Labor & Employment Laws in Germany

Germany is a great place for foreign workers and entrepreneurs because of its strong economy, diverse job opportunities and business-friendly environment. Whether you're looking to advance your career or start a new business, you should know about the employment laws in Germany to ensure a smooth and fair working experience.

Employment contracts for German employees

If you work in Germany, you will usually receive a clear and comprehensive employment contract. This contract defines the conditions of your employment relationship. It sets out the rights and obligations of both employer and employee.

Hiring in Germany: types of employment contracts

In Germany, there are several types of employment contracts that cover different employment relationships and legal requirements.

Full-time employees work 35-40 hours per week and receive benefits such as health insurance, pension contributions, and paid holidays.

Part-time employees work fewer hours but receive similar benefits on a prorated basis.

Permanent contracts offer long-term job security without a fixed end date and are the most common type of employment contract in Germany. Temporary contracts, on the other hand, have a fixed term and end automatically at the end of that term. They are often used for project-based assignments or to cover temporary needs.
A special form of temporary contract is a fixed-term contract, which is for a fixed period and must be justified by an objective reason, such as replacing an employee on parental leave or covering the duration of a project. Fixed-term contracts without objective justification can be used for up to two years or renewed up to three times within this period.

Mini-jobs are a form of marginal employment where the employee earns up to €520 per month and is exempt from most social security contributions, although the employer still pays a lump sum for social security. This type of contract is particularly popular among students, retirees, and those seeking additional income.
Freelance contracts are suitable for independent contractors who are not considered employees and, therefore, do not receive typical employment benefits. Freelancers are responsible for their own social security and tax obligations.
Apprenticeship contracts are designed for people who are undergoing vocational training, combining practical work experience with theoretical training. Apprentices receive a training allowance and similar benefits to regular employees, but the focus is on learning and developing skills. Internships are also important, particularly for students or recent graduates seeking practical experience. Internships can be paid or unpaid, depending on their length and nature, and interns may receive limited benefits, depending on the employer's policies.

These different types of contracts offer flexibility and meet different personal and professional needs, making the German labor market adaptable and versatile.

Key elements of an employment contract in Germany

When reviewing or signing an employment contract, pay attention to the following key elements:

• Job description and duties: a clear outline of your role and responsibilities. Make sure this section matches your expectations for the job.
• Salary and benefits: this lists your base salary, bonuses and additional benefits such as health insurance, pension and vacation days.
• Working hours and overtime: sets out your standard working hours and how overtime is handled.
• Termination clauses: explains the conditions under which both parties can terminate the contract, including notice periods.

Labor laws in Germany: working conditions

The German labor law protects employees and ensures a balance between work and private life. Understanding your rights as an employee in Germany is important for a fair and supportive working environment. If you know what you can expect and what you're entitled to, you can manage your career and stand up for your rights.

Standard working hours in Germany

The Working Hours Act (Arbeitszeitgesetz) limits a typical working week to 48 hours, with a maximum daily working time of 8 hours. In some cases, it can be extended to 10 hours per day if the average working time over six months doesn't exceed 8 hours per day. Overtime must be compensated either by additional pay or time off. The specifics should be outlined in your employment contract. Employees are entitled to a minimum rest period of 11 consecutive hours between working days. If you work more than six hours a day, the law also demands a break of at least 30 minutes.

Minimum wage in Germany

As of 2024, the minimum wage in Germany is 12,41 € per hour. This rate adjusts from time to time, so it's important to keep up with changes. Some industries have higher minimum wages due to collective bargaining agreements. It is important to research your industry and its specific wage standards.

Health and safety regulations for employees in Germany

It's the employer's job to ensure that their employees don’t get harmed at work. This means providing the right safety gear, training, and keeping the workplace safe. Employees have the right to say no to unsafe tasks without getting in trouble. If you think something isn’t right or safe, you should report it. Concerns can be reported to your immediate supervisor, the company's health and safety officer, or the Betriebsrat (works council). Additionally, you can contact the Gewerbeaufsichtsamt (Occupational Safety and Health Authority) for further assistance.

Maternity leave and parental leave

Expectant mothers are entitled to maternity leave, which covers six weeks before the due date and eight weeks after the birth. During this period, mothers receive maternity pay. Both parents can take up to three years of parental leave per child. This leave can be taken all at once or spread out until the child reaches the age of eight. During parental leave, parents can receive a parental allowance to compensate for the loss of income.

Employee rights in Germany: vacation, sick days, and protection against dismissal

Full-time employees who work a 5-day week are entitled to at least 20 days of paid vacation per year. Many employers offer more, often between 25 and 30 days per year. If you're sick and unable to work, you're entitled to full pay for up to six weeks. After that, your health insurance will cover part of your salary. Employees who've been with their employer for more than six months are protected by the Protection against Dismissal Act (Kündigungsschutzgesetz).

