Employee Benefits in Germany

Employers in Germany are required to provide several statutory benefits under national labor law. 

In addition to the benefits outlined below, many employers also offer supplemental benefits, such as private health insurance, commuter subsidies, job bikes, or additional pension plans. These benefits help attract and retain skilled professionals in competitive markets. 

As your employer of record in Germany, we help design compliant and competitive benefit packages that align with statutory obligations and local market expectations.

Bonuses and additional payments

In Germany, bonuses are not mandated by statutory law but are commonly provided based on individual employment contracts, collective bargaining agreements, or company policies. Common bonuses include the Christmas bonus ("Weihnachtsgeld") and holiday pay ("Urlaubsgeld"), which are typically paid annually. If an employer pays a bonus consistently over several years, it may establish a company practice ("betriebliche Übung"), creating a legal entitlement for employees to receive the bonus in subsequent years. Employers must ensure that bonus provisions are clearly defined to avoid unintended obligations.

Annual leave

In Germany, employees are entitled to paid vacation leave after completing a six-month probationary period. The statutory minimum entitlement is 24 working days per year for full-time employees, based on a six-day working week. For a five-day working week, this equates to 20 working days annually. This leave is fully paid and should be scheduled in agreement between employer and employee.  

Employers often grant additional leave beyond the statutory minimum to attract and retain talent, though this is not mandated by law.  

Unused statutory leave generally must be taken within the calendar year. Carrying over leave to the next year is only permitted if justified by urgent operational reasons or personal circumstances of the employee. In such cases, the carried-over leave must be used within the first three months of the following year. Payment in lieu of unused leave is only allowed upon termination of employment.

Sick leave

Personal and sick leave are governed by the German Social Code. Employees are entitled to 100% of their salary for up to six weeks of illness, paid by the employer. From the seventh week onwards, statutory health insurance provides sick pay at approximately 70% of the employee's salary for up to 78 weeks.

Maternity leave

Mandatory maternity leave — referred to as Mutterschutz — covers six weeks prior to the birth of a child and eight weeks following the birth. It extends to 12 weeks in the case of a premature birth or multiple births.  

Employers must provide up to three years of unpaid leave to each parent following the birth or adoption of a child, with the option to take up to 24 months of this leave between the child's third and eighth birthdays. Employees who have notified their employer in writing at least seven weeks before the intended start date are eligible for job protection during this period, with the possibility to receive parental allowance (Elterngeld) from the state, depending on prior income and working arrangements.