German Hiring and Recruiting

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German Hiring and Recruiting

Germany is the powerhouse economy of Europe with high employment levels, a strong industrial and manufacturing sector and consistently impressive export levels underpinning a robust economy.

Germany’s network of airports – 25 of which have international connections – are part of a highly-rated transport infrastructure, which includes major ports such as Hamburg, Europe’s third largest container port. More goods, worth over €200 billion, pass through Germany than any other European nation. Germany also has Europe’s largest rail network.

Numerous multinationals have offices throughout Germany’s major cities, drawing on a highly-educated, skilled and motivated workforce. Earnings and job security are high, unemployment is low – all of which attracts foreign companies to expand into the German market.

In this fast-moving commercial environment, companies must move quickly to extend their international reach. As a Professional Employer Organisation (PEO) and Recruitment Process Organisation (RPO), Bradford Jacobs source top-level staff from any industry and any country to find the perfect fit for every role. This is backed up by Employer of Record (EOR) services to handle all aspects of staff administration and compliance with Germany’s complicated employment, tax and registration laws.

Bradford Jacobs’ expertise in international recruitment services is indispensable for expansion into Germany. Our comprehensive knowledge of all German employment sectors, and understanding of the culture and customs, guarantees an untroubled transition.

https://www.business.hsbc.com/business-guides/germany/economy

Challenges when expanding into Germany

Establishing a subsidiary or independent entity in Germany involves complex processes which emphasise the benefits of obtaining expert in-country advice. In 2019, Germany ranked just outside the World Bank’s top 12 nations for ease of doing business, partly because of the requirements for start-ups to liaise with chambers of commerce, register with the local chambers of industry, trade associations and to enrol with the commercial register.

The German fiscal system is difficult to navigate, with employers having to deal with changing regulations concerning payroll, various tax and social insurance payments, VAT, employment laws and more. Cultural differences can also affect business in the hierarchical German commercial structure, which can delay negotiations and decision making.

These complexities make it strongly advisable to consult with global recruitment specialists Bradford Jacobs and consider the alternatives to opening a subsidiary. Our Professional Employer Organisation (PEO) network will source the brightest talent either within Germany or from abroad. Then our Employer of Record (EOR) services relieve the administrative headaches, freeing incoming companies to concentrate on their territorial expansion. The employee is all yours – the paperwork is all ours.

The Recruitment Process in Germany

A foreign company does not need to use a local entity to hire an employee, but under the statutory social security regulations will need a local representative. With the employee in place the recruitment process must follow strict procedures, which include:

  • Registering with the German Tax Office
  • Registering with the Sozialversicherungen (Social Security Organisations)
  • Creating employment contracts
  • Applying special expatriation status (if applicable)
  • Calculating monthly salary and creating payslips
  • Researching available tax free allowances
  • Submitting wage tax returns and national insurance forms
  • Corresponding with involved parties
  • Creating annual accounts, administration and year-end statements
  • Creating payment schedule for wage tax, national insurances, and net wages

However, the simple answer to avoiding these time-consuming and unproductive demands is to engage an Employer of Record (EOR) such as Bradford Jacobs. We will convert your blueprint for expansion into the German economy into an action plan, as follows:

  • Bradford Jacobs step in as EOR through our legal German entity to guarantee your employees comply with employment contracts, payroll, HR, tax and where required, German visas and work permits
  • You have daily control of your employee, while Bradford Jacobs manage all work-related registration formalities
  • Employee completes time sheets and approved expenses claims and we invoice you, the client. Once paid, we deduct all contributions to German authorities and transfer the balance into employee’s nominated account
  • Within a few days your company has international presence in Germany, in prime position to explore further expansion without having risked the expense or hassle of setting up your own subsidiary or branch office

The general requirement of a residence title and work permit for all employees wanting to work in Germany does not apply to nationals from the European Union (EU), European Economic Area (EEA) or Switzerland.

