Employment contracts in Germany are highly recommended to be in written form, and under the Nachweisgesetz (Proof of Employment Act), employers must provide a written document outlining essential employment terms, such as salary, working hours, and job title, within one month of the employee’s start date. While verbal agreements are valid, having a written contract ensures clarity and compliance with German labor laws.
Employer of Record (EOR) Germany
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Simple & Compliant Hiring with Globaine's Employer of Record (EOR)
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Globaine takes care of all compliance matters, including payroll, taxes, and legal obligations, while providing seamless hiring processes. Our platform ensures that every aspect of employee management in Germany is handled efficiently and in full compliance with local regulations.
Fast Time-To-Hire
Onboard employees in as little as 12 hours.
Cost-Efficient
The most affordable solution on the market, saving you time and money.
Compliant Contracts
Contracts compliant with Germany's labor law in both German & English
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in Germany
An Employer of Record (EOR) is a third-party organization that manages all legal and administrative responsibilities of employing staff on behalf of another company. This includes payroll, tax compliance, employment contracts, benefits administration, and adherence to local labor laws. An EOR allows businesses to hire employees in new countries without establishing a local entity, enabling faster and compliant global expansion.
Choosing an Employer of Record (EOR) in Germany simplifies compliance with Germany’s complex labor laws, minimizes administrative challenges, and accelerates business expansion without the need for setting up a local entity. EOR services in Germany manage payroll, benefits, tax filings, and employment contracts, ensuring full legal compliance. This allows businesses to focus on growth while effectively managing employees across Germany.
Written contracts must be provided before employment begins. They are required for all full-time, part-time, and fixed-term positions. They should also include the probation period (up to 6 months) if applicable.
Salary must be specified in euros and is typically listed as gross monthly wages, including social contributions like health insurance and pension. This helps avoid misunderstandings about deductions for taxes and other contributions.
Non-compete clauses, probationary periods, and overtime regulations should be included in the contract. Some roles may also have specific clauses related to intellectual property, especially in research or tech fields.
in Germany
1. What are the key steps in employee onboarding in Germany?
Employees must be registered with tax authorities and social security systems. Key documents include the employee’s tax ID, social security number(SNN), and proof of health insurance. The EOR manages this process for smooth onboarding.
2. When should employees complete pre-hire medical checks in Germany?
A pre-hire medical check may be required for certain roles, particularly in sectors like healthcare or heavy industry, to ensure the employee is fit for the position.
3. What documents are required for onboarding in Germany?
Employees must provide a signed employment contract, tax ID, proof of health insurance, and bank details. For foreign employees, a valid work permit or visa is also required before the start of employment.
4. Why businesses in Germany need EOR services?
5. How does EOR in Germany different from other countries?
in Germany
Salaries in Germany are generally paid monthly. There is no 13th or 14th salary requirement, but it is common to provide bonuses, especially for high-level roles. Employers are responsible for withholding income tax and making contributions to social security systems.
Remote employees must be compensated for work-related expenses, such as home office allowances. These payments must comply with German tax laws and be documented in the employment contract.
As of 2024, the minimum wage in Germany is €12.41 per hour, which applies to most employees and ensures compliance with national labor laws.
Payroll compliance ensures that all legal obligations, including income tax withholding, social security contributions, and healthcare premiums, are met. Non-compliance can result in penalties and legal repercussions.
in Germany
1. What are the income tax rates in Germany?
Germany has a progressive income tax system, with rates ranging from 0% to 45%. High earners may also be subject to a solidarity surcharge of 5.5% on their tax.
2. How does the tax system apply to non-residents in Germany?
Non-residents are taxed only on income earned in Germany, typically at the same progressive rates as residents. Special tax treaties may apply depending on the employee’s country of residence.
3. When should tax returns be submitted in Germany?
The deadline for submitting tax returns is generally July 31st of the following year. Employers are required to withhold income taxes from employee salaries throughout the year.
4. What social security contributions are required in Germany?
Employers contribute approximately 20% to social security, covering pensions, healthcare, unemployment, and long-term care insurance. Employees contribute about 20% as well, shared between these services.
in Germany
Employees are entitled to a minimum of 20 days of paid leave annually, based on a five-day workweek. Many companies offer additional days or have collective agreements for more leave.
Employees can typically start using leave after six months of employment. Leave accrues from the start date and is calculated based on time worked.
Maternity leave is 14 weeks (6 weeks before and 8 weeks after childbirth), fully paid. Paternity leave is not mandated, but fathers can take parental leave, sharing up to 14 months of leave with the mother.
Germany has 9 to 13 public holidays, depending on the state. Employees are entitled to take these holidays off, with compensation.
in Germany
1. What benefits are mandatory in Germany?
Employers must provide social security coverage, including health insurance, pension, unemployment, and accident insurance. They are also required to offer at least the statutory minimum wage.
2. How are remote work allowances structured in Germany?
Employers are obligated to compensate employees for remote work expenses, including utilities and internet. This must be stipulated in the employment contract to ensure tax compliance.
3. What additional benefits are common in Germany?
Common benefits include meal allowances, transportation subsidies, and private health insurance, although these are not mandatory by law.
4. What are collective bargaining agreements (CBAs) in Germany?
CBAs often dictate additional employee benefits, such as higher wages, bonuses, or extended leave. These agreements are legally binding and are negotiated by unions and employers.
TERMINATIONS
in Germany
The notice period ranges from 4 weeks to 7 months, depending on the employee’s tenure. The longer an employee has worked, the longer the notice period.
Employees can only be terminated without notice in severe cases such as misconduct or breaches of contract. Probationary employees may be terminated with minimal notice.
Severance is usually calculated at half a month’s salary per year of service, though this varies based on individual contracts or collective bargaining agreements.
FAQs
1. What is EOR in Germany?
An Employer of Record (EOR) in Germany is a service that allows companies to hire employees without establishing a local entity. The EOR manages all compliance tasks, including payroll, tax filings, employee benefits, and adherence to German labor laws. This solution enables businesses to expand into Germany quickly while staying fully compliant with local regulations.
2. What specific cost savings can our company expect by using Globaine's EOR solution compared to setting up a local entity in Germany?
Using Globaine’s EOR can save costs related to setting up a local entity, such as legal fees, office space, and administrative overhead, allowing you to focus resources on business growth.
3. How does Globaine guarantee fast onboarding within 12 hours, and what processes are in place to maintain this speed?
Globaine’s local experts ensure that all necessary documents are prepared in advance, and our streamlined digital processes allow for rapid onboarding without sacrificing compliance.
4. Can Globaine handle complex employment scenarios in Germany, such as drafting bilingual contracts and managing terminations?
Yes, Globaine is experienced in managing complex scenarios, including drafting bilingual contracts (e.g., German-English) and handling terminations in line with German labor law.
6. How Does Employer of Record Work in Germany?
An Employer of Record (EOR) in Germany takes care of all employment-related tasks, including payroll, benefits, tax filings, and compliance with German labor laws. The EOR acts as the legal employer, enabling companies to hire employees in Germany without establishing a local entity, simplifying HR processes and speeding up expansion into the market.