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German labor law: Social Security and benefits

The German social security system is designed to support you in various ways to ensure your well-being. It's funded by contributions from employers and employees and covers several key areas:

• Health insurance: ensures access to healthcare services.
• Pension insurance: secures income in retirement.
• Unemployment insurance: provides financial support if you lose your job.
• Long-term care insurance: covers the costs if you need nursing care.
• Accident insurance: protects you against work-related accidents and illnesses.

Access to public healthcare

Health insurance provides comprehensive medical coverage, including visits to the doctor, hospitalization, and prescription drugs. Employer and employee each pay approximately 7.3% of the employee's gross salary for insurance coverage. Additional contributions may be required depending on the insurance provider. If the benefits of statutory health insurance are not sufficient for you, you have the option of switching to private health insurance (Private Krankenversicherung), depending on your income or if you are a student.

Pension benefits

Once you have contributed to the pension system, you will be entitled to receive a pension upon retirement. The amount you receive depends on your total contributions and the duration of your employment in Germany. If you leave Germany before reaching retirement age, you may be eligible to have your contributions refunded under certain conditions. Both the employer and the employee contribute approximately 9,3% of the employee's gross salary to the pension system.

Unemployment benefits

If you lose your job, unemployment insurance offers financial support. To be eligible, you must have worked and paid into the insurance for at least 12 months in the last two years. The amount of the benefit is usually 60-67 % of your previous net salary, with 67% being for those with children and 60% for those without. Employer and employee each pay approximately 1,2% of the employee's gross salary to the unemployment insurance.

Parental benefits

Parents can receive financial support from the government during their time off work to compensate for the loss of income. Depending on the previous net income, the parental allowance (Elterngeld) is between 65% and 100% of the previous net income, with a monthly cap of €1.800. This parental allowance is granted for up to 14 months and can be shared between both parents. There's also an extended form of parental allowance (ElterngeldPlus) that allows parents to extend the benefit period to up to 28 months with reduced monthly payments.

Sick pay

If you fall ill and cannot work, you will continue to receive your full salary for up to six weeks. After that, statutory health insurance will cover part of your salary, usually around 70% of your gross income, for up to 78 weeks within a three-year period for the same illness. The employer covers the full salary during the first six weeks, but the ongoing payments from the statutory health insurance are funded through health insurance contributions, which are shared between the employer and employee. The exact contribution rates can vary by health insurance provider and are not solely determined by industry and risk level.

Employer and employee: anti-discrimination laws in Germany

Germany's anti-discrimination laws are designed to protect individuals from unfair treatment and to foster a respectful and inclusive work environment. The primary law governing anti-discrimination in Germany is the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz), enacted in 2006. This law aims to prevent discrimination in the workplace and applies to all aspects of employment, including hiring, promotion, working conditions, and termination. The AGG protects against discrimination based on the following grounds:

• Race and Ethnicity: protection against discrimination based on skin color, ethnic origin, or descent.
• Gender: equal treatment regardless of gender, including protection against gender identity discrimination.
• Religion or Belief: protecting individuals from discrimination due to their religious beliefs or lack thereof.
• Disability: ensuring equal opportunities for individuals with disabilities.
• Age: protection for employees of all ages against discrimination.
• Sexual Orientation: protection against discrimination based on sexual orientation.
  
  

Termination of employment

It's important for both employees and employers to understand the rules and regulations regarding termination of employment in Germany. German employment laws provide strong protections to ensure that terminations are handled fairly and legally. Understanding your rights and responsibilities will provide clarity on the proper procedures when termination becomes necessary.

Reasons for termination

There are several reasons for termination in Germany, which generally fall into one of the following categories:

• If an employee consistently fails to meet performance standards, even after being given opportunities to improve, the employer may terminate the employment.
• Employers can dismiss employees due to operational changes such as plant closures, restructuring or downsizing. In such cases, the employer must prove that the dismissal is essential for the business and that other alternatives (e. g. transferring the employee to another job) have been considered.
• Conduct-related termination includes serious breaches of duty such as theft, fraud, or gross misconduct. If the breach is severe, the employee can be terminated immediately (without notice).
  
  

Notice periods

In Germany, both employers and employees must give a certain amount of notice when ending an employment contract. The length of the notice period depends on how long the employee has been with the company.

• During probation period: typically six months during which either party may terminate the agreement with two weeks’ notice.
• After probation: the notice period depends on how long the employee has been with the company.

Severance pay

While there is no general legal requirement for severance pay in Germany, it may be provided under certain circumstances. Some employers offer severance pay to avoid legal disputes. This is usually half a month's salary for each year of service. In most negotiated termination agreements, severance pay is part of the settlement. In the event of extensive redundancies, social plans negotiated with employee representatives may be applied, which also include severance payments.

Dismissal Protection Act in Germany

The Dismissal Protection Act (Kündigungsschutzgesetz or KSchG) protects employees from unfair dismissal. The KSchG applies to companies with more than ten employees and to employees who've been with the company for more than six months. The employer must give a good reason for ending the employment. This can be for personal, operational, or behavioral reasons. When it comes to operational terminations, employers must go through a social selection process in which factors such as age, length of service, family commitments, and disability status are considered in determining which employees are to be dismissed.