Since March 1 2020, changes in the German Residence Act allow for workers from outside the EU/EEA to enter Germany if they hold an employment contract. Skilled workers from non-EU/EEA countries can stay in Germany for a limited period if they have German language skills and prove they can secure their livelihood.

https://knowledge.leglobal.org/hiring-practices-in-germany/

Legal Checks you can make on Employees

Background checks – the phrases ‘information or pre-employment verification’ are often preferred in Germany – are subject to the General Data Protection Regulation (GDPR) and the German Federal Data Protection Act. The employee’s right to privacy must not be unreasonably affected and the employer must have a legitimate reason to obtain the information.

For example, a private employer has no right of access to an applicant’s criminal record. Therefore, without the explicit consent of the employee, personal data can only be collected or used if relevant to hiring decisions. An employer has a general right to verify statements made in the application, such as references to:

  • Academic qualifications, such as degrees, diplomas, certificates
  • Original copies of reference letters, but the employer cannot contact previous employers without the applicant’s consent

A credit history check is only permissible if future duties involve positions of particular financial trust. Background checks on social networks are allowed only where there is a professional context, on such sites as LinkedIn.

When the recruitment process reaches interview, the employer faces similar restrictions. The General Equal Treatment Act aims to eliminate treatment of employees based on certain criteria, such as:

  • Race and ethnic origin
  • Gender
  • Religion or beliefs
  • Disability
  • Sexual discrimination
  • Age

Such references also apply to job advertisements. For example to advertise for a ‘young team member’ might indicate discrimination against age.

Personal data from rejected applicants may be kept only for six months, without the applicant’s express permission.

https://knowledge.leglobal.org/wp-content/uploads/sites/2/LEGlobal-Employment-Law-Overview_Germany_2019-2020.pdf

How do Companies hire German Employees?

Foreign companies looking to hire in-country employees as part of their expansion into Germany must comply with recruitment tax and social security regulations and a host of federal employment laws as well as any collective bargaining, trades union or work council agreements.

Once staff have been sourced, interviewed and selected, the employer has a number of statutory obligations, including providing the contract with its main terms within one month of employment starting. The contract should include:

  • Names and addresses of employer and employee
  • Employment start date
  • Duration of employment (for fixed-term contracts)
  • Place of work
  • Nature of employment
  • Remuneration, frequency and method of payment
  • Annual leave
  • Notice period
  • Whether collective bargaining or other trade agreements apply

If the employer is locating and hiring staff from outside Germany, or migrating them from the parent company’s country, they will also have to deal with visa, work permit and residence requirements, depending on whether or not they are from European Union or European Economic Area nations.

Where employers hire workers needing a work visa to enter Germany, they should already have a job offer or contract in order to be issued the work visa. They should apply with a German visa application form, a copy of their employment contract and a compulsory health insurance certificate (Gesetzliche Krankenversicherung) from their German employer, valid from date of employment.

Main types of work/residence permits:

  • Temporary residence permit for employment purposes
  • The EU Blue Card
  • Permanent residence permit

There is an alternative to this tangle of red tape and administrative headaches. Bradford Jacobs’ expertise in global recruitment provide solutions for international companies from the moment they consider expansion into Germany. We search for the best-qualified talent to fill the desired roles. Then we implement our Employer of Record (EOR) know-how to ensure you comply with every aspect of German payroll relating to salaries, tax and social insurance by the time your new employee is sitting at their desk. Your company is fully operational within days rather than weeks or months.

https://www.auswaertiges-amt.de/en/aamt/zugastimaa/buergerservice/faq/04-eubuergerarbeitsmoeglichkeiten/606668

