered to be freely given if the employee stands to gain a legal or financial benefit. Employers must appoint a DPO if a minimum of ten employees are regularly tasked with carrying out the automatic processing of personal data. If the employer is subject to a privacy risk assessment, it must appoint a DPO regardless of the number of employees involved in the processing of personal data.

In addition to penalties provided for in the GDPR, employers that violate the GDPA can be subject to fines and imprisonment.

Employee Monitoring and Surveillance

Under the GDPR, employers can monitor employees only if there is a lawful basis for doing so. Lawful bases can include preventing employee misconduct, deterring crime, and ensuring compliance with health and safety procedures. Employees must be given prior notice, and any data that is collected must be used and kept only to fulfill its original purpose.

Covert employee monitoring can only be conducted if it is based on a specific suspicion that an employee has committed a severe breach of contractual duty or a crime.

Reference Citations

Employee Data: General Data Protection Regulation, 2016; German Data Protection Act, 2018 (German)

Employee Monitoring and Surveillance: General Data Protection Regulation, 2016

Compensation

Hours of Work

Under the Working Hours Act, work hours cannot exceed eight per day and 48 per week, as the workweek is defined as Monday to Saturday. The act allows work hours to be extended up to a maximum of 10 hours per day, if over six calendar months or within 24 weeks an average of eight hours per working day is not exceeded.

After finishing their daily work, employees must be given at least 11 hours of uninterrupted rest. If this period is interrupted, it must be granted in full after the interruption.

Employees must not work for more than six consecutive hours without a break. If they work from six to nine hours, a 30-minute break must be provided (or two 15-minute breaks), and if they work more than nine hours, a 45-minute break must be provided, which may be split into periods of at least 15 minutes each.

Certain employees can request to work part-time for up to five years and return to full-time after the part-time period has expired. This right can be availed only when the employee has worked for the employer for at least six months and the employer has over 45 employees in Germany. Employers with over 45 and no more than 200 employees may reject the employee’s request if:

• one in 15 employees has already been granted the part-time work arrangement, or
• operational reasons preclude the reduction in work time.

Employers with more than 200 employees may reject the part-time work request only when operational reasons preclude the reduction of working time. The request for the part-time work arrangement must be made at least three months prior to commencement of the part-time period.

Employers may apply to the Federal Employment Agency or compensation to employees, known as the reduced working hours allowance, for working hours lost because of temporary, unavoidable events or economic conditions. Employers must notify the agency of a loss of working hours.

In a month for which the reduced working hours allowance is sought by an employer, the loss of working hours must result in at least one-third of the employer’s employees losing at least 10% of their gross wages for the month for the reduced working hours allowance to be paid.

Minimum Wage

Effective Jan. 1, 2024, Germany’s national standard minimum wage is €12.41 per hour, and effective Jan. 1 2025, Germany’s national standard minimum wage will be €12.82 per hour.

Overtime

Employees can be required to perform overtime work only if there is a provision in the employment agreement or in a collective bargaining agreement giving the employer that right. There is no legal provision for premium pay.

Overtime pay is not required or regulated by statutory law, and in principle it is possible to have some overtime work included in monthly remuneration. Overtime need only be compensated if it occurs regularly and is necessary to fulfill the workload given the employee or if the employer requires overtime. Otherwise, overtime may be compensated by granting additional time off.

Wage Payment

The date of wage payment depends primarily on employment agreements. If there is no agreement and if a payment schedule is not established by the circumstances, the wage payment interval may not exceed one month for manual workers, 15 days for other employees.

The employer is required to give the employee a written pay slip upon payment. The remuneration must be calculated and paid in euros.

Mandatory Bonuses

While labor law does not require the payment of bonuses in addition to wages, various sorts of bonuses are commonly provided by German employers. These include:

• gratuities,
• profit sharing,
• supplemental pay,
• commissions, and
• piecework rates.

Gratuities are special bonuses paid in addition to regular wages on special occasions (e.g., Christmas, anniversaries, annual reports). The most common gratuities are the Christmas bonus and the vacation allowance.

A legal claim for the gratuity can arise from:

• a collective bargaining agreement, a works agreement, or an employment agreement;
• “operational practice” (i.e., because the bonus has been granted at least three times previously); or
• the principle of equal treatment.

