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Germany has one of Europe’s strongest labor markets, driven by industries like engineering, IT, healthcare, logistics, and advanced manufacturing. Talent shortages remain structural, especially in tech and skilled trades, making recruiting highly competitive. Employers must navigate compliance requirements set by labor law, Works Councils, and qualification recognition.
Facts & Stats
Germany Labor Laws
In Germany, probation (Probezeit) is typically agreed in the employment contract and can last up to 6 months. During probation, termination is easier, and the statutory notice period is usually two weeks (unless the contract or collective agreement sets different terms).
Statutory paid leave is at least 24 working days (Werktage) per year under the Federal Leave Act, which equals 20 days for employees on a standard 5-day week. Many employers offer 25–30 days to stay competitive, but the legal minimum remains the baseline.
The Working Time Act limits work to 8 hours per day, with an extension to 10 hours allowed only if the average returns to 8 hours within 6 months or 24 weeks. Over a 6-day week, this corresponds to a general 48-hour weekly cap.
Germany does not set a universal statutory overtime premium. Overtime pay, time off in lieu, and caps are typically defined by the employment contract, collective bargaining agreement (Tarifvertrag), or company policy. Even when overtime is allowed, ArbZG daily/weekly limits and rest rules still apply.
Germany’s statutory minimum wage is €12.82 per hour from 1 January 2025. This applies nationwide across sectors unless a higher sector minimum applies under a valid collective agreement.
Germany payroll costs are driven mainly by statutory social insurance. Most contributions are split between employer and employee, subject to income ceilings, with health insurance including an additional contribution that varies by provider.
20–22% of gross salary
Employees generally pay the other half of social insurance: pension 9.3%, unemployment 1.3%, health 7.3% plus half of the insurer’s additional contribution, and long-term care contributions with special rules (a surcharge can apply for childless employees, and reductions can apply for parents). Contributions apply up to statutory ceilings.
20–22% of gross salary
Employers generally pay roughly half of the main social insurance contributions: pension 9.3%, unemployment 1.3%, health 7.3% plus half of the health insurer’s additional contribution, and long-term care approximately half of the standard rate (with child-related adjustments handled via employee side rules). Rates apply up to contribution ceilings.
0% up to the basic allowance, rising to 45%
Beyond social insurance, employees pay wage tax (Lohnsteuer) withheld via payroll. The final amount depends on income, tax class, allowances, and location. Some employees also pay solidarity surcharge and church tax. Employers usually rely on payroll software and ELStAM data to calculate withholding correctly.
18.6% of gross pay, split 9.3% employer / 9.3% employee
Terminating employment in Germany is procedure-heavy. Notice periods are regulated by law, dismissal protection can apply, and Works Council consultation is required where a Betriebsrat exists. A termination can become invalid if the Works Council is not properly consulted before dismissal.
Statutory notice periods depend on who terminates and employee tenure. For employees, the baseline rule is 4 weeks to the 15th or end of the month. During an agreed probation period (max 6 months), either side can usually terminate with 2 weeks’ notice.
Germany does not guarantee severance in every termination. A statutory severance right can arise in specific cases, such as §1a KSchG for certain redundancy dismissals when the employer offers it in the notice and the employee does not file a claim. The amount is 0.5 monthly earnings per year of service.
Germany’s leave framework includes statutory annual leave, public holidays that vary by federal state, and protected absences such as sickness and family-related leave. For recruiters, the key baseline is the Federal Leave Act minimum, then add company policy or collective agreement benefits on top.
Public holidays vary by Bundesland. Germany has one federal holiday (German Unity Day), while most others are set by state law. Many employers plan on 9 holidays nationwide, with total public holidays typically ranging roughly 10–13 depending on the state.
Frequently asked questions
How do I hire an employee in Germany step by step?
Start with a compliant job description, then source candidates through German job boards and direct outreach. Use structured screening, verify right-to-work documents, and issue a written Arbeitsvertrag before the start date. Complete tax, health insurance, and social security registrations during onboarding.
What must a German employment contract include in 2025?
A German contract should clearly state job title and duties, start date, workplace location, working hours, salary and pay frequency, probation period, notice period, holiday entitlement, and any collective agreement references. Many employers also document remote work rules and overtime handling to avoid disputes later.
What are the key legal rules on working hours, leave, and sick pay in Germany?
Working time is regulated under the Working Time Act, statutory leave has a legal minimum under the Federal Leave Act, and sick pay typically requires employers to continue salary for a defined period before health insurance benefits apply. Your contract and policies should reflect these rules and any collective agreement terms.
Do I need to involve the Works Council (Betriebsrat) when hiring in Germany?
If a Betriebsrat exists, involve it early. Works Councils can influence job postings, selection processes, and onboarding conditions under co-determination rules. Skipping required consultation can delay hiring and create legal risk, so align on the role profile and process before finalising the offer.
How can I hire non-EU talent in Germany in 2025?
Use the Skilled Immigration pathways and plan for documentation, qualification recognition where required, and realistic timelines for permits. Employers that provide relocation support, registration guidance, and structured onboarding typically close international candidates faster and reduce early drop-off.