Basic Facts on Hiring in Germany

  • At interview, the employer’s questions are restricted by data protection legislation and must relate directly to the job specification
  • The applicant has the right to refuse to answer questions violating their privacy or anti-discrimination laws
  • Terms and conditions can depend on collective bargaining, trades union and works council agreements
  • Employers must adhere to the national minimum wage, although in some sectors higher rates may have been set by collective agreements
  • A contract setting out the basic terms of employment must be provided to the employee within one month of starting work
  • The employer and employee may agree to a trial period, which must not exceed six months and has a two weeks’ notice period. The Dismissal Protection Act does not apply during the first six months of employment, whether or not a trial period was agreed
  • Notice periods given by the employer range from four weeks for less than two years’ service up to seven months for more than 20 years’ service, though these can be varied by collective agreement
  • The statutory working week is based on eight hours a day from Monday to Saturday, but can be increased to 10 hours provided the average is eight hours over a six-month period
  • Overtime is not regulated by law, but generally by collective agreements for each sector or by individual contracts

German Work Culture

Employees in Germany are often viewed as working fewer hours but being more productive. Whether true or not, German employees tend to be intensely focused on their job – working hours are for work, not chatting or furtively scanning social networks. Communication between peers generally relates to their work, not out-of-office activities.

Nevertheless there is a growing appreciation of striking a work/life balance through flexi-time and taking opportunities for remote working, but in the office itself etiquette still plays a key role. Here are a few tips:

  • First impressions count and introductions tend to be formal. Using ‘Herr’ or ‘Frau’ is the norm
  • If speaking German, use the formal version of ‘you’ (Sie), unless invited to use the informal ‘Du’
  • Dress is similarly formal, men wearing dark suits, white shirt, with a solid tie; women wearing dark suits, white blouse or a formal dress. Only remove jacket if your German colleague does so
  • Verbal agreements and handshakes bond an agreement
  • Germans like presentations to include, facts, statistics and graphs and to be well presented
  • The hierarchical structure means decisions filter down from the top, so be patient
  • Germans schedule meetings well in advance, so make an appointment, be punctual and respect the formality of the occasion
  • Business meals are used to cement relationships, not generally to discuss deals
  • If Germans enter into an agreement they will commit one hundred per cent and will expect the same in return

What Employment Laws exist in Germany?

German employment law does not have a single code but is based on Federal legislation, case law, collective bargaining, trades union and work councils’ agreements and individual contracts between employers and employees. Therefore companies must be aware where agreements apply, rather than legislation, such as

  • Overtime
  • Dismissal or termination
  • Severance payments

However, there are laws governing certain elements of employment that must be followed. These include:

  • National Minimum Wage, set at €35 per hour in 2020
  • Social security contributions, which are codified under the Social Code (Sozialgesetzbuch (SGB) in 12 parts
  • The Immigration of Experts Act, to encourage highly skilled workers from outside the European Union to move to Germany
  • The Second EU Data Protection Act, affecting the rights of employees
  • (Amended) Working Time Act (Arbeitszeitgesetz – ArbZG) regarding employers monitoring employees working hours
  • The Federal Vacation Act (Bundesurlaubsgesetz – BUrlG)
  • The Maternity Protection Act (Mutterschutzgesetz – MuSchG)

This mix of case law, legislation and agreements make German employment regulations extremely difficult to navigate without risking sanctions or fines for non-compliance. Bradford Jacobs’ comprehensive knowledge of all aspects of German employment laws make us the ideal partner for your expansion into Europe’s leading economy. The global reach of our Professional Employer Organisation (PEO) recruitment platforms, allied to the in-country knowledge of our Employer of Record (EOR) specialist teams, guarantee a successful and smooth transition into your new territory.

https://knowledge.leglobal.org/wp-content/uploads/sites/2/LEGlobal-Employment-Law-Overview_Germany_2019-2020.pdf

How do you Onboard German Employees?

Moving existing employees into Germany, or recruiting new staff in-country, is the first stages for companies planning to onboard employees. The parent company then has to deal with visas and work permits and then ensure they comply with all local laws and regulations at the risk of attracting fines and sanctions from German authorities.

The most efficient and effective method of onboarding employees into Germany is through a global recruitment company such as Bradford Jacobs. Our Professional Employer Organisation (PEO) and Employer of Record (EOR) services manage every stage of the process from finding the employee to seeing their first cheque is paid on time.