The amount of the gratuity for which no legal claim exists may be determined by the employer at its complete discretion.

The employee may also receive profit-sharing bonuses. Profit sharing means that employees participate in the company’s operating results. Profit-sharing bonuses are mostly granted at or above executive officer level in addition to fixed remuneration. Employment contracts or work agreements form the contractual basis. A much more common bonus is to give the employee a company car.

Reference Citations

Hours of Work: Working Hours Act, 1994, No. 33, §§ 3-6 (German)

Minimum Wage: Minimum Wage Act, 2014, § 1

Wage Payment: German Civil Code, 2002, § 614

Benefits

Vacation

According to the German Federal Leave Act, every employee working six days a week is entitled to at least 24 working days of vacation (i.e., four weeks), employees working five-day weeks 20 days. Individuals with disabilities and minors have larger claims. Sundays, public holidays (nine national public holidays and some additional holidays in Catholic areas), and generally Saturdays are not included.

In practice, almost all employees in Germany have longer vacation leave. This is usually regulated in collective bargaining agreements or works agreements and sometimes graduated according to age or years of service. At present, five- to six-week annual vacations are typical. In the absence of a collective bargaining agreement, the employment contract regulates vacations.

Regardless of their individual working time, employees are eligible for their full vacation entitlement if they have been employed for at least six months.

In scheduling vacation leave, employers must take into account the dates requested by employees. If an employee requests dates that clash with operational demands or the vacation requests of co-workers, however, vacation may be granted at another time. The law also stipulates that vacation must be granted en bloc.

The purpose of granting vacations is to give employees the chance to recuperate. Employees on vacation may only perform work which does not conflict with this purpose. If employees become ill during their vacations, these days are not counted against their leave entitlement as long as a doctor’s certificate is presented.

During vacation leave, employees are entitled to full remuneration, calculated in accordance with their average earnings during the 13 weeks preceding the vacation. The law expressly forbids substituting money for vacation. This is permissible only if employment has ended and vacation can no longer be taken.

Unused leave can only be carried over to the next calendar year if compelling operational reasons or reasons personal to the employee justify it. In the case of a carryover, the vacation must be granted and taken within the first three months of the succeeding calendar year.

Holidays

Germany observes the following ten national holidays, the dates of some of which vary year to year:

• Jan. 1: New Year’s Day
• Good Friday
• March 8: Women’s Day
• Easter Monday
• May 1: Labor Day
• Ascension
• Whit Monday
• Oct. 3: German Unity Day
• Dec. 25: Christmas
• Dec. 26: St. Stephen’s Day

There are also holidays specific to individual regions.

Holidays are always observed on the day on which they fall, even if they fall on a weekend. Holidays are not moved to the nearest Monday, nor do workers get a free day in compensation for a holiday falling on a nonwork day. If employees are required to work on a holiday which falls on a working day, they must have a day of rest in compensation, which must be granted within a period of eight weeks including the day on which they worked.

Employees are not entitled to extra pay if they are required to work on a public holiday.

Maternity Leave

Under terms of the Maternity Protection Act, an expectant mother must not be employed during the six weeks prior to the birth of her child, even if she has never provided a doctor’s certificate, unless she has made a declaration, which she can revoke at any time, stating that she agrees to continue working.

Following the birth of the child, the mother has a right to parental leave until the child reaches the age of three.

A woman who has given birth must not be employed for eight weeks thereafter. This is extended to 12 weeks for premature or multiple births, or if the child is born with a disability. The leave entitlement starts on the day of birth and ends eight or 12 weeks later on the same day of the week as the day of the birth. In the event of a premature birth, the length of time is extended by the time that the actual birth took place before the normally expected date of birth. During this period, the employee is eligible for maternity benefits from her health insurance.

Employees who are pregnant or breastfeeding cannot be required to work on Sundays, public holidays, and between 8 p.m. and 6 a.m.

Employers must assess possible safety risks that an employee who is pregnant or breast feeding might face and the potential accommodations that would mitigate these risks. If the employer determines that the employee would be exposed to an “irresponsible risk,” it must take steps to modify the employee’s working conditions. If the employer cannot provide a safe workplace, the employee must be placed on paid leave with the ability to resume her position following childbirth.

