Employing in Germany
In Germany, the minimum wage is set at €12.82 per hour.
The individual income tax contributions in Germany range from 14% to 45% and is calculated on a progressive basis. The rate is based on the employee tax class, which means that marital status and multiple income sources will determine an employee’s tax class and therefore their tax rate.
For more information on other tax rates, allowances and employer contributions in Germany, please get in touch to discuss your specific requirements.
In Germany, pension contributions are a significant portion of social security, with employees and employers splitting the 18.6% pension contribution rate between them.
This contribution is capped at an annual income rate, which is currently €84,600 (or €81,000 in the new federal states).
In Germany a standard working week is 8 hours per day and 40 hours per week, Monday to Friday. Any hours outside of this are considered overtime.
Employees can work overtime although payment is not mandatory. Employers can choose to compensate overtime either financially or with time off in lieu, at their discretion. An employee can work a maximum of 2 hours overtime per day and 12 hours per week.
Employee’s leave consists of several types:
- Statutory time off or paid leave, which is 20 days per year for full-time employees
- Public holidays (there are 9 bank holidays per year in Germany)
- Maternity, Paternity and Parental leave
- Sick leave
Termination of an employment contract in Germany is complex and is covered by the Dismissal Protection Act and any contractual obligations made at the time employment commenced.
Legally compliant terminations can include:
- When the agreed contract end date occurs
- Voluntarily by the employee, or by mutual agreement
- Termination by the employer:
- At the conclusion of any probationary period
- Conduct-related dismissal
- Person-related dismissal
- Business-related dismissal
All dismissals require a minimum notice period to be given, which is four weeks prior to either the 15th of the month, or the last day of the next month.
