Germany

Employer of Record & PEO in Germany

Hire & manage teams remotely in Germany without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Native Language

German

Employee Protection

High

Payroll Frequency

Monthly

Capital city

Berlin

Termination

Hard

Internet

Fast

Currency

Euro (€, EUR)

Immigration

Easy

English Speaking

>50%

Population

84.20 Million

Employment Cost

High

Cost of Living

Medium

How NNRoad Employment & PEO Services Work?

NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Germany. Registering a legal entity in Germany as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Germany in full accordance with local labor laws in under a week.

Employer of Record in Germany

Employer of Record (EOR) services are for companies who do not have a legal entity in Germany, but who want to hire in Germany. Employment and full liability are outsourced to NNRoad.

➊ You interviews & select the candidates you want to hire in Germany.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes  payroll in Germany in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Germany while NNRoad manages payroll & HR liabilities.

  • Acting as Employer of Record for leased employee and assuming all associated in-country liabilities
  • Assisting in the preparation of the employment contract
  • Employee onboarding and offboarding process in compliance with local laws
  • Complete payroll solution and statutory benefits administration
  • Insurance cover for public liability
  • HR consulting:
    • Advising on the setup of HR contracts for new recruits
    • Answering ad hoc questions from both employees and clients management on HR matters
    • Advise on extension, terminations, contract amendments
    • Registration of sick leave notifications, advise on matters of sick leave to employer
    • Day to day legal advice on standard HR matters
  • Personal income tax return for employees, if requested

Payroll & PEO in Germany

Professional Employment Organization (PEO) services are for companies who have a legal entity in Germany, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.

➊ You interviews & select the candidates you want to hire in Germany.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Germany while NNRoad manages payroll & HR compliance.

  • Registering the necessary company and personnel information for payroll calculation in the payroll software and system
    • Raw data collection and cleaning
    • Employee data maintenance
    • Local government bureau registration and statutory insurances
      • Registration with the German tax office
      • Registration with the Sozialversicherungen (Social Security Organization)
    • Maintain employee record accordingly to the requirements by local government
    • Creating payment schedules for wage tax, national insurance, and net wages
  • Monthly payroll processing
    • Gathering of monthly mutations and variable compensation
    • Calculation of gross salary, salary deductions (e.g. tax, social contribution, and other deductions), and net salary based on pre-agreed format
    • Calculation and provision of holiday pay, public holiday pay and sick pay
    • Distribution of payslips to employees (online portal is an option)
    • Preparation of wages journal / wages ledger information
    • Preparation of payroll reports to tax- and other authorities
    • Managing/coordinating the salary payment processes, statutory deposits with tax- and social authorities, etc
    • Making all necessary payments via a German trust account, directly by the accountant (optional)
    • Same day free bank transfer of funds once received from Agency / Client
    • Advice about the available Tax Free Allowances
    • Submitting of wage tax returns and forms for National Insurance
    • Auditor’s letters on request to Agency/customer to prove payment of tax
  • Annual accounts, administration and year end statements

Advantages of NNRoad's Germany Employment Services

  1. With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Germany.
  2. Pay as you go
  3. ​​Dedicated account manager – One point of contact for multiple locations
  4. Employment & termination processing
  5. Complete payroll solution and statutory benefit according to local laws
  6. With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Germany.
  7. NNRoad only works with professional locally licensed partners
  8. GDPR compliant
  9. NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
  10. NNRoad provides foreigner VISA application services, if needed

Employment Compliance in Germany

Taxes & Payroll in Germany

Germany has a progressive income tax system, meaning that higher earners pay a higher rate of tax than those on lower incomes. The tax is levied on both German and overseas income. Germany has double taxation agreements with many countries, which means that taxpayers can claim a credit for taxes paid in another country.

There are a number of deductions and exemptions that can be claimed to reduce the amount of income tax payable. These include deductions for pension contributions, charitable donations and expenses incurred in the course of employment. There are also a number of exemption thresholds, which mean that taxpayers with low incomes do not have to pay any income tax at all.

The rate of income tax depends on the taxpayer’s marginal tax rate. This is the highest rate of tax that the taxpayer will pay on their income. The marginal tax rate is composed of the income tax rate and the solidarity surcharge. The income tax rate ranges from 0% to 45%, while the solidarity surcharge is a flat rate of 5.5%. This means that the highest marginal tax rate in Germany is 50.5%.