The Maternity Protection Act ensures that as a rule female employees suffer no financial disadvantages as a result of maternity. On return from maternity leave, the employee is guaranteed her previous job if the object, scope, and nature of the work to be done is exactly defined by contract of employment or by actual practice.

Employers cannot dismiss an employee who has a miscarriage after the twelfth week of her pregnancy, for a period of four months, regardless of the weight of the fetus.

Paternity Leave

There is no leave benefit specific to fathers, although either parent may take advantage of parental leave.  From Dec. 12, 2022, the Maternity Protection Act (Mutterschutzgesetz or “MuSchG”) is amended to allow two-weeks of paid leave of absence for the partner directly after the birth of the child.

A child-raising benefit is paid by the government from the child’s birth to the age of 12 to 14 months.

Sick Leave

In the event of incapacity for work without any fault on their part, the Continuation of Remuneration Act gives employees the right to receive sick pay up to 100 percent of salary for six weeks. Employees are entitled to continuation of salary after employment of four weeks.

Employees are obliged to notify the employer of their incapacity for work and the expected duration without undue delay. Before the end of the third calendar day at the latest, they have to show a medical certificate stating the fact of their incapacity for work and the expected duration. If the actual time they are unable to work exceeds the duration stated in the certificate, employees must submit a new medical certificate. The employer may refuse continued payment of remuneration if the employee does not provide the mandatory medical certificate. In the event that the six-week limit is overrun, employees are entitled to receive a sickness allowance paid by their statutory health insurance plan.

Physicians must send medical certificates electronically to health insurers indicating that employees are unable to work. Effective July 1, 2022, employers may retrieve data contained in the digital health certificate from the health insurance fund when they become aware of an employee’s incapacity for work instead of asking the employee to submit a sick note. Employees must promptly inform their employer of their incapacity to work.

Other Leave

Parental leave. Mothers and fathers are entitled to take parental leave until the child reaches the age of three. The employer and employee can agree to transfer up to 24 months of parental leave to any period until the child reaches the age of eight. Employers do not pay the employee’s salary during the parental leave but the employee may be entitled to a parental allowance of 67 percent of the last net income for up to 14 months.

On Dec. 12, 2022, Germany implemented provisions of the EU Directive on Work-life Balance for Parents and Carers. Employers must now give reasons for rejecting an application for flexible working arrangements during parental leave, regardless of the size of the company.

Employees who have worked for their employer for at least six months can request to work a part-time schedule of up to 30 hours during parental leave. The request must be submitted to the employer no later than seven weeks before the beginning of the part-time work. Requests for part-time work generally cannot be rejected unless there are urgent operational grounds. The employer’s decision must be made in writing within four weeks of the start date of the reduced working hours or else the request will be considered approved. Employers with less than 15 employees are exempt.

Nursing care leave. Employees are entitled ten days leave to take care of close relatives who are in urgent need of care. The employer must be informed about this as early as practicable. The leave of absence is unpaid, unless stated otherwise in a collective bargaining agreement. Employees also can take nursing care leave of up to six months for a close relative. The employee must give the employer at least ten working days’ written notice prior to the commencement of the leave.  From Dec. 12, 2022, employees in small companies may apply for partial leave from work for a maximum of 24 months as well as care leave or other leave for a maximum period of six months for each close relative in need of care. Previously, this was only possible in companies with generally more than 15 employees.  Employees enjoy special protection against dismissals during the leave period to care for the close relative.

Sick children leave. Employees are entitled to paid leave to care for a sick child under the age of 12. The total number of days that can be taken off per calendar year vary as follows:

• if both mother and father work, both parents are entitled to 10 working days off;
• working single mothers or fathers are entitled to a total of 20 working days off;
• if there are multiple children under the age of 12, the maximum time off per parent increases to 25 working days; and
• for single parents with multiple children under the age of 12, the maximum entitlement is 50 working days.

Note: Effective until September 23, 2022, child sickness benefits can be claimed for healthy children when schools or daycare facilities are closed due to Covid-19. Child sickness benefits due to Covid-19 are as follows:

• if both mother and father work, both parents are entitled to 30 working days off;
• working single mothers or fathers are entitled to a total of 65 working days off;
• if there are multiple children under the age of 12, the maximum time off per parent increases to 60 working days; and
• for single parents with multiple children under the age of 12, the maximum entitlement is 130 working days.

