Hire in Germany

EOR in Germany

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Germany, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Germany―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Germany and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in Germany

​Top companies from around the world have recognized the advantages of hiring in Germany, but its labor regulations can be complex. Employment relationships in Germany are governed by the German Civil Code (Bürgerliches Gesetzbuch – BGB), the General Act on Equal Treatment (Allgemeines Gleichbehandlungsgesetz – AGG), and various statutory instruments, as well as collective agreements and individual contracts. The BGB serves as the primary legal framework, outlining workers' rights, employer obligations, and procedures for labor disputes. ​

Additionally, German law places specific regulations on the use of temporary and agency workers. The Temporary Employment Act (Arbeitnehmerüberlassungsgesetz – AÜG) ensures that agency workers receive equal treatment in terms of basic working and employment conditions after a nine-month assignment with the same employer. Employers must provide written employment contracts detailing terms and conditions and ensure compliance with statutory requirements such as the minimum wage and working time regulations. ​

Because of the complexity of Germany's labor and tax laws, compliant employment contracts are a critical business requirement. With Safeguard Global as your partner, you can hire employees in Germany with confidence, knowing that every contract meets legal standards. We also provide guidance on cultural expectations and hiring best practices, while helping you stay current with regulatory changes.

Employment laws and contracts

Employment contracts

In Germany, employment contracts can be fixed-term or permanent, depending on the nature of the job and the agreement between the employer and employee. Permanent employment contracts must include benefits such as health insurance, pension contributions, paid leave, and unemployment insurance. Fixed-term employees are entitled to the same benefits as permanent employees, and without a justified reason, fixed-term contracts cannot exceed two years or be renewed more than three times within that period.

Germany also has apprenticeship contracts, mainly for training, which are governed by the Vocational Training Act. Employers engaging apprentices are required to:

• Provide structured training aligned with approved curricula
• Pay apprentices a stipend in line with government regulations
• Ensure apprentices work in a safe environment
• Adhere to regular working hours as defined by labor standards

Probationary period

In Germany, probation periods are indirectly addressed in local law, typically lasting up to six months in the private sector, with similar provisions applicable in government employment, as stipulated in the German Civil Code.

Termination and notice periods

In Germany, statutory laws generally require written notice for termination, with periods ranging from four weeks to seven months based on the employee's length of service. In most cases, terminated employees are entitled to a warning and a fair hearing. Just cause for a dismissal includes the following:

• Serious misconduct
• Repeated violations
• Incapacity
• Operational requirements
• Insubordination
• Theft
• Other significant breaches

Employees may be entitled to severance pay, particularly in cases of redundancy, calculated based on their length of service and salary. As your Employer of Record (EOR) in Germany, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Working hours and overtime

The standard working week in Germany typically consists of 40 hours, spread across five days, with a legal maximum of 48 hours per week averaged over a six-month reference period. Employees are entitled to 11 consecutive hours of rest in every 24-hour period and one full day off each week.

Any work beyond the standard working time is considered overtime. While German law does not mandate a specific rate for overtime pay, it is common for employers to offer premium rates, such as time and a half or compensatory time off, based on the employee’s contract or collective agreement. Some industries have sector-specific agreements that define overtime compensation rules.

Pay and benefits

When negotiating terms of an employment contract with a candidate in Germany, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Minimum wages and salary benchmarks

Minimum wage rates in Germany are set nationally. As of January 1, 2025, the statutory minimum wage is €12.82 EUR per hour. Some sectors have higher rates established through collective agreements. ​

The minimum wage applies uniformly across sectors, ensuring fair compensation regardless of industry.​

The overall annual average salary in Germany is approximately €51,876 EUR, with monthly earnings varying significantly by position, experience, and region. The median monthly salary is estimated to be around €4,323 EUR. ​

By gender, a wage gap exists with average annual salaries for men typically exceeding those for women. Efforts to reduce this disparity continue through targeted government initiatives and policy reforms.​

Looking at salary by location in Germany

• Munich: Known for offering salaries above the national average, particularly in sectors such as finance, technology, and healthcare
• Frankfurt: Offers competitive compensation in industries like banking, education, and information technology, with wages generally reflecting the local cost of living
• Leipzig: While salaries in Leipzig are competitive, certain sectors may offer compensation slightly below the national average, influenced by regional economic factors​

As your employment partner in Germany, Safeguard Global can provide you with the latest resources and insights on average employee compensation across various roles and regions, ensuring that you make competitive and compliant employment offers.