Germany also has a corporate income tax, which is levied on the profits of companies. The standard rate of corporate income tax is 15%, but there are a number of deductions and exemptions that can be claimed to reduce this amount.

Employee Income Taxes:

Individual income tax rates in Germany are based on progressive tax brackets. All resident individuals are taxed on their worldwide income. Non-resident individuals are taxed (usually by withholding) on German source income only.

Tax Brackets for single taxpayer (EUR)

0%: 0 – 9,744
14% to 42%: 9,744 – 57,918 (geometrically progressive rates start from 14% and increase to 42%)
42%: 57,918 – 274,612
45%: Over 274,612

Tax Brackets for married taxpayer (EUR)

0%: 0 – 19,488
14% to 42%: 19,488 – 115,836 (geometrically progressive rates start from 14% and increase to 42%)
42%: 115,836 – 549,224
45%: Over 549,224

individual income tax in Germany

Employer Costs in Germany

Employer Contributions:

7.3% – Health insurance
9.3% – Pension insurance
1.25% – Unemployment insurance
1.525% – Long term care insurance (effective once the employee reaches 23 years of age and is increased to 1.775% for employees with no children)
0.12% – Insolvency charge

Employee Contributions:

7.3% – Health insurance
9.3% – Pension insurance
1.25% – Unemployment insurance
1.525% – Care insurance (effective once the employee reaches 23 years of age and is increased to 1.775% for employees with no children)

Working Hours in Germany

Working Hours per Week

The usual German workweek is 8 hours per day or 48 hours per week, Monday to Friday. Working hours might be temporarily increased to up to 10 hours per workday in Germany. Employees are entitled to a minimum of 24 hours’ rest per week.

Overtime

Except for labor on Sundays and public holidays, there are no special overtime restrictions in Germany. Except in specified instances, such as for emergency services, these situations are normally prohibited. Overtime is typically not compensated through regular remuneration for regular employees. However, it is possible to agree to incorporate an additional 10%-20% overtime in your job contract.

Employer of Record Germany PEO

Benefits & Insurance in Germany

Statutory Health Insurance (gesetzliche Krankenversicherung – GKV)

Almost everyone is compelled to contribute into a government-run health insurance plan (currently around 90 percent of the population is covered by a GKV scheme). If you are self-employed or earn more than 64.350 euros per year, you have the option of purchasing private health insurance or contributing to GKV voluntarily.

Pension Insurance (Rentenversicherung – RV)

Anyone working in Germany is required to contribute to a pension plan. Your contributions accumulate over time to provide you with a basic retirement income. You have the option of joining the statutory pension insurance scheme or starting a private pension plan if you are self-employed (i.e. you operate a business or work as a freelancer).

Unemployment Insurance (Arbeitlosenversicherung)

In Germany, workers are also compelled to contribute to the unemployment insurance system. Unemployment benefits are paid out of these contributions to those who are unemployed.

Long-term Care Insurance (Pflegeversicherung)

Everyone in Germany has been required to contribute to long-term care insurance since 1995, which covers you if you require care due to old age, an accident, or disease. If you have statutory health insurance, you are automatically protected; if you have private health insurance, you may need to apply for long-term care insurance separately.

Termination Laws in Germany

Employees’ rights are protected in Germany by defining termination conditions, notice periods, and when they are protected from termination.

Termination by agreement is the easiest one. Employee and employer both agree on the termination of the contract. This must be in writing and signed by both parties.

For operational reasons, misconduct, or employee personal reasons, termination with cause is permitted. If there is a valid reason, notice is required, which varies depending on the length of service. If you have fewer than two years of service, you must provide notice by the 15th of the month or the end of the calendar month, which is always at least two weeks.

After two years of service, the notice period is one month, which is effective until the end of the calendar month. For up to 20 years of service, there is a sliding scale that requires 7 months’ notice.

There is no requirement for notice when someone is fired for serious wrongdoing.

Severance pay

There is no statutory severance pay in Germany.

An individual employee on a permanent contract is entitled to severance pay under the Employment Protection Act if the employer indicates in the notice of dismissal that the dismissal is for operational reasons and offers compensation, or if the worker does not file a complaint within three weeks of the dismissal.

