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ALARY PAYMENT IN Euro (EUR, €)

CONTRACT LANGUAGES German / English

PAYROLL TAX 20.66%

PAYROLL CYCLE Monthly

TIME TO HIRE 48 hours

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Hire Employees in Germany - Overview

Germany is Europe’s — and one of the world’s — strongest economies. It is a world innovation and tech capital, with a well-educated and highly-skilled workforce. These factors make Germany a prime location for hiring an overseas team, but in doing so it is crucial to follow German labor laws and employment etiquette.

In this guide, we set out everything you need to know about hiring employees in Germany.

Map of Germany

Facts & Stats

 

Population

83M (Labor Force 41 million)

Capital City

Berlin

Languages Spoken

German

Currency

Euro (€)

GDP per capita

$34,758

Ease of Doing Business

22nd in the world

Minimum Wage

€1500/Month (2022)

Average Wage

€3600/Month (2022)

Paid Leave

24-32 day annually

Germany: Business Environment

Business outlook

Germany is Europe’s largest economy and in 2020 came fourth in terms of global market size, making it a logical choice for any business setting up European operations. 

According to the World Bank, Germany’s GDP shrank by 4.6% in 2020 due to the pandemic. By 2021, however, the economy was in recovery and GDP in Germany grew by 2.9%. While the country is still experiencing significant inflation, future prospects continue to look positive. 

Business regulation

Germany has relatively strict labor laws that protect employees, so it is important to understand your obligations as an employer before hiring there.

Key labor laws cover matters such as mandatory parental leave, sick leave, working hours, termination notice periods and severance.

Business culture

Now that the United Kingdom has left the EU, it is likely that Germany will continue to solidify its position as the international business hub of Europe. 

There are multiple benefits of doing business in Germany: This includes a commitment to innovation and technology, highly-skilled employees with excellent English proficiency, great infrastructure for business, and a direct and honest style of communication. On the other hand, some businesses do notice challenges when entering into German business culture for the first time: This includes bureaucratic complexity and a business culture that expects formality, punctuality, and efficiency. 

Recruiting employees in Germany

Recruiting employees in Germany – Overview

In Germany, as in most other countries, people generally search for jobs online. There are a number of popular websites, however most people search for jobs on StepStone, Indeed, Monster, or LinkedIn in Germany. These websites are ideal places to list your job advertisement.

To simplify the process further, you can hire a global Professional Employer Organization such as Horizons to work with you and find the perfect candidate for the job.

Most important recruitment tools in Germany

  • Indeed
    de.indeed.com
    A great source to post a job ad. It is a global job advertising company and therefore a place where you can find both German and global candidates for employment.
  • Stepstone
    Stepstone.de
    StepStone is a place popular to just Germany. On here you will mostly find German candidates for employment.
  • Monster
    monster.de
    A place where a lot of European job talent is. Therefore, this is great place to find European candidates for employment.

Interviewing employees in Germany

Interviewing employees in Germany – Overview

In-person interviews are standard in Germany. Because it is a country that relies on formalities, typically in-person is the best option. However, since the pandemic, as with most countries, online interviews have grown in popularity. One on one interviews are the norm, however panel interviews are also done in Germany. Candidates will expect the typical Western interview format of handshakes, small talk greetings, and business attire dress code.

Can I ask the candidate’s previous salary in Germany?

In Germany, it is legal to ask a candidate for salary history. However, candidates are not obligated to disclose that information to you, and asking a candidate for their previous salary is not recommended procedure. If you must, it is legal to ask.

What is the typical salary increase at a new job in Germany?

The average salary increase in Germany is around 3% annually.

Onboarding employees in Germany

Onboarding employees in Germany – Overview

Onboarding in Germany will varying from company to company. It is most important to be open and honest and as clear as possible about the position in the early days. Include all important legal information in a written contract for the employee to have for their own files.

Basics of onboarding an employee applies in Germany. For example, your new employee should be educated on company policy and procedure, given a proper amount of training, and given a friendly introduction to their team. Always allow them a channel to provide feedback about the onboarding process and ability to ask any questions to fulfil their needs. Quality onboarding procedure will pay dividends in good employees in the long run.

Best remote working tools to use in Germany

There are a variety of remote working tools in common use in Germany: Microsoft Office Suite, Monday, and Slack are amongst the most popular. German employees are usually adept with the latest technology, therefore you should be able to integrate any new employee into your current communication system with ease.

Holiday season in Germany — 2024

There are 9 Germany-wide public holidays in Germany:

DateHoliday name
1 Jan., 2024New Year’s Day (Neujahr)
Date changes each yearGood Friday (Karfreitag)
Date changes each yearEaster Monday (Ostersonntag)
01 May, 2024Labour Day (Tag der Arbeit)
Date changes each yearAscension Day (Christi Himmelfahrt)
Date changes each yearWhit Monday (Pfingstmontag)
03 Oct., 2024Day of German Unity (Tag der deutschen Einheit)
25 Dec., 2024Christmas Day (1. Weihnachtsfeiertag)
26 Dec., 2024St. Stephen’s Day (2. Weihnachtsfeiertag)

These are the Germany-wide public holidays. It is important to note that each federal state in Germany has additional holidays on top of these, and each state is different. Consulting with us at Horizons can give you a schedule of holidays in the German federal state you plan to put the business.

What is the typical salary increase employees in Germany expect?

The average salary increase in Germany is around 3% annually. However, there is no set standard and the increase amount would depend on a variety of factors, most typically, performance of the employee. Sometimes a collective bargaining agreement with the employee could create for mandatory raises annually so it is best to fully understand the employment contract that is being signed.

FAQs

This depends on the type of work that needs to be done: Whatever path that is chosen you must be clear in the contract which type of worker the contractor is. Misclassification of a freelancer as an employee can lead to serious repercussions for the offending company. .

In general, we recommend you use a German tax professional/Employer of Record to assess your situation and advise you on whether you should hire a German freelancer or employee. Hiring an employee may be the more expensive option, but is usually the least risky when you require fulltime work. 

Yes, it is possible to hire foreign employees in Germany. However proper working visas and work permits are necessary.

Opening a subsidiary in Germany can be a difficult process due to the strict rules that apply and the slowness of the bureaucracy. You must incorporate the subsidiary (usually via a ‘GmbH’ or Gesellschaft mit beschränkter Haftung), pay the necessary establishment capital (€25,000), and complete all applicable registration for Germany’s tax and social security programs. Completing these steps requires the appointment of a special kind of administrative professional/lawter, a ‘Notare’. 

Registering a branch office in Germany is similarly difficult. 

In most cases, the fastest and safest way (from a compliance perspective) to get operations started in Germany is to hire your employees with a global Employer of Record registered to operate in Germany, like Horizons.

The process of hiring employees in Germany can be straightforward. If you have already identified a candidate, you can contact us for a free consultation and detailed description of how we can hire your German team in as little as 48 hours.

Hiring in Germany, Made Easy

Your business can easily hire employees in Germany without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.

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