Pensions and Social Security

For persons born before 1965, the legal retirement age is 67. Employees who have paid into the pension fund for at least 45 years can retire at 63 with no reduction in benefits.

Employers and employees make equal contributions of roughly 20 percent of gross monthly salary to the statutory pension insurance system. The employer transfers the total amount of both contributions to the insurer.

The pension benefit depends on various factors, such as the number and amount of contributions made, the period of time over which contributions are paid, the employee’s income and social factors.

State pension plans usually provide only basic benefits, and a company pension is another way of financing employee retirement. Unlike statutory pension insurance, however, company pension plans are always voluntary on the part of the employer. Employers may offer them but are not obligated by law to do so.

In Germany, there is a national social security system, to which employees belong by law. The employer is required within 14 days to report a new hire to the competent health insurer, to which all contributions to the social security system have to be made.

Foreign nationals are exempt from mandatory coverage as long as they have presented the necessary residence and work permits.

The social security system covers:

• health insurance,
• unemployment insurance,
• nursing care insurance,
• pension or old-age benefits, and
• accident insurance.

Workers’ Compensation

Employers make contributions to the employee accident insurance system, which is administered by associations set up for all branches of trade and industry. Contributions vary according to an individual employer’s accident record.

The employees become eligible for compensation in the case of a workplace accident that occurs during or in connection with the performance of services under their employment contracts. This definition also covers accidents occurring while employees are commuting between home and their places of work.

Reference Citations

Vacation: Federal Paid Leave Act, 1963, §§ 3-4, 7-8, 11

Holidays: Working Hours Act, 1994, No. 33, § 11 (German)

Maternity Leave: Maternity Protection Act, 2000, §§ 3, 6, 9-10; Act on the Payment of Child-Raising Benefit and Child-Raising Leave, 2015, § 2 (German);

Paternity Leave: Act on the Payment of Child-Raising Benefit and Child-Raising Leave, 2015, § 2 (German); Law on Parental Allowance and Parental Leave, 2015, §§ 15-18 (German)

Sick Leave: Continued Remuneration Act, 1974, § 2 (German)

Other Leave: Law on Parental Allowance and Parental Leave, 2015, §§ 15-18 (German)

Pensions and Social Security: Social Security Code, Sixth Book, 1989, § 36 (German); Performance Improvement Act, 1989, §§ 36-38 (German)

Workers’ Compensation: Social Security Code, Fifth Book, 1989, § 3(3) (German)

Labor Relations

In General

Unions are usually organized by industry to negotiate collective bargaining agreements with employers on salaries, hours, and other terms and conditions of employment. Employers have organized themselves into regional associations that conclude agreements covering a certain territory rather than individual companies. Collective bargaining always take precedence over works agreements.

Works councils play a significant role in labor relations in Germany and have the right to be informed and consulted on such matters as workplace design, personnel planning, vocational training, recruitment, job classification, transfers, overtime, vacation planning, salary systems, and social benefits.

The right to take industrial action is almost entirely based on case law. Strikes are relatively rare in Germany and generally quickly concluded. For a strike to be legal, the union must have as its goal the conclusion of a collective agreement. Strikes called to achieve goals that cannot be covered under a collective agreement are illegal, as are strikes against collective agreements still in force.

Right to Organize

In contrast to works councils, unions are independent of companies and usually formed on a sectoral, industry branch basis. The most important task of unions is to negotiate collective bargaining agreements with employers on salaries, hours, and other terms and conditions of employment. The agreements negotiated by union leaders are binding on the rank-and-file members and on employers that are members of the competent employers’ association.

The German trade union system is dominated by affiliates of the German Trade Union Confederation and the Unified Service Union. Generally, there are different unions for different industrial sectors (e.g., the metal industry, the chemical industry). Employers have organized themselves into regional associations that conclude agreements covering a certain territory rather than individual companies.

Employees can join any union they want but only benefit from membership if the union they join signs the collective agreement with their employers or with the employers association to which their employer belongs.