Payroll frequency

In Germany, employees are typically paid on a monthly basis, with salaries disbursed at the end of each month, as specified in the employment contract or company policy. German labor law mandates that remuneration must be paid at least once a month, ensuring regular income for employees. ​

In addition to regular monthly wages, employees may receive additional compensation such as holiday bonuses or a 13th-month salary. These payments are often stipulated in collective bargaining agreements or internal company policies and are disbursed according to the terms outlined therein. Employers are required to adhere to the agreed-upon schedules for these payments to maintain compliance with labor regulations.

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. ​

Employee benefits

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

• Public pension insurance (gesetzliche Rentenversicherung): Employers must contribute 9.3% of the employee’s gross salary to the state pension system.

• Sick pay (Entgeltfortzahlung): Employees are entitled to six weeks of full salary when off sick, followed by statutory sickness benefits from health insurance.

• Parental leave (Elternzeit): Employees may take up to three years of unpaid leave per child. Maternity leave includes six weeks before and eight weeks after birth, with full wage coverage.

• Holiday entitlement: Employees are entitled to at least 20 days of paid vacation per year based on a five-day workweek. Many employers offer 25–30 days.

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.

Tax and social contributions

Income tax and employee deductions

In Germany, withholding tax is known as Lohnsteuer and is deducted by employers before paying salaries to employees. Employers must deduct Lohnsteuer from employee salaries based on applicable income tax rates and submit it to the local tax office (Finanzamt). ​

Employer payroll contributions

Germany's social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers' compensation is financed by contributions from state governments, employers, and employees. ​

Business tax and compliance

Employers in Germany must adhere to various taxation and regulatory compliance requirements to operate legally and avoid penalties.​

• Corporate tax: Companies are taxed at a combined rate of approximately 29.9%, including a federal corporate tax of 15%, a solidarity surcharge of 5.5% on the corporate tax, and a trade tax that varies by municipality. ​
• Value added tax (VAT): VAT applies to businesses with annual turnover exceeding €25,000 EUR in the previous year and expected to exceed €100,000 EUR in the current year. Employers must register, file monthly or quarterly returns, and pay VAT on applicable goods and services. ​
• Wage tax (Lohnsteuer): Employers must deduct wage tax from employee salaries, vendor payments, and contractor fees. Wage tax must be deposited by the 10th of the following month, and periodic returns must be filed.​
• Income tax returns (ITR): ITRs are filed annually based on company profits. Companies must also file annual financial statements with the German tax authorities.

Work visas and immigration

Programs for foreign workers

In Germany, hiring foreigners without valid work permits can result in fines, legal action, or deportation of the employee. The German government enforces strict regulations to ensure employment opportunities are first available to German citizens unless specialized skills are required. Therefore, Germany has structured skilled migration programs for foreigners, with provisions for highly skilled professionals in sectors like engineering, healthcare, information technology, and skilled trades. Certain workers may apply for a German work visa.​

• EU Blue Card: For highly qualified non-EU nationals with a job offer in Germany​
• Skilled Workers Immigration Act Visa: For professionals with vocational training or higher education qualifications recognized in Germany
• Job Seeker Visa: Allows individuals to enter Germany for up to six months to seek employment

Foreigners may also apply for a Short-Term Business Visa, which is issued for attending meetings, conferences, or exploring business opportunities in Germany. It does not permit full-time employment in a German company.

Sponsorship and employer responsibilities

Hiring a foreign national in Germany requires compliance with immigration and labor regulations. Employers must ensure that both the position and the candidate meet the criteria defined by the Federal Employment Agency (BA) and immigration authorities.

Eligibility criteria

• The role must match the applicant’s qualifications and meet skill shortage criteria if applicable.
• The candidate must present recognized vocational or academic credentials.
• The employer must offer a binding employment contract with equitable working conditions.

