Employer of record in Germany: costs, rules and how to hire
Hire someone in Germany without opening your own German company.
An employer of record (EOR) can handle local employment while you manage the person’s work. Start by confirming the provider’s coverage and the arrangement available for your specific hire.
By Employ Borderless · We help you understand and compare EOR services.
Start with our hiring overview, then use the guide to plan your offer and costs.
Use the dated guidance below for current rates and requirements.
Watch on YouTubeHow does an employer of record in Germany work?
Three parties, two contracts: the EOR employs the person under a local employment contract, your company signs a service agreement with the EOR and directs the day-to-day work. Which arrangement is legal and sensible in Germany is decided by the questions below.
Your company
Choose the person, agree their role and manage their daily work.
The employer of record
Handles the agreed employment, payroll and HR services through the employing entity named in your contract.
Your employee
Works with your team under a local employment contract with the EOR’s employing entity.
- Do you already have an entity in this country?
- How many people are you hiring, and for how long?
- Is the work genuinely independent, or is it a job?
- Who carries the employment risk if the arrangement is challenged?
What each route means in full
- Your own entity
- Choose it when: You already have a company here, or you are committing to a substantial local team for the long term.You become the legal employer. You arrange payroll, benefits, filings and employment support yourself, and you carry the setup and running cost.
- Employer of record
- Choose it when: You have a person to hire here, want them employed properly, and do not want to open a company for it.The provider is the legal employer through its own entity. You direct the work and pay one invoice covering salary, employer costs and the service fee.
- Independent contractor
- Choose it when: The work is genuinely independent: their own business, their own methods, their own clients.A contract for services, not employment. The label does not decide the status; how the person actually works does, and getting it wrong is reclassified after the fact.
Hiring in Germany: the short version
The Federal Employment Agency must refuse its employment approval where the person is to work as a temporary agency worker. Read that again with an EOR hire in mind: if your candidate needs a residence route that depends on that approval, the EOR option is closed before the price is discussed. It is the surprise that ends more German EOR plans than cost ever does, and almost nobody hears it until the offer is out.
The second German particularity is that notice is a ladder, not a number. After probation it starts at four weeks to the 15th or month-end and climbs with service to seven months at twenty years, so the exit cost of a hire is set by how long you keep them. Add the employee-leasing rules that apply when someone works under your instructions, and the German question is legal before it is commercial: which arrangement, which licence, which limit.
Your first hire in Germany in five decisions
Five things settle a German hire, and each carries a number this page explains in full.
- Entity or EOR. An EOR suits a role with an end date, because the default employee-leasing assignment limit is 18 consecutive months for the same worker with the same hirer.
- Employee or contractor. Personal dependence, integration and instructions about the work decide status, and a contractor agreement cannot make a supervised employee independent.
- Budget line. Employer pension at 9.3% and unemployment at 1.3% run up to €101,400 a year, health and long-term care up to €69,750, so a senior salary does not carry those rates all the way up.
- Notice reality. Four weeks to the 15th or month-end after probation, rising with service to seven months at twenty years, in written form only: no email and no signature app.
- Realistic start. Key written evidence of the terms is due on the first working day, and if the person needs a new permit the agency-work route can be refused outright.
How to hire employees in Germany
Where the employee works within your organisation under your instructions, the arrangement can be Arbeitnehmerüberlassung, or employee leasing, and the provider normally needs an AÜG licence to run it. That licence is the first document to ask for, ahead of any quote, because without it the arrangement is not lawful rather than merely expensive. What decides whether it applies is how the work is actually directed, not what the service is called.
How an EOR hire works in Germany
The parties must identify the arrangement and the worker before the assignment starts. Statutory exceptions exist but need a specific assessment, not a reassurance, so ask for the employing company by name and for evidence of the licence, or for the exact exception it relies on. An EOR service label answers neither question.
Plan for the assignment limit
The default maximum is 18 consecutive months for the same worker with the same hirer, and earlier assignments through other providers count if the gap is no more than three months. Applicable collective agreements and authorised workplace agreements can change that limit.
This is the number to plan the hire around. Agree the intended end date and any transition to direct employment before the start, because moving the same worker to another provider does not necessarily restart the clock. The AÜG employee-leasing statute sets the basic requirements.
How long the first hire takes, and what sets the date
Two things set the date in Germany and neither is the paperwork: whether the provider holds the licence, and which collective agreement applies. Where the person also needs permission to work, that becomes the longest item by a distance.
So rather than a number of weeks, here is the sequence, in the order the steps actually gate each other. Work backwards from whichever one is unresolved in your case, because that is the one holding your date and the rest will not be.
- Confirm the provider holds the employee-leasing licence, because without it the arrangement is not available to you at all, and the questions to ask are set out under the compliance heading.
- Settle which collective agreement applies and which comparable employee of yours sets the pay, since equal treatment is measured against your workplace.
- Agree the written terms, the probation length and the start date.
- Confirm the right to work, and where a visa or residence procedure applies, treat it as the critical path.
- Register the person for social insurance and payroll with the employing entity, then land the start date on the payroll cut-off.
Plan the exit while you are planning the start. The assignment limit means the end date is part of the hiring decision in Germany in a way it is not elsewhere, and month one is the cheap time to arrange it.
EOR, entity, or contractor in Germany?