Bradford Jacobs’ recruitment specialists put us in the front line of international talent acquisition and from there we step in to handle the intricacies of German employment laws, which are a confusing mix of federal legislation, collective agreements, trades union and work councils’ agreements and individual contracts.

Bradford Jacobs deal with every element of payroll and tax, human resources, holiday entitlements and more. We also devise specific onboarding plans to integrate your new employee into the company, with guides, useful information and resources to help them understand local culture, customs and business etiquette.

What are the Benefits of Hiring Outsourcing for Germany?

A major benefit of outsourcing recruitment into Germany is that it streamlines international expansion by opening potential new markets efficiently, speedily and cost-effectively. Optimising the benefits of outsourcing allows companies to focus on planning and managing their new venture.

Advantages for the parent company include:

  • A wide-ranging talent search undertaken by a Professional Employer Organisation (PEO) with reduced recruitment costs for the parent company
  • Control over capital expenditure, which is largely removed by outsourcing as there is no initial need to establishing premises for a subsidiary
  • Mitigate risks with an ‘easy in, easy out’ operation while you explore new markets
  • Quickly start new projects
  • Focus on core business
  • Improve flexibility
  • Scale your global workforce to fit expansion blueprint

The next stage is to outsource payroll, by utilising Bradford Jacobs’ Employer of Record (EOR) platforms to deal with the demanding requirements of German employment laws and regulations, which come with strict penalties for non-compliance. Bradford Jacobs’ global recruiting and EOR services take care of selection, onboarding, payroll, compliance and providing ongoing support.

Working with a Recruitment Agency in Germany

Germany is a member of the European Employment Service (EURES) network with other European Union nations plus Norway and Iceland. The member nations exchange information on job vacancies, living and working conditions.

The German Federal Employment Agency (Bundesagentur für Arbeit, BA) is the largest provider of labour market services in Germany and has a network of over 700 agencies.

The government organisation International and Placement Service (ZAV) support jobseekers from abroad seeking employment and is a department of the Federal Employment Agency. It operates as a bridge between Germany and the world, advising employers and employees in different sectors of the economy and targeting specific groups of international personnel.

https://www.arbeitsagentur.de/en/welcome

https://www.arbeitsagentur.de/datei/zav_ba018761.pdf

Employment Contracts in Germany

German employment contracts include:

  • Permanent labor contract (unbefristeter Arbeitsvertrag)
  • Fixed-term labor contract (befristeter Arbeitsvertrag)
  • Contract with a recruitment agency
  • Mini-job contract

Contract details can typically include:

  • Job description
  • Contract duration
  • Probation or trial period
  • Working hours
  • Salary
  • Bonuses
  • Any additional benefits, such as car or mobile phone
  • Holiday leave
  • Company pension scheme

A permanent labour contract is for an unspecified, indefinite period. It usually contains a probationary period of up to six months, after which the contract can only be terminated if the employee resigns or the employer finds legal grounds for dismissal (there are strict guidelines governing this).

Fixed-term labour contracts are valid for a specific period. They may be renewed once this period has elapsed, but the employer is not obliged to do so. A fixed-term contract can be renewed a maximum of three times, provided the total length of employment does not exceed two years.

Contracts with recruitment agencies means the worker is employed by the agency (Personalagentur) and not directly by the employer. The agency is responsible for paying the employee. Temporary contracts can be for a maximum of 18 months, but the employer is entitled to the same benefits and remuneration as their full-time employees.

Mini-job contracts are a form of marginal employment where the employee earns no more than €450 per month or works less than three months or 70 days each year (Kurzfristige Minijobs). Mini jobs can be taken alongside a main job as a supplement to regular wages, or as the principal form of income. Workers with mini-job contracts are not liable for income tax or social security contributions but have the same rights as permanent employees for such as sickness benefits or holiday pay.

Other contracts may be drawn up regarding casual employees, apprentices and trainees, commission and piece rate employees.

https://www.europeanjobdays.eu/en/content/germany

German Minimum Wage

The German national minimum wage, by law, is €9.35 an hour for employees. (From January 1, 2021 the minimum wage will be €9.50 an hour). Any contract or work agreement for any amount below that may be invalid. Many industries and sectors set their own minimum wages based on collective agreements within their sectors understanding these agreements isn’t always easy.