Required documentation

• Job offer or signed employment contract specifying salary, duties, and workplace
• Recognition of foreign qualifications
• Proof of salary meeting national or Blue Card thresholds
• Completed visa application forms and biometric passport
• Endorsement from the Federal Employment Agency, if required

Post-arrival requirements

• Registration with the local residents' office (Einwohnermeldeamt)
• Application for a residence permit at the Foreigners’ Authority (Ausländerbehörde)
• Health insurance enrollment and tax ID registration
• Employers must report employment changes and maintain personnel documentation for inspection

Processing times and costs

Once a person has applied for a German employment visa, the processing time varies, but it typically ranges from four to 12 weeks. Fees are charged according to the type of permit or visa required.

• Work visa: €75​ EUR
• Residence permit: €100 EUR​

Additional fees, such as qualification recognition fees ranging from €100 EUR to €600 EUR, may apply. Check with the specific German consulate or embassy for the most accurate and up-to-date fee structure.​

Leave and public holidays

Annual leave and paid time off

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.

Public holidays

Employees are entitled to the following paid public holidays that are collectively recognized in all provinces : • Jan. 1: New Year's Day (Neujahr)

• Good Friday (Karfreitag)

• Easter Monday (Ostermontag)

• May 1: Labor Day (Tag der Arbeit)

• Ascension (Christi Himmelfahrt)

• Whit Monday (Pfingstmontag)

• Oct. 3: German Unity Day (Tag der Deutschen Einheit)

• Dec. 25: Christmas (Erster Weihnachtstag)

• Dec. 26: Second Day of Christmas (Zweiter Weihnachtstag) There are also holidays specific to individual provinces.

Employees are not entitled to extra pay if they are required to work on a public holiday but they are entitled to a day of rest as compensation.

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 onward, statutory health insurance provides sick pay at approximately 70% of the employee's salary for up to 78 weeks.

Parental leave

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.

Hiring and talent management

Commonly recruited roles

​Global companies operating in Germany frequently hire for roles that support engineering, technology, and international client engagement. There are multiple roles that are commonly recruited for in Germany.​

• Software developers and IT specialists: Manage infrastructure, cloud systems, and software development

• Mechanical and electrical engineers: Design and oversee production processes in automotive and manufacturing industries
• Healthcare professionals: Provide medical care and support in hospitals and clinics
• Data scientists and analysts: Interpret complex data to inform business decisions
• Sales and marketing specialists: Lead campaigns, analytics, and client engagement strategies ​
• Logistics and supply chain managers: Coordinate supply chain, warehousing, and vendor contracts
• Renewable energy specialists: Develop and implement sustainable energy solutions

As your employer of record in Germany, we can help you access experienced, German-speaking professionals and onboard top talent efficiently and compliantly.

Languages

Germany is a multilingual workplace environment, with German and regional dialects used across industries. While German dominates corporate settings, regional dialects are widely spoken in government and business sectors, particularly in Bavaria and Saxony. Workplaces often operate in a bilingual or multilingual manner, depending on the industry and region.​

In corporate sectors like IT and finance, German is the primary language for communication, documentation, and client interactions, especially in multinational companies. Meetings, presentations, and official emails are generally conducted in German, though employees may use regional dialects informally.​

In government offices and public sector organizations, German and regional dialects are commonly used for internal communication and documentation. Germany recognizes several regional dialects, with states prioritizing their local dialects — such as Bavarian in Bavaria, Swabian in Baden-Württemberg, and Saxon in Saxony.​

The manufacturing and retail sectors rely on local dialects for daily operations, especially in labor-intensive industries. Factories, warehouses, and construction sites primarily use German or regional dialects, while management-level communication may be in German.​

In customer service, language use depends on clientele. German is common for domestic and international customer support, while many companies also hire speakers of Bavarian, Swabian, Saxon, and other regional dialects to cater to regional customers.

Education level

The German workforce comprises individuals with diverse education levels, ranging from basic schooling to advanced degrees. Education levels vary by industry, job role, and region, with skilled and unskilled workers contributing to different sectors of the economy.