The ceiling is 18 consecutive months for the same worker with the same hirer, and it is the number this decision turns on. A two-year project and a permanent team therefore look like different answers even at the same headcount, which is not how the choice works anywhere else. What decides it here is the expected life of the role, not its cost.
The 18-month limit, and what happens when you reach it
Both sides carry the limit, the provider and you. The statute says so twice in one sentence: "Der Verleiher darf denselben Leiharbeitnehmer nicht länger als 18 aufeinander folgende Monate demselben Entleiher überlassen; der Entleiher darf denselben Leiharbeitnehmer nicht länger als 18 aufeinander folgende Monate tätig werden lassen." Earlier assignments of the same person to you count in full where the gap between them is three months or less, so ending an assignment and restarting it does not reset the clock. A collective agreement made by the parties in your own industry can set a different maximum, and a hirer not bound by one can take that agreement's rule into a works agreement up to 24 months, so ask which agreement covers your industry before you plan around 18 months. Source: AÜG § 1 (1b), gesetze-im-internet.de, checked 18 September 2026.
Past the limit the arrangement does not quietly continue. The employment contract between the provider and the worker becomes void, unless the worker declares in writing within a month that they want to keep it, and an employment relationship is then treated as having come into existence between you and the worker from the date the work was due to start. That is what "what happens after 18 months" means in practice: arriving at the limit without a plan hands you the employment relationship you were paying a provider to hold. Source: AÜG § 9 (1) no. 1b and § 10 (1), gesetze-im-internet.de, checked 18 September 2026.
So decide the exit before the start. Three routes work, and all three are easier to arrange in month one than in month seventeen: end the assignment inside the limit, move the person onto your own German entity, or establish that your industry's collective agreement sets a longer maximum.
EOR, entity or contractor
Employee leasing has that assignment limit; your own entity does not.
| Hiring route | When to consider it | What to confirm |
|---|---|---|
| Employer of record | You want a provider to employ and administer the hire. | The AÜG arrangement, the licence, the 18-month assignment limit and the plan for reaching it, equal terms and immigration compatibility. |
| Your own employing entity | You are building a continuing German employment operation. | Registration, payroll, insurance, HR capacity and the cost of running the entity. |
| Independent contractor | You need an independent business to deliver a defined service. | Whether the actual working relationship qualifies as self-employment. |
A contractor agreement cannot make a supervised employee independent. What decides employee status is personal dependence, integration into your organisation and instructions about the work, its time and its place. The label on the contract is the last thing anyone looks at.
Ask who handles payroll questions, employee concerns and contract changes, and what happens when an assignment ends. Put responsibility for notice, leave balances and exit costs in the service agreement.
Moving from an employer of record to your own German entity
Germany is the country where I would plan this move first, because the assignment limit makes it a dated decision rather than an open one, and because German law has a real transfer rule that may or may not apply to you. Where a business or part of a business passes to another owner by legal transaction, the new owner steps into the rights and duties arising from the employment relationships existing at the time of the transfer. Source: BGB section 613a (1), gesetze-im-internet.de, checked 18 September 2026.
Three further parts of that rule decide how a move feels in practice. Terms set by a collective agreement or works agreement become part of the individual employment relationship and may not be changed to the employee's disadvantage before a year has passed. A dismissal by either the old or the new employer because of the transfer is ineffective, while the right to dismiss for other reasons is untouched. And the employees affected must be informed in text form before the transfer about its timing, its reason, its legal, economic and social consequences for them and the measures planned, after which the employee may object in writing within one month. Source: BGB section 613a (4) to (6), gesetze-im-internet.de, checked 18 September 2026.
Behind that national rule sits the European floor it transposes, which is worth knowing because it is what a national court reads the national words against: the transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee. The directive also lets member states make the transferor and the transferee jointly and severally liable for obligations that arose before the transfer, and it says in terms that a transfer is not in itself grounds for dismissal by either of them. Source: Council Directive 2001/23/EC, article 3 (1), CELEX 32001L0023, official text published by the Publications Office of the European Union, checked 18 September 2026. The national text is the one that binds your entity, so read the two together rather than the directive on its own.
The judgment is this: do not assume the rule covers you. It bites where a business or part of a business actually passes to you, and taking over one person's employment from a provider frequently is not that. So ask the provider whether they will treat the move as a transfer, and if not, what they will do instead, who pays for it, what notice the service agreement needs, and how accrued leave and the pension record are handed over. Get the answer in the service agreement rather than in month seventeen.
What should you budget for hiring in Germany?
Your budget includes salary, employer contributions, agreed benefits and the EOR fee. Ask for a quote for the actual role and salary.
- Gross salary
- Employer contributions
- Benefits and other costs
- EOR service fee
- Gross salary: 100
- Employer social contributions: 20.86%
- Benefits and EOR fee: quoted per hire
The numbers behind this figure
| Cost | Amount |
|---|---|
| Gross salary | 100 |
| Employer social contributions | 20.86% |
| Benefits and EOR fee | Quoted per hire |
Source: OECD, 2025
Published EOR base fees among providers covering Germany range from $99 to $699 per employee/month. These are provider base prices, not a quote for this hire or the total employment cost.