If the minimum wage is not paid, employees can make a claim for the difference between their actual pay and the minimum wage from their employer. Violations of the Minimum Wage Act can trigger fines of up to €500,000.

From July 1 2022 the statutory minimum wage will be €10.45. The government reviews the minimum wage bi-annually. The statutory minimum wage applies to all employees over the age of 18. Under certain conditions, interns may also be entitled to the minimum wage.

https://www.bundesregierung.de/breg-en/issues/sustainability/mindestlohn-faq-1765550

Probation in Germany

The employment contract must specify when your employment begins and the length of the probationary period. In Germany, the probationary period usually makes up the first three months of employment. The maximum probationary period is six months. During this time, the employment relationship can be terminated by either party with two weeks’ notice. After the probationary phase, employees may resign without giving reasons, keeping to a set notice period which is likewise agreed in the contract.

Working Hours in Germany

On average, employees in Germany have among the shortest working hours in Europe. A key issue for many workers is flexible working time. Couple this with high productivity levels, and it seems that Germans strike an ideal work-life balance.

The average working week in Germany is between 36 and 40 hours over a six-day period, Monday to Saturday but should not exceed eight hours per day or 48 hours per week, averaged over six months. However, under certain circumstances it can be extended to 10 hours. The majority of full-time jobs are seven or eight hours a day, five days a week, with an hour or 30 minutes’ rest at lunchtime which can be split into two breaks. A 45-minute rest break must be given if an employee works for more than nine hours, again this can be split into breaks of at least 15 minutes.

At the end of the working day, there must be a minimum uninterrupted rest period of 11 hours. In addition, most industries have collective agreements that regulate working hours and holidays. Therefore some companies may operate a longer working week, but compensate their employees with a higher salary or additional annual holiday leave.

Work on Sundays and public holidays is generally prohibited. There can be exceptions, for example in the service industry. However, work on Sundays has to be compensated by corresponding time off within the following two weeks (or eight weeks in the case of work on public holidays).

https://businessculture.org/western-europe/business-culture-in-germany/work-life-balance-in-germany/

Overtime in Germany

Overtime pay and surcharges are not regulated by law but are subject to the employment contract, collective bargaining or works council agreements. Overtime must also conform to the maximum working hours (i.e. no more than 60 hours a week, averaging 48 hours over a six-month period).

Overtime is usually compensated with time off in lieu, although some companies pay for any overtime hours worked. The right to compensation for overtime hours worked will be specified in the employment contract. Some companies maintain that a small amount of overtime is a normal part of the job and will not provide additional remuneration.

In the study by human resources company ADP, workers in Germany reported by far the highest amount of unpaid overtime, with 71.1% of respondents saying that they regularly work additional hours without receiving any compensation in their salary or extra holiday leave.

Notice Periods in Germany

Over decades Germany has developed a strong social contract with workers. There are many laws and regulations that employers must follow to ensure the wellbeing and fair and equal treatment of employees.

The length of the notice period given by the employer depends on the employee’s length of service, ranging from four weeks for employees with less than two years’ service, to seven months for employees with more than 20 years’ service. Unless otherwise stated in the employment contract, the extended statutory notice periods are only applicable to terminations by the employer, whereas the employee may terminate the employment with a notice period of four weeks to the 15th or the end of a calendar month.

The minimum notice period given to employees, with length of service:

  • Up to 2 years, four weeks prior to either the 15th or the last day of the next month
  • 2 to 4 years, one month prior to the last day of the next month
  • 5 to 7 years, two months prior to the last day of the next month
  • 8 to 9 years, three months prior to the last day of the next month
  • 10 to 11 years, four months prior to the last day of the next month
  • 12 to 14 years, five months prior to the last day of the next month
  • 15 to 19 years, six months prior to the last day of the next month
  • 20 years or longer, seven months prior to the last day of the next month

Most employment contracts align the notice periods for employees with the extended periods applicable to employers. Collective agreements may specify longer or shorter notice periods, whereas individual contracts of employment may only specify longer notice periods.