• Unskilled and semi-skilled jobs (agriculture, construction, retail, informal sector): Primary (Grundschule) or lower secondary (Hauptschule)
• Skilled trade and technical jobs (manufacturing, automotive, electrical, construction): Vocational training (dual system), polytechnic diploma, Realschule
• Entry-level corporate and service sector jobs (clerical, sales, customer service): Bachelor's degree (BA, BCom, BSc) or Fachhochschulreife
• IT and engineering jobs (software development, technical support, research and development): Bachelor's degree (BEng, BSc in computer science, IT, or electronics)
• Finance and business jobs (accounting, banking, consulting, corporate roles): Bachelor's or master's degree (BCom, MBA, Steuerberater, CFA)
• Healthcare and life sciences jobs (medical, pharmaceuticals, biotechnology): Bachelor's or master's degree (MD, BPharm, MSc, MTech in biotechnology)
• Academia and research jobs (education, scientific research, government): Master's or PhD (MA, MSc, MPhil, PhD)

Recruitment trends and hiring considerations

The German job market in 2025 reflects strong demand in digitalization, healthcare, renewable energy, and skilled trades. Technology, automotive, and manufacturing remain core drivers of hiring, while flexible and hybrid work arrangements continue to influence talent acquisition strategies.

Labor shortages in elder care, engineering, and logistics are shaping recruitment incentives and workforce training programs. Employers increasingly seek candidates with digital literacy, cross-functional skills, and industry-specific qualifications.

Cultural considerations include a preference for formal application procedures, structured onboarding, and performance-based hiring. As your local partner, we can help you navigate German hiring practices, salary benchmarks, and compliance obligations — ensuring a streamlined and legally compliant recruitment process in Germany.

Workplace culture and business practices

Workplace norms and professional etiquette

German workplace culture emphasizes formality, punctuality, and direct communication. Organizational hierarchies are well-defined, and adherence to established protocols is expected.​

Hierarchy and authority: Decision-making processes are typically top-down, with clear distinctions between roles and responsibilities. Managers hold significant authority, and employees are expected to follow established procedures. ​

Email and phone etiquette: Business communications are formal and concise. Emails should include a clear subject line, formal greeting, and professional closing. Phone calls are direct, with minimal small talk, focusing promptly on business matters. ​

Meeting etiquette: Punctuality is crucial; arriving late is considered disrespectful. Meetings are structured with predefined agendas, and discussions are expected to stay on topic. Decisions are made after thorough analysis and consensus. ​

Professional dress code: Attire is generally conservative and formal, with dark suits common in corporate environments. In sectors like IT, dress codes may be more relaxed, but maintaining a neat and professional appearance is advisable.

Typical working hours and business customs

The standard workweek in Germany typically consists of 36 to 40 hours, spread over five days, with most employees working Monday to Friday. Standard hours are generally from 9:00 a.m. to 5:00 p.m., including a lunch break. Employees are entitled to at least one full day of rest per week, commonly on Saturday or Sunday. ​

Remote and hybrid work arrangements have become increasingly common across sectors like finance, tech, and professional services. Employers must ensure that remote employees adhere to working time regulations, receive appropriate rest periods, and are protected under German employment law. ​

Flexible working requests are a statutory right for eligible employees and must be considered fairly. Any agreed changes to working hours or location must be confirmed in writing in line with German labor regulations.

Key HR challenges and compliance risks

Germany's employment regulations, anchored in the German Civil Code and the Works Constitution Act, establish a detailed legal framework for employer obligations. Recent legislative changes, including the Bureaucracy Relief Act IV and updates to the EU AI Act, have introduced additional compliance requirements. Failure to adhere to these regulations can result in substantial fines, legal challenges, and reputational damage. The evolving landscape of tax laws and salary structures demands proactive HR management, particularly when transitioning from an EOR model to a fully established local entity.

Professional employer organization (PEO) vs. employer of record (EOR) in Germany

What is a PEO in Germany?

A professional employer organization (PEO) in Germany is a third-party service provider that manages human resources, payroll, compliance, and employee benefits for their workforce.