Employer contribution benchmarks · 2025
These stored OECD benchmarks help with initial planning. Earnings ceilings, employee circumstances and later changes can affect the actual charge; use the EOR’s itemised quote for your budget.
| Contribution | Rate |
|---|---|
| Employer social contributions | 20.864648% |
Salary benchmarks
None of those numbers is a market rate. Destatis reports €64,441 gross annual earnings for full-time employees in 2025, including special payments, across agriculture, industry and services: a national mean, not a median and not a salary for a role.
Build the total employment budget
Ask for the budget in these five lines rather than one number. It is the fastest way to see whether a quote is complete.
| Cost item | What to ask the provider for |
|---|---|
| Gross salary | The agreed salary and all required or promised variable payments. |
| Employer social insurance | The contribution bases, ceilings, actual health-fund rate and applicable exceptions. |
| Pension and benefits | Any salary-conversion supplement and agreed additional benefits. |
| Absence and termination | How statutory pay, reimbursements, notice and exit liabilities are funded. |
| EOR service | The fee, deposit, currency charges, extra services and refund terms. |
Employer contributions and payroll deductions
These rates stop applying above the earnings ceiling, so they should never be multiplied across a whole senior salary.
| Insurance | General employer share | General employee share | 2026 earnings ceiling |
|---|---|---|---|
| Pension | 9.3% | 9.3% | €101,400 a year / €8,450 a month |
| Unemployment | 1.3% | 1.3% | €101,400 a year / €8,450 a month |
| Statutory health | 7.3% plus half the actual fund's additional rate | 7.3% plus half the actual fund's additional rate | €69,750 a year / €5,812.50 a month |
| Long-term care | Usually 1.8%; 1.3% in Saxony | Usually 1.8%; 2.3% in Saxony, before family adjustments | €69,750 a year / €5,812.50 a month |
Two lines move with the individual: the published average additional health-insurance rate is 2.9% for 2026, though the quote should use the worker's actual fund, and childlessness can add 0.6 percentage points to the employee long-term-care share.
What an employer of record adds to the employment cost
Budget the provider fee as a third line, next to gross pay and the employer contributions above. Across the market it runs from $99 to $799 per employee per month, or 8 to 20% of salary, and where a quote sits in that range is decided by the work rather than by the country: headcount, how much of the administration you hand over, and whether the provider is pricing a single hire or a team. I treat a quote at the bottom of the range as a question rather than a win, because the cheap number is usually the one with the fewest things inside it.
What the fee buys is the employment itself: the employing entity, the payroll run, the filings and the employer-side administration. What it does not buy is the cost of employing the person. Gross pay, the employer share of social insurance, the statutory accident cover and any collectively agreed supplements are yours, and the equal-treatment rule above means the pay itself is set by your own workplace rather than by what the provider would like to charge for. Ask for a quote that separates the fee from the pass-through costs, priced in euro, because a single blended figure hides which half moves when pay changes.
Average salary in Germany by occupation
Gross monthly earnings of employees per ISCO-08 occupation group, in EUR, from the ILO's official labour statistics. These stored survey figures for Germany have reference year 2022. Use these survey earnings to benchmark an offer before an EOR quote turns it into total employer cost.
| Occupation group | Monthly (EUR) | Approx. USD |
|---|---|---|
| All occupations | 4,413 | $4,647 |
| Managers · ISCO 1 | 8,800 | $9,267 |
| Professionals · ISCO 2 | 6,012 | $6,331 |
| Technicians and associate professionals · ISCO 3 | 4,532 | $4,772 |
| Clerical support workers · ISCO 4 | 3,804 | $4,006 |
| Service and sales workers · ISCO 5 | 2,769 | $2,916 |
| Skilled agricultural, forestry and fishery workers · ISCO 6 | 3,150 | $3,317 |
| Craft and related trades workers · ISCO 7 | 3,934 | $4,142 |
| Plant and machine operators and assemblers · ISCO 8 | 3,679 | $3,874 |
| Elementary occupations · ISCO 9 | 2,354 | $2,479 |
Source: ILOSTAT, the International Labour Organization's statistics database (average monthly earnings of employees, both sexes), reference year 2022.
How to hire through an EOR in Germany
- Step 1
Define your hire
Prepare the role, work location, salary, working hours and target start date.
- Step 2
Confirm the local hiring route
Ask the provider to confirm that its employing arrangement fits this role and location, including any restrictions.
- Step 3
Review the full quote and contract
Check the legal employer, total costs, benefits, responsibilities and exit terms before signing.
- Step 4
Complete onboarding
Coordinate employment documents, required checks, equipment and the payroll cut-off with the EOR.
- Step 5
Keep employment changes coordinated
Manage the work and tell the EOR about proposed pay, leave, contract or termination changes before they take effect.
What should the EOR arrange before your hire in Germany starts?
Confirm the employment terms, work eligibility, payroll and pension arrangements before the start date. Ask which local rules and agreements apply to your employee.
What types of employment contracts exist in Germany?
Key written evidence of the employment terms is due by the first working day, further items within seven days and the rest within one month. German contract paperwork therefore starts before the employee does, which catches out teams used to tidying documents up in week two. What decides the format is the statute rather than convenience: electronic text form is permitted only under the statutory conditions, and paper is required on request and in excluded sectors.