Dismissals must be declared clearly and unambiguously. The decision to end an employment relationship, and when it should end, must therefore be stated with absolute clarity in the dismissal notice. Any notice of termination, whether issued by the employer or by the employee, must be made in writing or the notice of termination is invalid.

https://www.businesslocationcenter.de/en/labor-market/employment-law-and-collective-contracts-system/concluding-employment-agreements/

Redundancy, Termination / Severance in Germany

Under the Employment Protection Act, an individual employee on permanent contract is entitled to severance pay if the employer indicates that the dismissal is based on operational grounds and offers compensation.

Severance payments of half a month’s wage for each year of service can be filed. The maximum payment stipulated by law equals 12 months’ salary. This rises to 15 months’ salary for employees aged 50 or older, with at least 15 years of continuous service, and to 18 months’ salary for employees aged at least 55 and with at least 20 years of continuous service.

There is legal entitlement to severance pay for an employee in the case of a collective dismissal if a works council is in place. Under the Works Council Constitution, in case of collective dismissals due to operational grounds, the employer and the works council negotiate a social plan that includes redundancy compensation. In case the employer does not comply with a social plan, the worker may turn to the labour court for severance pay.

https://www.oecd.org/els/emp/Germany

Pension Plans in Germany

Germany operates a three-pillar pension system, comprising mandatory state pension, occupational pensions and private pensions. In the past, individuals relied predominantly on pension benefits provided by the statutory pension insurance.

The pension scheme contribution in 2020 is 18.6% of earned income, shared equally between the employer and employee. The employee does not make any contribution on earned income above €82,800 in the former West German states or above €77,400 in the former East German states. Contributions are due to increase to 20% by 2025.

Company or occupational pensions are private schemes offered by employers to allow employees to boost their contributions toward retirement. Private pensions are set up by banks and insurance providers.

Public Holidays in Germany

There are more public holidays in Germany than any other European country. On these days, banks and most shops close, including supermarkets. However, many restaurants remain open. Public transportation and other services are also available. Many shops and businesses are also closed on Carnival Rose Monday (Cologne and Rhine region), Christmas Eve and New Year’s Eve although these are not official holidays.

National dates:

Stephen’s Day December 26Sick Leave in Germany
  • New Year’s Day - January 1
  • Good Friday - March/April
  • Easter Monday - March/April
  • Labor Day - May 1
  • Ascension Day - May
  • Whit (Pentecost) Monday - May
  • Day of German Unity - October 3
  • All Saints’ Day - November 1
  • Christmas Day - December 25
  • Stephen’s Day - December 26

Sick Leave in Germany

If an employee is unable to perform their contractual duties due to physical or mental incapacity or illness, they can take time off work. The employer must be informed immediately and often also the Human Resources department. If absence extends over three consecutive days, the employee must submit a doctor’s note.

German law requires that employees are paid 100 per cent of salary or wages by their employer during the first six weeks. Under certain circumstances, this six-week period can be enacted more than once a year. If employees are sick during their holiday, some companies will allow this to be counted as sick leave rather than holiday leave.

After six weeks, employees are entitled to statutory/private insurance sickness benefits. The allowance amounts to 70% of normal pay for a maximum period of 78 weeks.

Sickness benefit is funded by their health insurance premiums, meaning employees are automatically covered if they contribute to the German statutory insurance system. The insurance covers employees and their families. The general contribution is 14.6 % plus an additional contribution if implemented by the respective insurance institution – on average 1.1 % of the monthly gross pay up to € 4,687.50 (payable half each by employer and employee). All workers with regular annual salaries lower than €62,550 must be enrolled in the compulsory scheme.