Challenges with a PEO model

While a professional employer organization (PEO) in Germany can streamline HR operations through a co-employment model, the client company retains certain legal liabilities. This arrangement typically necessitates establishing a local legal entity and managing aspects such as tax filings and employee benefits.

In contrast, an employer of record (EOR) assumes full legal responsibility for employment, enabling foreign companies to hire in Germany without setting up a local entity. The EOR manages payroll, taxation, compliance with labor laws, and statutory benefits, thereby reducing administrative burdens and legal risks.

EOR as an alternative to PEO

If you're interested in expanding into Germany and adhering to stringent labor laws or navigating collective bargaining agreements are among your top concerns, an employer of record (EOR) may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Germany — often in as little as two weeks — without having to take on the cost and risk of establishing a local entity.

Safeguard Global has more than 17 years' experience as an EOR in countries around the globe. As an EOR in Germany, we're experts in local employment regulations, payroll compliance, and benefits management, ensuring your operations meet all legal requirements.

Entity setup in Germany

Setting up a local entity

While employers of record (EORs) provide a quick entry into Germany, establishing a legal entity is essential for companies planning large-scale operations, direct hiring, and full market control. The decision depends on growth plans, industry regulations, and cost considerations.

Safeguard Global can help you assess your growth plan and objectives and find the solution that best meets your needs. We're the only provider that grows with you.

Entity registration steps and timelines

Establishing a legal entity in Germany requires several steps, each involving specific documentation and regulatory approvals. The process begins with selecting an appropriate legal structure, such as a Gesellschaft mit beschränkter Haftung (GmbH), and drafting the articles of association, which define the company's internal governance structure. These documents must be notarized by a German notary.​

Next, companies must open a corporate bank account and deposit the minimum share capital, which is €25,000 EUR for a GmbH. The bank will issue a certificate confirming the deposit, which is required for registration. Subsequently, the company is registered with the local commercial register (Handelsregister). Upon approval, the company receives a registration certificate, confirming its legal existence.​

After registration, businesses must register with the local trade office (Gewerbeamt) and obtain a trade license. Additionally, companies must register with the tax office (Finanzamt) to obtain a tax number and, if applicable, a VAT number. Depending on the business activities, registration with other authorities, such as the chamber of commerce, may be necessary.​

The entire incorporation process in Germany typically takes between two to six weeks, depending on the complexity of the business structure and the efficiency of the relevant authorities.​

Comparing EOR vs. entity setup

While EOR is a faster, low-risk option for market entry and small teams, entity setup is better suited for long-term growth and larger workforce expansion.

When EOR might better suit your needs:

• You need to hire employees quickly (one to two weeks).
• You don’t want to set up a legal entity and manage compliance.
• You are testing the German market before making a long-term commitment.
• You plan to hire fewer than 50 employees in Germany.
• You need flexibility without significant investment.

When entity setup might better suit your needs:

• You want full business control and plan to operate long term.
• You need to sign contracts, open bank accounts, and own assets in Germany.
• You are hiring 50+ employees (EOR costs become unsustainable).
• You operate in a regulated industry requiring local registration.
• You want to protect your intellectual property under German law.

Global workforce solutions

HR & Benefits solutions in Germany

We offer localized HR and benefits support in Germany, ensuring your workforce receives compliant and competitive offerings. This includes administration of statutory benefits (such as health insurance and pensions), onboarding, leave tracking, and employee records management. Whether your team is remote or office-based, we help ensure alignment with German labor regulations and market expectations.

Tax & Accounting solutions

Our team manages employer payroll tax calculations, income tax withholdings, and social contribution remittances in accordance with German tax law. We also support corporate tax filings and ensure compliance with Bundeszentralamt für Steuern (BZSt) and Sozialversicherungsträger reporting requirements.

Global Payments & Payroll Processing

We provide compliant multi-currency payroll processing and salary disbursements for German employees and expatriates. Our services include real-time payment tracking, year-end tax documents, and transparent deductions — ensuring you stay compliant with German wage and banking regulations.

Updated: May 2025

Partner with Safeguard Global as your Germany employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution to expand and hire in over 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Germany. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer: The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.