Put the employment terms in order
Record the legal employer, the employee's usual work location, responsibilities, salary components, pay date, weekly hours, leave, pension and any applicable collective terms. Ask which signatures and delivery method each document needs: rules permitting electronic evidence of employment terms do not make every contract clause or dismissal email valid.
Permanent and fixed-term contracts
Without an objective reason, a fixed term is usually limited to two years in total with at most three extensions, subject to prior-employment restrictions and statutory or collective exceptions. The fixed-term clause needs legal written form, and early ordinary termination has to be allowed by the contract. Keep two dates apart: your project's commercial end date and the employee's contract end date.
Probation
An agreed trial period can allow two weeks' notice for up to six months, a fixed-term contract's probation must be proportionate to its expected duration and the work, and probation removes no pay, leave or other employment right.
Confidentiality, inventions and restrictions
A post-employment restriction is expensive here and that is deliberate: it needs the statutory written agreement, compensation of at least half the employee's most recent contractual benefits, a legitimate business interest, and a maximum of two years. Employee service inventions carry their own statutory reporting, claiming and remuneration rules, so ask the EOR how it handles them.
Misclassification risk, and who decides the status
Germany gives you something most countries do not: a way to get the status decided in advance, by the body whose opinion counts. Social insurance law defines employment as non-self-employed work, particularly in an employment relationship, and names the indications: work performed according to instructions and integration into the work organisation of the person giving them. Source: SGB IV section 7 (1), gesetze-im-internet.de, checked 18 September 2026.
The parties can apply to the Deutsche Rentenversicherung Bund, in writing or electronically, for a decision on whether a contractual relationship is employment or self-employed activity, and it decides on an overall assessment of all the circumstances of the individual case. One part of that provision is written for arrangements like this one: where the agreed work is performed for a third party and there are indications that the contractor is integrated into that third party's work organisation and subject to its instructions, the authority also determines whether the employment relationship exists with the third party, and the third party may apply for the decision itself. Other insurance institutions are bound by that decision. Source: SGB IV section 7a, gesetze-im-internet.de, checked 18 September 2026.
Read that in the context of a client who directs the work day to day, which is what a hirer normally does, and the risk is not an abstract fine. It is a finding that you are the employer. So decide the question deliberately: keep a written record of who directs the work, use the status determination where the arrangement is genuinely unclear, and where the honest answer is that the person works inside your organisation under your instructions, employ them rather than contract with them.
What catches employers out in Germany
Three things catch out foreign employers in Germany, and the immigration one can cancel the hire outright. Equal pay and works councils cost money and time; the employment-agency approval rule decides whether an EOR arrangement is available at all. What separates them is that the first two can be budgeted and the third has to be checked before anyone is offered a job.
Equal pay needs an assignment-specific check
Equal essential conditions, including pay, are the starting rule for agency workers, and the statutory agency wage floor is a minimum rather than the right rate for your hire. The statute puts the comparison in your workplace, not the provider's: the provider must grant the worker, for the period of the assignment, "die im Betrieb des Entleihers für einen vergleichbaren Arbeitnehmer des Entleihers geltenden wesentlichen Arbeitsbedingungen einschließlich des Arbeitsentgelts". So your own pay structure sets the floor, and a provider quoting a market rate has answered a different question. Qualifying collective agreements may allow deviations, but pay deviations normally stop after nine months, with a staged-pay exception reaching equivalent sector pay by 15 months. Ask in writing which comparable role and collective agreement the provider uses, and the dates the entitlement changes. Source: AÜG § 8 (1) and § 8 (4), gesetze-im-internet.de, checked 18 September 2026.
Work permission can limit the EOR option
The Federal Employment Agency must refuse its employment approval where the person is to work as a temporary agency worker, which matters for residence routes that require that approval. It does not decide every existing right-to-work or approval-exempt case, so the answer differs between someone who already holds an unrestricted right to work and someone making a new application. Confirm the individual permit and the hiring arrangement before promising sponsorship or a start date.
Collective agreements and works councils
Check whether a collective agreement applies through membership, incorporation or a declaration of general applicability, and ask about both the employing business and the receiving workplace. A works council may be elected in an establishment normally having at least five permanent voting-eligible employees, including three eligible candidates, and where one exists it has statutory participation rights.
Payroll and bonuses
Salary is due after the work is performed, and when agreed by time periods it falls due after that period ends, so put the pay period and due date in the employment terms. Bonuses, commission and any Christmas payment belong in the offer with their calculation dates, and ask which additional payments the applicable collective agreement already requires.
What taxes and social contributions apply in Germany?
Employer social insurance runs at 9.3% for pension and 1.3% for unemployment up to €101,400 of annual earnings, and 7.3% plus half the fund's additional rate for health up to €69,750. Those ceilings are the detail most cost comparisons drop, and dropping them overstates a senior hire's cost substantially. What decides the real figure is the employee's health fund, family circumstances and location, not a headline percentage.
Employee income tax
For 2026 the basic personal allowance under the individual income-tax formula is €12,348, after which tax follows progressive formulas, with the 45% band starting at €277,826 of taxable income. Filing status, deductions and other charges all affect payroll, so compare a gross offer with another gross offer and leave net pay to the individual calculation. The EOR should collect what it needs for that calculation and give the employee a payslip they can actually read.
