Germany Employment Law & Compliance Guide for Employers
Key employment laws in Germany: what employers need to know
Employment in Germany is governed by several federal statutes rather than one labour code, mainly the Civil Code (BGB), the Working Time Act, the Federal Leave Act and the Dismissal Protection Act, plus collective agreements in many sectors. Foreign employers are most often surprised by the strong dismissal protection that starts after six months, the wet-ink signature required for any termination, and employer social contributions of about 21% on top of gross pay. This page summarises the core employer rules, with official sources.
Germany employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | EUR 13.90 gross per hour from 1 January 2026, rising to EUR 14.60 on 1 January 2027. Sector collective agreements can set higher minimums. Mini-job earnings limit: EUR 603 a month in 2026 (EUR 633 in 2027). | Federal Government: minimum wage now EUR 13.90 |
| Standard working hours | Maximum 8 hours per working day (Monday to Saturday), extendable to 10 if the average stays at 8 over 6 months or 24 weeks. At least 11 hours' rest between shifts; Sunday work generally prohibited. Contracts usually set 35 to 40 hours a week. | Working Time Act (ArbZG) |
| Overtime pay | No statutory overtime premium. Pay or time off for extra hours follows the contract or collective agreement. Blanket clauses saying salary covers all overtime are often invalid, so contracts should cap the hours included. Overtime counts towards the daily limits and must be recorded. | Working Time Act (ArbZG) |
| Paid annual leave | At least 20 working days a year on a 5-day week (24 days on a 6-day basis); full entitlement after 6 months of employment. 25 to 30 days is common in practice. Severely disabled employees get 5 extra days. | Federal Leave Act (BUrlG) |
| Public holidays | Public holidays are set by the 16 states; only 3 October (German Unity Day) is set federally. 9 holidays apply nationwide and states add more, so employees get 10 to 13 days depending on where they work. | Federal Ministry of the Interior: national holidays |
| Sick leave | Employer pays 100% of salary for up to 6 weeks per illness after 4 weeks' service. Then the health insurer pays sickness benefit of 70% of gross pay (max 90% of net). Employers with up to 30 staff recover part via the U1 levy. | Continued Remuneration Act (EntgFG) |
| Maternity and parental leave | 6 weeks before and 8 weeks after birth (12 after premature or multiple births) at full net pay: the health insurer pays up to EUR 13 a day and the employer tops up the rest (refundable). Each parent may take up to 3 years' parental leave. | Familienportal (Federal Family Ministry): maternity benefits |
| Probation period | Up to 6 months, with 2 weeks' notice during probation. Separately, the Dismissal Protection Act applies after 6 months' service in businesses with more than 10 employees. | Civil Code section 622 (BGB) |
| Notice period | 4 weeks to the 15th or end of a month. Employer notice rises with service: 1 month after 2 years up to 7 months after 20 years, to month-end. Notice must be on paper with a handwritten signature; email or e-signature is void. | Civil Code section 622 (BGB) |
| Severance pay | No general statutory severance. Settlements often use 0.5 months' gross salary per year of service, the formula in section 1a of the Dismissal Protection Act for business-reason dismissals. Social plans agreed with a works council can require payments in restructurings. | Dismissal Protection Act section 1a (KSchG) |
| Employer social contributions | About 21% of gross salary in 2026: pension 9.3%, unemployment 1.3%, health 7.3% plus half the insurer's additional rate (2.9% average), long-term care 1.8%, plus accident insurance and U1/U2/U3 levies. Monthly ceilings: EUR 8,450 (pension, unemployment) and EUR 5,812.50 (health, care). | Techniker Krankenkasse: contribution rates 2026 |
| Employee social contributions | About 21% of gross salary up to the same ceilings: pension 9.3%, unemployment 1.3%, health 7.3% plus half the additional rate, long-term care 1.8% (2.4% if childless and aged 23+, less for parents of children under 25). Deducted through payroll. | Techniker Krankenkasse: contribution rates 2026 |
| Income tax on salaries | Employer withholds Lohnsteuer [wage tax] monthly by tax class. 2026: tax-free allowance EUR 12,348; progressive rates from 14% to 42% (42% from EUR 69,879 taxable income) and 45% above EUR 277,826. Solidarity surcharge (high earners) and church tax (8 to 9%) may apply. | Income Tax Act section 32a (EStG) |
| Mandatory bonuses and 13th-month pay | None required by law. Christmas bonuses and holiday pay are common but arise only from the contract, a collective agreement, a works agreement or repeated unconditional payments (company practice). | Civil Code section 611a (BGB) |
| Work permits for foreign nationals | Non-EU/EEA/Swiss nationals need a residence title allowing work, e.g. the EU Blue Card (2026 minimum salary EUR 50,700; EUR 45,934.20 for shortage occupations and recent graduates) or a skilled-worker permit. Under the employer-led fast-track procedure, visa decisions usually take 3 weeks. | Make it in Germany (Federal Government): EU Blue Card |
| Employment contract requirements | No set form, but essential terms must be documented under the Evidence Act, core terms by the first working day. Since 2025 text form such as email is allowed outside listed sectors. Fixed terms need a wet-ink signature. German is not legally required. | Evidence Act (NachwG) |
Employer obligations in Germany, topic by topic
Filter by primary service relevance
Does an employment contract in Germany have to be in writing, and how long can probation last?