Collective bargaining agreements are normally negotiated between an employers’ association (not individual employers) and the competent union. Agreements govern the rights and obligations of the parties and provide legal norms regulating the content, commencement, and termination of employment relationships; matters relating to the operation of the establishment and legal aspects of the works constitution.

A collective agreement binds the parties to an employment relationship if one of following three prerequisites is fulfilled:

• The agreement applies if both parties are members of a signatory body. On the employees’ side, this means that the agreement applies only to the signatory members of the union. On the employers’ side, companies belonging to the employers’ association are bound by the agreement unless there is a company-level collective agreement.
• The parties are free to agree to the validity of a collective agreement under the employment contract. This can be done expressly or by consistent practice.
• The Federal Ministry for Economics and Labor or the highest labor authority in a federal state can declare a given collective agreement generally binding with the result that its terms apply even to employment contract parties outside its jurisdiction. The declaration can be made if one of the parties to the collective agreement requests such intervention, if it is found that the employers bound by the agreement employ at least half of the employees who fall under it, and if the declaration appears to be in the public interest.

Standards set by the collective agreement addressing operational and works constitution issues apply to a business unit even if it is only the employer that is bound by the agreement, simply because it would make no sense to apply them differently to persons not covered. These are standards that must be uniformly applied and so cannot be regulated in an individual contract, such as regulations covering industrial action, employee monitoring, shift times, and clothing.

All terms and conditions set by a collective agreement regarding the content, conclusion, and termination of employment relationships are directly applicable and mandatory. Direct effect means that the standards automatically determine the content of employment relationships just as statutory regulations do, so that it does not matter whether the parties approve of or even have knowledge of the collective agreement and its contents.

Departures from a collective bargaining agreement are admissible only when the agreement expressly permits this or if the new provisions are in the employee’s favor.

Collective bargaining always takes precedence over works agreements. The latter may not violate the terms of collective bargaining agreements, nor may they regulate matters subject to collective standards. A collective bargaining agreement may, however, permit works agreements which alter its terms, thus leaving the parties within a business some room to maneuver.

Works Councils

Under the Works Constitution Act, works councils can be set up in all private sector workplaces with at least five employees. The works council’s task is to safeguard employees’ collective interests in the business. In doing so, it is subject to three principles:

• The cooperation principle imposes the duty to work cooperatively and in good faith with the employer.
• The works council is also obliged to preserve peace in the workplace. This means that it cannot initiate any form of industrial action to exert pressure on the employer.
• Finally, the works council must defend the principle of equal treatment of employees with regard to age, personal development, and actual equality.

The size of the works council depends on the regular number of employees in the business unit. It is always an odd number. The works council election is initiated and carried out by an electoral board. Where no works council exists, a union representing company workers or three employees eligible to vote have the right to call an employees’ meeting at which an electoral board is selected.

The works council has various rights, none of which is executive in nature. Only the employer can implement measures within the business. Works councils elections must take place every four years.

The works council has a general right to be kept informed in detail and without delay in keeping with its duties under the Works Constitution Act. The employer is required to give the works council a hearing before reaching a decision on certain matters and to take its views into account, although management is not bound to accept these arguments. The most important right is the opportunity to be heard before every dismissal and to be informed about all reasons for dismissal.

The works council also has the right to be consulted on such matters as workplace design, personnel planning, and vocational training, although again the employer is not obliged to implement the works council’s proposals.

The most far-reaching right of the works council is co-determination, which means that measures cannot take effect until the council gives its approval. Subjects of co-determination include recruitment, job classification, transfers, overtime, vacation planning, salary systems, and social benefits.

The works council has the right to be involved in any planned operational changes if there are at least 20 employees in the company entitled to vote. An operational change is defined as the closure, transfer, or reduction in size of the entire enterprise or of essential parts of it; mergers with other businesses; splitting up of businesses; major changes in the organization, aims, or facility of the business; or the introduction of new working methods and manufacturing processes. Even staff cutbacks made with no corresponding decrease in plant or equipment are considered a reduction in the business if a significant proportion of staff is made redundant.

In all these cases, consultation between management and the works council must take place to reach a balance of interests. A plan must be set up to compensate for or ease employees’ economic disadvantages resulting from operational changes.

Dispute Resolution

There are no specific rules that employees and employers who are members of a union must follow to resolve a dispute.