Pensions and agreed benefits
Employees can generally request pension salary conversion up to 4% of the general pension-insurance assessment ceiling, with a statutory employer supplement of 15% of converted pay for qualifying vehicles insofar as the employer saves social contributions. Record any extra holiday, insurance or remote-work allowance in the offer.
What are the working hours and overtime rules in Germany?
The statutory daily limit is eight hours, extendable to ten if the average returns to eight over six calendar months or 24 weeks. That is a different thing from the 40-hour week in the contract, and confusing the two is how German schedules go wrong. What decides normal hours and how extra work is paid is the contract or the applicable collective agreement, not the statute.
Working hours and overtime
The legal calculation uses working days including Saturday, which is why the weekly arithmetic rarely matches an intuition built on a five-day week.
Breaks and rest
Work over six hours normally requires at least 30 minutes of breaks, rising to 45 minutes over nine hours, with break segments of at least 15 minutes, and daily rest is normally 11 consecutive hours, subject to specified sector exceptions and compensatory-rest rules.
How does termination and severance work in Germany?
Statutory employer notice runs from four weeks after probation to seven months at twenty years of service, and it must be given in written form, on paper, signed. The length of the relationship therefore sets the cost of ending it, which is the German fact worth knowing on the day you hire rather than the day you leave. What decides whether you can end it at all is the reason, once general dismissal protection applies.
Assess the reason and procedure first
Ending your EOR service contract does not end the employee's employment, and that misunderstanding is the expensive one. Involve the EOR before anything is announced, and let it assess the legal reason, any protected status, redeployment or selection requirements and the consultation or approval process.
General dismissal protection normally applies after more than six months in an establishment with more than ten weighted employees, and a dismissal then needs a lawful personal, conduct or operational reason. Other protections apply outside that threshold too.
Written notice and employee challenge
Dismissal and mutual termination agreements require legal written form and electronic form is excluded, which means no email and no signature app. An existing works council must be consulted before dismissal, protected employees may need additional approvals, and the usual deadline for the employee to challenge a written dismissal is three weeks from receipt.
Immigration and right-to-work checks
Reassess the permission before changing the employing entity or the assignment, not after.
Other things to agree with your EOR
Document who maintains payroll and employment records, handles sickness reports and reviews contract changes. Employment-data processing needs an appropriate legal basis and safeguards, and employee consent is not the only possible basis under German law, which matters because many providers default to a consent form.
What pay and leave should your offer in Germany cover?
Agree pay, working patterns, paid leave and benefits as part of the offer. These affect both your hiring budget and how you plan the employee’s work.
- Paid annual leave: 20 days
- Public holidays: 9 days
- The rest of the year: 336 days
The numbers behind this figure
| Entitlement | Days a year |
|---|---|
| Paid annual leave (statutory minimum) | 20 days |
| Public holidays (national) | 9 days |
| Total statutory paid days off | 29 days |
Source: National government, 2026; National government, 2026. Statutory minimums. Eligibility, accrual and collective agreements can change what an individual employee receives.
How does payroll and compensation work in Germany?
The general minimum is €13.90 gross an hour from 1 January 2026, but for covered temporary agency work the floor is €15.33 from 1 September 2026 through 31 March 2027. An EOR hire therefore starts from a higher legal floor than a direct one, which is the first place the two routes diverge on price. What decides the actual rate is the equal-pay entitlement and any applicable collective agreement, either of which can sit above both figures.
Minimum pay and the employee’s offer
The enacted increase in the general minimum to €14.60 starts on 1 January 2027, and a higher applicable agency, sector or collective-agreement rate takes priority over any of these floors.
What benefits and leave are employees entitled to in Germany?
The statutory leave minimum is 24 working days on a six-day week, equivalent to 20 days on a five-day week, and the employer carries up to six weeks of full sick pay per qualifying illness. Both are floors that the German market has long since moved past, so treat them as compliance numbers and budget from what comparable offers actually pay. What decides your package is the collective agreement, if one applies, and then the role.
Paid annual leave
Full annual entitlement arises after six months, with specified part-year cases receiving one-twelfth per complete employment month. Carryover and expiry need their own assessment, including the employer's duty to enable leave, so have the EOR check a balance before anyone treats unused days as lost.
Public holidays in 2026
Nine holidays are nationwide; the rest depend on where the employee works, and Christmas Eve and New Year's Eve are bank closures rather than public holidays.
| Date | Nationwide holiday |
|---|---|
| 1 January | New Year's Day |
| 3 April | Good Friday |
| 6 April | Easter Monday |
| 1 May | Labour Day |
| 14 May | Ascension Day |
| 25 May | Whit Monday |
| 3 October | German Unity Day |
| 25 December | Christmas Day |
| 26 December | Second day of Christmas |
Sick pay
The employer normally continues regular pay for up to six weeks of qualifying incapacity, after four weeks of continuous employment, with overtime supplements excluded from the statutory calculation. Agree how the employee reports incapacity and how the EOR obtains the required certification, and keep continued employer pay separate from the later health-insurance benefit.
Maternity and parental leave
The protected periods are usually six weeks before birth and eight weeks afterwards, rising to 12 weeks for premature or multiple births and qualifying disability cases, and work after birth is prohibited during the protection period. For qualifying employees the employer supplement generally covers the difference between €13 per calendar day and average calendar-day net pay from the last three settled calendar months. Parental leave then runs up to three years per parent per child, normally unpaid by the employer, with the money coming from Elterngeld, a separate public benefit generally income-related within €300 to €1,800 a month.