How many hours can employees in Germany work, and must working time be recorded?
What is the minimum wage in Germany, and how must salaries be paid?
How much paid leave, sick pay and parental leave do employees in Germany get?
What social contributions and payroll taxes does an employer in Germany pay?
How can an employer in Germany dismiss an employee, and what notice and severance apply?
Can a company hire a non-EU national in Germany, and which permit is needed?
When is a freelancer in Germany treated as an employee?
When can employees in Germany set up a works council, and what rights does it have?
Key employment laws in Germany and official sources
- Civil Code (Bürgerliches Gesetzbuch, BGB), sections 611a to 630 — Core rules of the employment contract, including pay, notice periods (section 622) and the written form for terminations (section 623).
- Dismissal Protection Act (Kündigungsschutzgesetz, KSchG) — Requires a valid reason for dismissals after 6 months in businesses with more than 10 employees and regulates collective dismissals.
- Working Time Act (Arbeitszeitgesetz, ArbZG) — Sets daily maximum hours, breaks, rest periods and the ban on Sunday work.
- Minimum Wage Act (Mindestlohngesetz, MiLoG) — Establishes the statutory minimum wage, its adjustment by ordinance and record-keeping duties.
- Federal Leave Act (Bundesurlaubsgesetz, BUrlG) — Guarantees at least 24 working days of paid leave on a 6-day week (20 on a 5-day week).
- Social Code Book IV (SGB IV) — Common rules for social insurance contributions, employee status (section 7) and the status determination procedure (section 7a).
- Income Tax Act (Einkommensteuergesetz, EStG) — Sets income tax rates and the employer’s duty to withhold wage tax from salaries.
- Residence Act (Aufenthaltsgesetz, AufenthG) — Governs residence titles for employment of non-EU nationals, including the EU Blue Card and skilled-worker permits.
FAQs: hiring employees in Germany
Can a foreign company hire employees in Germany without a local entity?
Yes. A foreign company can employ staff in Germany directly without a subsidiary, but it must register for a Betriebsnummer, pay German social insurance and often withhold wage tax, and the activity may create a taxable permanent establishment. Alternatively, an Employer of Record employs the worker locally. In Germany this model usually counts as temporary agency work, so the provider needs a licence under the Temporary Agency Work Act and assignments to one client are generally capped at 18 months.
How much does an employee cost in Germany on top of gross salary?
Employer social insurance contributions are about 21% of gross salary in 2026: 9.3% pension, 1.3% unemployment, 7.3% health plus half the insurer’s additional rate (2.9% on average) and 1.8% long-term care. Statutory accident insurance and small levies for sick pay, maternity and insolvency come on top. Contributions stop at monthly ceilings of EUR 8,450 (pension, unemployment) and EUR 5,812.50 (health, care), so the percentage falls for high earners.
What is the minimum wage in Germany in 2026?
The statutory minimum wage is EUR 13.90 gross per hour from 1 January 2026. It rises to EUR 14.60 per hour on 1 January 2027 under the Fifth Minimum Wage Adjustment Ordinance. It applies to nearly all adult employees, including part-time and mini-job staff, whose monthly earnings limit is EUR 603 in 2026. Some collective agreements set higher minimums for particular sectors.
How much notice and severance does an employer owe when dismissing an employee in Germany?
Statutory notice is 4 weeks to the 15th or end of a month, rising with service to 7 months after 20 years; contracts and collective agreements may set longer periods. During probation of up to 6 months it is 2 weeks. There is no general statutory severance, but after 6 months dismissals in businesses with more than 10 employees need a valid reason, so most disputes end in a settlement, often around half a month’s salary per year of service.
Can a company hire a foreign national in Germany, and what permit is needed?
Yes. EU, EEA and Swiss citizens need no permit. Other nationals need a residence title that allows work, most often the EU Blue Card (2026 minimum salary EUR 50,700, or EUR 45,934.20 for shortage occupations and recent graduates) or a skilled-worker permit. The Federal Employment Agency usually has to approve the job. Employers can use the fast-track procedure for skilled workers, which officially takes about 4 months in total.
Is it risky to engage contractors instead of employees in Germany?
Yes, if the contractor works like an employee. The German Pension Insurance treats people who follow instructions and are integrated into the client’s organisation as employees (Scheinselbstständigkeit). The client then owes employer and employee social contributions, generally for up to 4 years, plus surcharges, and deliberate non-payment is a criminal offence. A status determination procedure can confirm a contractor’s status in advance.
Related NNRoad resources for Germany: Employer of Record in Germany · Payroll in Germany · Hiring foreign employees in Germany · Contractors and on-demand talent in Germany · Germany employer cost calculator
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Regulation Updates in Germany
Discover the latest employment and compliance updates in Germany — helping you stay ahead in a changing regulatory landscape.
Governing coalition agrees on rapid aid for consumers and the economy
What it is: The federal government has introduced rapid aid measures allowing employers to pay a tax-free and duty-free relief bonus of 1,000 euros in 2026.
What it changes: In 2026, employers may provide a 1,000-euro relief bonus to employees that is tax-free and duty-free. This update affects employer payroll processing for that year.
Who is affected:
- Employers
What employers should do:
- Prepare payroll processes to accommodate a 1,000-euro relief bonus as tax-free and duty-free in 2026.
Notes: Effective month: 2026-04.