Requirements for sickness benefit:

In order to qualify for sickness benefit, the following criteria must be met:

  • The employee contributes to a statutory health insurance scheme
  • Individuals have a valid residence permit (if applicable) allowing work in Germany
  • Being unable to work due to sickness for more than six weeks and/or the employer is no longer paying a salary
  • A certificate from a doctor confirming incapacity for work
  • Attend a medical examination if requested

With private health insurance, the amount and duration of sickness benefit received beyond the initial six weeks depends on the type of cover chosen when taking out the policy.

https://www.iamexpat.de/expat-info/social-security/sickness-benefit-germany-krankengeld

Vacations / Holidays in Germany

Full-time employees in Germany are entitled to a statutory minimum of 20 days’ annual paid holiday, based on a five-day working week, or 24 days based on a six-day working week. Part-time employees’ holiday leave is calculated pro rata, based on weekly working hours. Employers regularly grant more than the minimum vacation and between 25 and 30 days per year is common. Holiday due is detailed in the work contract.

Full holiday entitlement starts after six months’ employment. If employment ends before six months or within the first half of a calendar year, the employee is only entitled to one twelfth of annual vacation entitlement for each month employed. Termination after the first six months and within the second half of the calendar year, entitles the employee to the full annual vacation.

There is no entitlement when an employee has already taken vacation in a previous job during the same calendar year. The previous employer must certify the vacation already taken.

During vacation, employees are entitled to full remuneration. Frequently, the employer also grants a special holiday bonus.

In general, employees must take their annual holidays/vacation during the calendar year. Otherwise, it is forfeited. However, unused holiday can be carried forward until March 31 of the next calendar year if the employee was unable to take the holiday due to operational or personal reasons.

If any holiday entitlement still remains at the end of the employment, employees can claim financial compensation for the days not taken or take the days during the notice period.

https://www.iamexpat.de/career/working-in-germany/sick-holiday-maternity-leave

Maternity / Paternity Leave in Germany

Maternity and parental leave in Germany is complex and potentially confusing, especially for foreigners.

Female employees are entitled to paid maternity leave, six weeks before and eight weeks after giving birth. Maternity leave after the birth is 12 weeks in case of multiple births, premature births and disabled children. Payments to the employee during this period are made partly by the statutory health insurance provider and partly by the employer.

The German social security system provides for maternity benefit (Mutterschaftsgeld) to be paid to most women during statutory maternity leave.

The maternity allowance amount is determined by the salary of the last cleared calendar months before the beginning of maternity leave to a maximum of €13 per day plus 65% of their most recent pay. The employer pays the difference between the maternity allowance and previous salary.

Employees not covered by state health insurance (e.g. privately insured or with family insurance under the state health insurance system) receive one-off maternity benefits up to a maximum of €210 from the Federal Office for Social Security).

Following maternity leave, both parents of a new-born child are entitled to parental leave for up to three years (until the child has reached the age of three). Any mother or father who are in an employment relationship may apply for parental leave, but need to inform both the employer and health insurance fund in advance seven weeks before the intended leave.

An additional option, Parental Allowance Plus, is also available for parents of children born on or after July 1 2015. This gives employees the right to receive the parental allowance from the government for a period of up to 24 months or, if both parents decide to take parental leave, parental allowance can be shared between the parents for a period of up to 28 months.

https://bfgnet.de/employment/fast-find/section-2-subsection-7.html

Work with Bradford Jacobs’ Global Payroll and Recruitment Services in Germany

Bradford Jacobs’ Employer of Record (EOR) and Professional Employer Organisation (PEO) specialist teams put into action their unrivalled understanding of hiring and recruiting in Germany when consulting with international companies on their global expansion plans. Germany have Europe’s most powerful economy and attracts foreign investment and expansion, but negotiating the complex labour laws and complying with payroll, tax and registration issues demands expert guidance. Every aspect of hiring and recruiting in Germany falls within our expertise and experience. Remove the risks, costs and uncertainty of establishing a subsidiary in Germany by outsourcing your recruitment and payroll through Bradford Jacobs. Contact us now – we have the solutions.