Care and special absences
An acute care situation can justify up to 10 working days to organise or provide care for a close relative, with employer pay needing a separate legal or contractual basis, and longer qualifying care leave can last up to six months, with the statutory claim generally applying to employers with more than 15 employees. For marriage, bereavement or moving home, check the legal circumstances and the applicable collective agreement rather than promising a standard number of paid days.
Sunday and holiday work
Work on Sundays and public holidays is generally prohibited, with specified sector and activity exceptions. Permitted Sunday work normally requires a substitute rest day within two weeks, and work on a holiday falling on a working day normally requires one within eight weeks, so check the exception before scheduling a shift. Agree how your team records working time and reports it to the EOR, including remote work: where a works council exists it can have participation rights over hours, overtime and monitoring tools.
What happens if you need to end employment in Germany?
Discuss the proposed change with the EOR before giving notice or promising an exit payment. Ask it to confirm the procedure, timing and costs for the employee’s circumstances.
The numbers behind this figure
| Obligation | Weeks of salary |
|---|---|
| Statutory notice | 10 weeks |
| Statutory severance | 0 weeks |
| Total statutory exit cost | 10 weeks |
Germany sits at number 87 of 191 countries for statutory exit cost in our Termination Cost Index.
Notice periods
After probation the basic statutory period is four weeks to the 15th or month-end, and during an agreed qualifying probation period two weeks can apply. The extended periods below normally end at month-end, and collective agreements can change the result.
| Completed service | Statutory employer notice after the base period |
|---|---|
| 2 years | 1 month |
| 5 years | 2 months |
| 8 years | 3 months |
| 10 years | 4 months |
| 12 years | 5 months |
| 15 years | 6 months |
| 20 years | 7 months |
Severance and final settlement
There is no universal half-month-per-year payment for every German dismissal, whatever you have read. Section 1a KSchG creates that formula for a specific employer-offered operational-dismissal arrangement when the employee does not bring the stated challenge; settlements and social plans need their own assessment. Budget for notice, outstanding salary, bonus obligations, unused leave and any agreed severance.
What compliance and regulatory rules apply in Germany?
Permission to work has to be checked for the actual role, employer and work location before the employee starts, and rechecked before the employing entity or the assignment changes. In Germany that is not a formality, because the agency-work approval rule can rule the EOR route out for the person you have chosen. What decides the rest of the compliance load is whether a works council exists and how employment data is handled.
Three questions to ask a provider before you sign
Ask these three first, because each one can end the conversation. Everything else is a negotiation you can have afterwards.
- Do you hold the AÜG licence for employee leasing, and will you show it? Without the licence the arrangement is not available to you at all.
- Which comparable employee of ours, and which collective agreement, sets the pay, and on what dates does the entitlement change?
- What is your plan for month 18, and who pays for it? The assignment limit of 18 consecutive months binds you as well as the provider, so the answer belongs in the service agreement rather than in an email. Source: AÜG § 1 (1b), gesetze-im-internet.de, checked 18 September 2026.
A provider who answers all three in writing is a provider you can budget for. One who answers the first two and leaves the third open has left you carrying the assignment limit alone.
These are stored source rules, not a case-specific termination calculation. Confirm the applicable procedure and current requirements before acting.
Choose an EOR for your hire in Germany
Compare the employing entity, itemised costs, local support, payroll deadlines and what happens if you change or end the arrangement.
Questions about hiring in Germany
Is a PEO the same as an EOR in Germany?
No, and the service name settles nothing either way. Ask who becomes the legal employer, whether you need your own entity, and which employee-leasing rules apply to the arrangement being proposed. Compare the EOR and PEO service models.
What changed in Germany
Checked against official sources on .
No rule changes recorded since we began logging them.
Check the facts behind this guide
Each reviewed fact links to its source and shows its validation date and effective period. Monthly review does not mean that every rule changes monthly. Statistical benchmarks retain their original data periods.