In this situation, severance compensation of half a month’s wage might be filed for each year of work. The maximum payment allowed by law is equal to one year’s salary. Employees aged 50 and older with at least 15 years of continuous service are entitled to 15 months’ pay, while employees aged 55 and older with at least 20 years of continuous service are entitled to 18 months’ pay.

Employment in Germany

Public Holidays in Germany

Germany has a total of 12 public holidays.

Public holidays in Germany are called gesetzliche Feiertage and there are 12 of them.

9 of these are so-called “restoration days”, commemorating the struggle for democracy and national unity, as well as celebrating the country’s cultural heritage.

The remaining 3 holidays celebrate Easter, Pentecost and Christmas.

Germans are entitled to paid leave on all public holidays.

This leave is in addition to the annual vacation entitlement of at least 24 days.

If a public holiday falls on a weekend, then the next working day becomes a holiday.

For example, if Christmas Eve or New Year’s Eve falls on a Saturday or Sunday, the following Monday is a holiday.

The same applies if Easter Monday or Pentecost Monday falls on a Saturday or Sunday.

If Christmas Day, New Year’s Day or Boxing Day (December 26th) falls on a Saturday or Sunday, the following Monday is not a holiday.

Public Holidays in Germany

In Germany there are both national and regional public holidays. Below we show you the list of national holidays.

  • New Year’s Day – January 1st
  • Good Friday – April 15th
  • Easter Monday – April 18th
  • Labour Day – May 1st
  • Ascension Day – May 26th
  • Whit Monday – June 6th
  • Day of German Unity – October 3rd
  • Christmas Day – December 25th
  • 2nd Day of Christmas – December 26th

Paid Leave in Germany

In Germany, the Federal Holiday Act (Bundesurlaubsgesetz) provides for 20 vacation days per year for a 5-day work week and 24 vacation days for a 6-day work week; nevertheless, most firms in Germany give full-time employees upwards of 26 to 30 vacation days each year. Sick leave does not affect vacation time.

Germany Employment laws

Employment Contract in Germany

Employment Contract

Employment contracts are not subject to any legal restrictions in law, which means they can even be concluded orally. However, it is encouraged, and almost always the rule, that they are concluded in a written form.

Despite the fact that there is no necessary legal regulation dictating which parts must be included in the employment contract, it is prudent to include the following vital aspects for legal clarity:

  • the job description
  • the amount of remuneration (including shareholdings, allowances, bonuses, special payments) and its due date
  • the start of the employment relationship
  • a possible limitation of the employment relationship
  • working hours
  • the holiday periods
  • the place of work
  • data protection provisions
  • private car/phone/internet use
  • flexitime
  • non-competition obligations
  • the periods of notice
  • general references to the collective agreement/company or service agreement.

Probation Period

The probationary period usually lasts 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. An employee is not entitled to severance pay during a probationary period.

Types of Leaves in Germany

Sick Leave

Employees in Germany are entitled to up to 6 weeks of sick leave per illness under German legislation (statutory sick pay). If employees are suffering from a variety of illnesses, there is no maximum limit. With a few exceptions, sick leave is usually paid for by the employer.

Maternity Leave

Mothers in Germany are entitled to fourteen weeks of maternity (6 weeks before the child is born and 8 weeks after). In Germany, maternity leave is paid in full; however, the government only pays a portion of it (EUR 13 per day) and the remainder is covered by the employer. Maternity leave is the same as it is for childbirth in the case of a surrogacy agreement.

Paternal Leave

In Germany, parents can take up to 24 months of paid parental leave per child. A single parent can take up to 24 months while two parents can take up to 28 months. Parental leave is available at any time until the child turns three years old. If a request for parental leave is made with seven weeks’ notice, employers cannot refuse it. During parental leave, parents can opt to work part-time (up to 30 hours per week).

Immigration Laws in Germany

Different types of German work permits are available depending on your qualifications and type of job:

  • General Work Permit – If you have found a job in Germany that cannot be filled by an EU national, you can apply for this form of German work permit. You don’t need to have exceptional abilities if you are qualified for the position.
  • Highly Skilled Worker Permit – If you are a highly skilled worker with a lot of experience and high income, you can apply for this sort of work permit.
  • The EU blue card for Germany – If your annual salary is at least €56,800 or €44,304 if you work in a shortage occupation, you can apply for an EU Blue Card.
  • Work Permit for Freelancers — If you are a freelancer or self-employed individual and can demonstrate that you have potential clients, you can apply for this form of permit.
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