Strikes and Lockouts

The right to take industrial action is almost entirely based on case law. Industrial disputes are relatively rare in Germany and generally are quickly concluded.

The unions have developed guidelines for the conduct of industrial disputes which are reflected in the constitution of the German Trade Union Confederation. Under these guidelines, industrial action includes the following stages:

• a resolution by the trade union to start a strike action,
• a resolution by the trade union to initiate a strike ballot of all its members,
• a call to union members to take part in the strike ballot,
• the strike ballot,
• the passing of the actual resolution by the responsible executive body of the union,
• an order by the union instructing members to strike, and
• the actual stoppage of work.

In the event of a strike, employees wishing to work must be provided access to company facilities. Unions are not allowed to block entrances to employer facilities and can be sued for damages if they do.

Unions are the only parties allowed to initiate a strike. Temporary employees cannot be brought to replace workers on strike.

For a strike to be legal, the union must have as its goal the conclusion of a collective agreement. Strikes called to achieve goals that cannot be covered under a collective agreement are illegal. This applies particularly to political demonstration strikes. Strikes against collective agreements still in force violate the duty to maintain peace.

Successorship Clauses

If a company is sold or transferred to another entity, the contracts of employment and any collective bargaining agreements remain unaffected by the sale or transfer.

Reference Citations

Right to Organize: Basic Law, 1949, § 9(3); Act on Collective Agreements, 1949 (German)

Works Councils: Works Constitution Act, 2001, §§ 1, 2, 3, 5, 9, 14

Strikes and Lockouts: Basic Law, 1949, § 9(3)

Successorship Clauses: German Civil Code, 2002, § 613a

Safety, Health and Security

In General

Under the Act on Employee Protection, employers are responsible for ensuring workplaces are safe and hygienic and are required to provide training to supervisors and employees on accident and disease prevention and on first aid. Workplace health and safety committees comprised of employer and works council representatives, work doctors and health and safety specialists must be established in any workplace with more than 20 employees and hold meetings at least quarterly.

Workplace Safety and Health

Occupational safety and health is the joint responsibility of the federal government, the 16 regional governments, and the work accident insurance funds. Occupational safety and health laws are enforced by inspectors from both the regional governments and the insurance funds.

Under the Act on Employee Protection, employers are responsible for ensuring workplaces are safe and hygienic and are required to provide training to supervisors and employees on accident and disease prevention and on first aid. Workplace health and safety committees comprised of employer and works council representatives, work doctors, and health and safety specialists must be established in any workplace with more than 20 employees and hold meetings at least quarterly.

Reference Citations

Workplace Safety and Health: Work Protection Act, 1996, §§ 3-6 (German)

Termination

Termination by Employer

Under the Civil Code, the employment relationship can be terminated for good cause by either party without observing a notice period, “if facts exist whereby, taking into consideration all circumstances of the particular case and balancing the interests of both contractual parties, the party giving notice of termination cannot be reasonably expected to continue the employment relationship until expiration of the notice period or until the end of the employment relationship agreed upon”.

In Germany, an employer’s freedom to dismiss an employee is severely restricted by the Act on Protection Against Unfair Dismissal. The employer cannot terminate an employee unless at least one of three statutorily defined reasons for termination exists: personal, conduct-related, or business-related grounds.

The Protection Against Unfair Dismissal Act applies if:

• a business establishment has more than five (if a concrete relationship exists since 2003 or earlier) or 10 employees (if a concrete relationship exists only since 2004), and
• the employee has six months of service with the same company or business establishment without interruption.

Whistleblowing. On May 12, 2023, the Germany passed a national law that transposes the EU Directive on Whistleblowing and expands upon the directive’s scope.

Effective immediately, employers with more than 50 workers must establish whistleblower policies and reporting mechanisms for suspected wrongdoings within the company and designate specific staff, or an external partner, to handle these functions. This requirement will apply to companies with between 50 and 249 employees beginning December 17, 2023.

Whistleblowers acting in good faith may not be retaliated against. The Act includes a rebuttable presumption that any disadvantage the employee experiences after the complaint is in retaliation. Violations of the obligations contained in the Act carry a fine of up to 50,000 euros.