View sourced facts and review dates
| Fact | Value | Source | Effective / data period | Last validated |
|---|---|---|---|---|
| EOR and employee leasing | Where the employee works within your organisation under your instructions, the arrangement can be Arbeitnehmerüberlassung (employee leasing). The provider normally needs an AÜG licence, and the parties must identify the arrangement and worker before the assignment. Statutory exceptions require a specific assessment. | German federal legislation, Gesetze im Internet | Review due | |
| Assignment duration | The default maximum is 18 consecutive months for the same worker with the same hirer. Earlier assignments through other providers count if the gap is no more than 3 months. Applicable collective agreements and authorised workplace agreements can change the limit. | German federal legislation, Gesetze im Internet | Review due | |
| Agency-worker pay and conditions | Equal essential conditions, including pay, are the starting rule for agency workers. Qualifying collective agreements may allow deviations; pay deviations normally stop after 9 months, with a defined staged-pay exception reaching equivalent sector pay by 15 months. The statutory agency wage floor still applies. | German federal legislation, Gesetze im Internet | Review due | |
| General minimum wage | The general minimum is €13.90 gross per hour from 1 January 2026. The enacted increase to €14.60 starts on 1 January 2027. A higher applicable agency, sector or collective-agreement rate takes priority. | German federal legislation, Gesetze im Internet | 2026 rate; enacted 2027 increase shown separately | Review due |
| Agency-worker minimum wage | The statutory floor for covered temporary agency work is €15.33 gross per hour from 1 September 2026 through 31 March 2027. Check the applicable agreement and equal-pay entitlement, which may require more. | Federal Ministry of Labour and Social Affairs (BMAS) | 1 September 2026–31 March 2027 | Review due |
| Employment terms and documentation | Record the legal employer, role, location, pay, hours, applicable agreements and termination terms. Key evidence is due by the first working day, further items within 7 days, and remaining prescribed items within 1 month. Electronic text form is permitted only under the statutory conditions; paper is required on request and in excluded sectors. | German federal legislation, Gesetze im Internet | Review due | |
| Fixed-term contracts | Without an objective reason, the usual limit is 2 years in total with at most 3 extensions, subject to prior-employment restrictions and statutory or collective exceptions. Objectively justified contracts follow different rules. The fixed-term clause requires legal written form; early ordinary termination must be allowed by the contract or applicable agreement. | German federal legislation, Gesetze im Internet | Review due | |
| Probation and notice | An agreed trial period can allow 2 weeks’ notice for up to 6 months. A fixed-term contract’s probation must be proportionate to its expected duration and the work. Probation does not remove pay, leave or other employment rights. | German federal legislation, Gesetze im Internet | Review due | |
| Salary payment | Salary is due after the work is performed; when agreed by time periods, it is due after the relevant period ends. Put the pay period and due date in the employment terms. Confirm the agreed date and payroll cut-off with the EOR. | German federal legislation, Gesetze im Internet | Review due | |
| Statutory pension contributions | The general statutory pension contribution is 18.6% of covered earnings, usually split 9.3% each between employer and employee. The 2026 assessment ceiling is €101,400 per year (€8,450 per month). Coverage and special employment categories must be checked. | Federal Ministry of Labour and Social Affairs (BMAS) | 2026 ceiling; current general contribution rate | Review due |
| Unemployment insurance | The general contribution is 2.6%, usually split 1.3% each between employer and employee. The 2026 assessment ceiling is €101,400 per year (€8,450 per month), matching general pension insurance. Exceptions apply to some employment categories. | German federal legislation, Gesetze im Internet | 2026 ceiling; current general contribution rate | Review due |
| Statutory health insurance | The general rate is 14.6%, split equally, plus the employee’s health fund’s additional rate, also split equally. The published average additional rate for 2026 is 2.9%; the actual fund can differ. Contributions are capped at €69,750 yearly earnings (€5,812.50 monthly) in 2026. | Federal Ministry of Health (BMG) | 2026; actual additional rate depends on the health fund | Review due |
| Long-term care insurance | The standard total is 3.6%, usually split 1.8% each. In Saxony, the usual shares are 1.3% employer and 2.3% employee. Childlessness can add 0.6 percentage points to the employee share; qualifying children can reduce that share. The 2026 earnings ceiling is €69,750 a year. | Federal Ministry of Health (BMG) | 2026 ceiling; family and regional contribution rules apply | Review due |
| Work accident insurance | Employers fund statutory accident insurance for their employees. Obtain the applicable assessment from the provider; this is a separate cost item and should not be treated as one universal percentage of salary. | German federal legislation, Gesetze im Internet | Review due | |
| Employee income tax | For 2026, the basic personal allowance under the individual income-tax formula is €12,348. Tax then follows progressive formulas, with the 45% band starting at €277,826 of taxable income. Filing status, deductions and other applicable charges affect payroll; a national tax-wedge statistic is not an employer contribution rate. | German federal legislation, Gesetze im Internet | 2026 individual income-tax formula; not a net-pay quote | Review due |
| Average annual earnings | Destatis reports €64,441 gross annual earnings for full-time employees in 2025, including special payments, across agriculture, industry and services. This is a national mean, not a median or a role-specific salary offer. | Federal Statistical Office (Destatis) | 2025; Destatis table published 1 April 2026 | Review due |
| Working time | The general daily limit is 8 hours per working day. It can extend to 10 if the average returns to 8 over 6 calendar months or 24 weeks. The legal calculation uses working days, including Saturday; the contract or collective agreement sets normal weekly hours. | German federal legislation, Gesetze im Internet | Review due | |
| Breaks and daily rest | Work over 6 hours normally requires at least 30 minutes of breaks, rising to 45 minutes over 9 hours; break segments must be at least 15 minutes. Daily rest is normally 11 consecutive hours. Specified sector exceptions and compensatory-rest rules apply. | German federal legislation, Gesetze im Internet | Review due | |
| Paid annual leave | The statutory minimum is 24 working days on a 6-day working week, equivalent to 20 days on a 5-day week. Full annual entitlement arises after 6 months; specified part-year cases receive one-twelfth per complete employment month. Contracts and collective agreements may provide more. | German federal legislation, Gesetze im Internet | Review due | |
