Germany’s known for having strict labor laws. If you want to hire someone there, you need to make a choice: Do I hire talent as employees, or do I hire people as contractors?
If you want to successfully hire in
Germany
, you have two options:
Laws about hiring contractors are significantly more simple in
Germany
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Germany
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Germany
.
Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Germany
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Germany
, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Germany than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Germany.
PTO is calculated by the:
German holidays differ based on the state. However, there are 9 national holidays that all states follow.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Mothers are entitled to 6 weeks leave at full pay prior to their child’s birth, and 8 weeks at full pay after birth. In the case of premature or multiple births, 12 weeks of paid leave is permitted after birth.
During such maternity leave, the employer will continue to pay the employee’s salary, and the health insurance company shall fully reimburse the employer.
Paternity leave falls under parental leave.
Parental leave is 36 months and can be divided between the parents as they see fit. The eight weeks of maternity leave (after labor) are counted as part of this leave.
In the case of the mother, the parental leave starts after maternity leave stops. During parental leave, parents can choose to work part-time for up to 30 hours per week.
At least 12 months of parental leave must be taken within the first 3 years after labor – the rest 24 of these 36 months can be taken until the child reaches the age of 8.
Parental leave does not start automatically, it must be requested in writing or submitted to the employer at least seven weeks before the start of the parental leave.
No additional mandatory leave.
None.
None.
All employees are protected by the German Termination Protection Act after the first 6 months of employment. The employer should have a specific reason to dismiss an employee, and there are different types of reasons (related to the personal situation of the person to be dismissed, related to the behavior of the person to be dismissed, related to the employer’s business).
A dismissal notice must be in writing and signed by the employer’s authorized representative. Generally, terminating employment in Germany, without the employee’s consent is a complex process, hence many termination processes are made under mutual agreement.
The notice period in Germany should be at least 4 weeks and increases according to the length of service as follows:
Severance payment is not mandatory if a justified reason and proper notice are given for the termination. However, severance payment must be given for termination caused by operational changes.
When severance payment is given, it is a half month of the employee’s regular wage for every year the employee was in the company.
The probation period is up to 6 months and is subject to mutual agreement between both parties.
38-40 hours average per week, up to 48 hours in exceptional cases.
Workdays are typically 8 hours and should not exceed 10 hours.
Overtime payment is required when stated in employees’ individual contracts or collective labor agreements. The statutory maximum weekly working time is 48 hours.
The regular daily working time may be extended up to 10 hours, provided that on average 8 hours per working day are not exceeded within a reference period of 6 months or 24 weeks.
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