Formalities and Procedure. Because of its serious consequences, attention must be paid to some formal requisites for valid dismissal:

• there must be a works council hearing,
• the reason for the dismissal must be clear and unambiguous,
• the dismissal notice must be in written form (a notice of termination given orally is null and void),
• the notice must be signed by the competent person to terminate,
• the notice must be delivered to the recipient, and
• the notice period must be observed.

The notice period requirement increases according to the length of service, varying from two weeks’ notice during the six-month probation period, four weeks’ notice after probation has been passed and to up to seven months’ notice after 20 years of service.

[Note: The works council has to be informed at least one week ahead of any notice of termination. Any such notice issued without prior consultation with the works council will be null and void.]

Reasons for Dismissal. According to the law, the termination of employment is only “socially justified” if it is on grounds related to the person or conduct of the employee or is based on business requirements that prevent further employment of the individual.

Personal grounds for dismissal include particular physical or mental impairments and extensive absenteeism due to illness and reduced working capacity.

Conduct-related grounds for dismissal include willfully or severely negligent breach of contract, working for a competitor, organizing a wildcat strike, and inexcusable absenteeism. A dismissal based on the employee’s conduct usually requires that advance warnings be given the employee. No such warning is required in cases where the employee’s behavior is obviously unacceptable (e.g., check fraud) or where an advance warning prior to notice of termination could not be reasonably expected (e.g., well-founded suspicion that the employee has committed a crime).

A dismissal is also socially justified if it is due to changes in the employer’s business organization. Such business-related grounds are difficult to define abstractly. The employer must prove that the employee’s dismissal was necessary for compelling reasons related to its business. Valid motives and arguments in this connection include: decreases in sales and/or orders, business reorganizations, cost savings, more convenient relocation of business activities and measures of rationalization. These measures must have resulted in the loss of the position, so that the employee’s services can no longer be put to any use. Additionally, there must not be any alternative job the employee could perform.

The crucial issue in determining whether dismissals due to a business reorganization are socially justified is whether the correct “social” criteria have been applied in selecting the staff members to be laid off. As a rule, among employees having identical or comparable personal and technical qualifications and working in the same or similar jobs, the employer must select the employee to be dismissed who would be least harmed by the dismissal. The relevant social factors that the employer must carefully consider are age, length of service, support obligations for dependents, and disability.

Notice of termination lacking social justification will be deemed null and void. The termination itself, however, will be effective and binding unless the employee objects by filing an action with the Labor Court within three weeks after receiving notice. The employee can only claim reinstatement, not damages.

During a probationary period, the employment contract may be terminated on two weeks’ notice. Shorter notice periods are only permissible if the relevant collective agreement provides for them.

As long as the probationary period does not exceed six months, no justifying reason is needed to terminate the employment contract. Dismissal protection granted under the Act on Protection Against Unfair Dismissal requires at least six months’ length of service with a company, regardless of the length of a probationary period that may have been agreed to. Prior to giving notice, the employer must notify the works council in writing.

In the event of dismissal for business-related reasons, the Act on Protection Against Unfair Dismissal gives the employee the right to compensation in return for waiving judicial control of the dismissal and if the employer has preliminarily opted for this regime.

Any dismissal not justified under the Act on Protection Against Unfair Dismissal is void. In this case, the employee is entitled to continue to be employed and remunerated by the employer. Hence, the German dismissal protection system is generally based on the idea of reinstatement rather than the payment of compensation. In practice, however, most lawsuits initiated by an employee claiming nonvalid dismissal are resolved through settlement: the employer pays compensation, and the employee accepts that the dismissal was justified. Only where no such settlement can be reached do judges render a decision: either the dismissal is void and the employee concerned is entitled to continue to be employed and remunerated or the dismissal is valid and the employee has to leave the company effective on the last day of the contractual relationship without any compensation.

Specific Dismissal Protection. Dismissal protection in Germany is divided into general or common and special protection. The special protection is applicable to employees who are generally more in danger of being dismissed than others. Special protection is granted to:

• disabled employees;
• pregnant employees and those on maternity/paternity leave;
• members of the works council;
• employees being drafted into the army, navy or civil service; and
• holders of certain functions (e.g., electronic data security clerks, specialists for security questions).