| Public holidays | Germany has 9 nationwide public holidays in 2026, with additional state and some local holidays. Apply the calendar for the employee’s place of work. Christmas Eve and New Year’s Eve are bank business closures in the Bundesbank calendar, not nationwide public holidays. | Deutsche Bundesbank | 2026 calendar; state and local scope must be checked | Review due |
| Continued pay during sickness | The employer normally continues regular pay for up to 6 weeks of qualifying incapacity, after 4 weeks of continuous employment. Repeated illness and other statutory conditions affect entitlement. Overtime supplements are excluded from the statutory regular-pay calculation. | German federal legislation, Gesetze im Internet | Review due | |
| Maternity protection | The usual protected periods are 6 weeks before birth and 8 weeks afterwards. The employee may expressly agree to work before birth, but post-birth work is prohibited during the protection period. The post-birth period increases to 12 weeks for premature or multiple births and qualifying disability cases; early birth can add unused prenatal time. | German federal legislation, Gesetze im Internet | Review due | |
| Maternity benefit and employer supplement | Maternity benefit depends on insurance status. For qualifying employees, the employer supplement generally covers the difference between €13 per calendar day and average calendar-day net pay from the last 3 settled calendar months before protection begins. Confirm insurance, reimbursement and employment circumstances with payroll. | German federal legislation, Gesetze im Internet | Review due | |
| Parental leave | Each eligible parent can take up to 3 years of parental leave per child, including up to 24 months between the third and eighth birthdays. Leave is normally unpaid by the employer. Notice is generally 7 weeks for leave before age 3 and 13 weeks for leave from age 3 to 8. | German federal legislation, Gesetze im Internet | Review due | |
| Public parental benefit | Elterngeld is a separate public benefit, not 3 years of employer-paid salary. Basic Elterngeld is generally income-related within €300–€1,800 a month, with eligibility and calculation rules. Income limits and other eligibility conditions apply. Benefit duration differs from parental-leave duration. | German federal legislation, Gesetze im Internet | Review due | |
| Leave for the other parent | The German government describes fathers’ time off through parental leave and Elterngeld. Do not assume a separate universal 10-day employer-paid paternity entitlement. Check the employee’s parental-leave entitlement and any additional contractual or collective-agreement leave. | German government, Familienportal | Review due | |
| Time off to care for relatives | An acute care situation can justify up to 10 working days to organise or provide care for a close relative; employer pay requires a separate legal or contractual basis. Longer qualifying care leave can last up to 6 months, with the statutory claim generally applying to employers with more than 15 employees. | German federal legislation, Gesetze im Internet | Review due | |
| Salary conversion into pension | Employees can generally request pension salary conversion up to 4% of the general pension-insurance assessment ceiling. For qualifying pension vehicles, the statutory employer supplement is 15% of converted pay insofar as the employer saves social contributions. Check the applicable scheme and collective rules. | German federal legislation, Gesetze im Internet | Review due | |
| State pension age | The standard pension age is rising by birth cohort, reaching 67 for people born in 1964 or later. Early-retirement routes have separate insurance-history requirements and may involve permanent reductions. This is distinct from any occupational pension scheme. | Federal Ministry of Labour and Social Affairs (BMAS) | Review due | |
| Employer notice | After probation, the basic statutory period is 4 weeks to the 15th or month-end. Employer notice rises with service: 1 month after 2 years, 2 after 5, 3 after 8, 4 after 10, 5 after 12, 6 after 15 and 7 after 20, normally to month-end. Collective agreements and statutory exceptions can alter the result. | German federal legislation, Gesetze im Internet | Review due | |
| Dismissal protection | General protection normally applies after more than 6 months in an establishment with more than 10 weighted employees, subject to older-employment and other exceptions. A dismissal then needs a lawful personal, conduct or operational reason. Other protections can apply even outside this threshold. | German federal legislation, Gesetze im Internet | Review due | |
| Termination formalities | Dismissal and mutual termination agreements require legal written form; electronic form is excluded. An existing works council must be consulted before dismissal. The usual deadline to challenge a written dismissal is 3 weeks from receipt. Protected employees may need additional approvals. | German federal legislation, Gesetze im Internet | Review due | |
| Severance payments | There is no universal half-month-per-year payment for every dismissal. Section 1a KSchG creates that formula for a specific employer-offered operational-dismissal arrangement when the employee does not bring the stated challenge. Settlements, social plans and other cases need their own assessment. | German federal legislation, Gesetze im Internet | Review due | |
| Agency work and immigration | The Federal Employment Agency must refuse its employment approval where the person is to work as a temporary agency worker. This matters for residence routes that require that approval; it does not decide every existing right-to-work or approval-exempt case. Confirm the individual permit and hiring arrangement before promising sponsorship. | German federal legislation, Gesetze im Internet | Review due | |
| Employee or contractor | The actual relationship determines employee status: personal dependence, integration and instructions about the work, time and place matter. A contract label does not override how the work is performed. Assess the full relationship before using a contractor instead of employment. | German federal legislation, Gesetze im Internet | Review due | |
| Post-employment non-compete | A post-employment restriction needs the statutory written agreement and compensation of at least half the employee’s most recent contractual benefits. It must protect a legitimate business interest, avoid unreasonable restrictions and last no more than 2 years. Enforceability depends on the full terms. | German federal legislation, Gesetze im Internet | Review due | |
| Works council | A works council may be elected in an establishment normally having at least 5 permanent voting-eligible employees, including 3 eligible candidates. It is not automatically created on the fifth hire. An existing council has statutory participation rights, including on working-time arrangements and monitoring systems. | German federal legislation, Gesetze im Internet | Review due |