For a dismissal in these cases, the permission of the competent authority must have been previously obtained.

Contract of Cancellation. Employment may also be cancelled at any time by a mutually agreed upon contract between the employer and the employee with or without severance payment (“contract of cancellation”). Neither the provisions on protection against dismissal nor the obligation to notify the works council is applicable in such cases. Even pregnant women, severely disabled people, and members of the works council, who all enjoy special protection against dismissal, may conclude a contract of cancellation without requiring the permission of the authorities or the approval of the works council. The employer generally offers a severance payment to entice the employee to accept the offered contract of cancellation. The amount of the severance payment varies (between 0.5 and 1.5 multiplied by the number of years of service multiplied by the monthly gross salary) and mainly depends on the possible outcome of an unfair dismissal action before a labor court if the employer dismissed the employee.

Termination by Employee

The employment relationship can be terminated for good cause by either party without observing a notice period, “if facts exist whereby, taking into consideration all circumstances of the particular case and balancing the interests of both contractual parties, the party giving notice of termination cannot be reasonably expected to continue the employment relationship until expiration of the notice period or until the end of the employment relationship agreed upon” [§ 626(1) of the Civil Code].

Plant Closings and Mass Layoffs

For reasons relating to job market policy and to protect the individual employee, the Act on Protection Against Unfair Dismissal imposes an obligation to inform the Federal Employment Agency about mass dismissals in companies with more than 20 employees. Mass layoffs are deemed to occur if within 30 calendar days the following numbers of employees are given notice of termination:

• more than five employees in businesses with more than 20 and fewer than 60 employees,
• 10 percent or at least 25 employees in businesses with generally at least 60 and fewer than 500 employees, or
• at least 30 employees in businesses with generally at least 500 employees.

The legal consequence of notification of the Federal Employment Agency is that, starting with the date of notification, a blocking period of one month begins during which a dismissal is not valid. After expiration of the blocking period, the reported dismissals have to be executed within 90 days. If the employer fails to submit notification of the mass layoff, all dismissals based on the layoff will be nonvalid.

Payment on Termination

Employees have no statutory right to severance pay, and are only entitled to severance payments under a collective bargaining agreement or social plan with the works council. It is common for employers and employees to settle termination claims that have been filed with the labor court in return for payment of negotiated severance. In most cases, severance is usually between 0.5 and 1.5 times the employee’s monthly remuneration per year of service.

Unemployment Insurance

To be eligible for unemployment benefits, a claimant must have worked at least 360 calendar days in the preceding three years, made contributions for at least 12 months, and be registered as unemployed and looking and available for work. The duration of benefits depends on the individual’s age and length of employment.

Unemployment insurance is compulsory.

Reference Citations

Termination by Employer: Protection Against Unfair Dismissal Act, 2008, §§ 1-4; German Civil Code, 2002, §§ 134, 138, 242, 613a, 622, 626

Termination by Employee: German Civil Code, 2002, § 626

Plant Closings and Mass Layoffs: Protection Against Unfair Dismissal Act, 2008, § 17

Personal Taxes

Residency Requirements

An individual is regarded as being resident in Germany for tax purposes if the individual has a domicile or habitual abode in Germany. A habitual abode is defined by the German Tax Code as a place where an individual has resided for not less than six months.

Taxable Income

Residents of Germany are subject to individual income tax on their worldwide earnings, nonresidents only on German-source income.

Tax Rates

Personal income is subject to tax at progressive rates from 0 percent to 45 percent.

Employees also are assessed a solidarity tax of 5.5 percent on their total income tax obligation, rather than their total taxable income.

Reference Citations

Residency Requirements: Income Tax Act, 1934, § 1

Tax Rates: Income Tax Act, 1934, § 39b(4)

Web References

In English unless otherwise noted.

Law and Regulation

Act on the Payment of Child-Raising Benefit and Child-Raising Leave (German)

Care Time Act (German)

Commercial Code (German)

Continued Remuneration Act (German)

Federal Paid Leave Act, 1963

German Civil Code

Income Tax Act (German)

Law on Part-Time Work (German)

Maternity Protection Act

Minimum Wage Act

Performance Improvement Act (German)

Protection Against Unfair Dismissal Act

Working Hours Act

Young Workers Protection Act (German)