Germany offers its employees many benefits under numerous compensation laws. Before going into business in Germany or incorporating a subsidiary, it is vital to understand what benefits are guaranteed to your employees and what supplemental coverages you can offer to stay ahead of the competition.
Germany Compensation Laws
Germany’s minimum wage in 2018 is 8.84 euros an hour and is expected to increase to 9.19 euros an hour in 2019. There are a few exemptions to the minimum wage requirements which include interns, employees under 18 and long-term unemployed workers for their first six months at their new job. If you violate Germany’s compensation law, you could face a fine of EUR 30,000 to 500,000.
While laws state that employees cannot work more than 12 hours of overtime in one week, the nation does not have a compensation law related to overtime. Instead, you’ll need to include overtime pay in an employment contract that is signed before an employee begins work.
Guaranteed Benefits in Germany
Understanding which benefits are guaranteed by law and which are considered additional is a vital part of Germany benefit management. For example, German compensation laws do not specify a 13th or 14th-month bonus, but many employers choose to give an end-of-the-year bonus on top of an employee’s salary.
Your employees are entitled to 24 vacation days a year if they work six days a week. Employees that work five days a week get 20 days of vacation a year. While this is the standard set by German law, most employers give full-time workers 25-30 days of vacation time a year.
The German Social Security System has four separate components that all employers and employees contribute to, including unemployment insurance, health insurance, pension insurance, nursing care insurance, and accident insurance. A fifth component, accident insurance, is paid only by the employer. Many businesses offer additional health benefits, and some even give employees a housing or child subsidy.
Germany Benefit Management
You will face harsh fines if you do not follow Germany compensation laws correctly. Instead of undergoing the Germany benefit management process alone, you can work with a German benefit outsourcing company.
Finding benefits for your employees requires a significant amount of time, money, and travel. However, working with a global PEO takes the stress out of German benefit management and helps you stay compliant. Globalization Partners can help you source the best supplemental benefits for your employees while ensuring your compliance with all German employment laws.
Benefits and Compensation Restrictions
Pay attention to the number of hours your employees work every day. German compensation laws state that employees cannot work more than eight hours a day and 48 hours per week. You also need to pay your employees at or above the minimum wage to avoid fines.
Instead of worrying about various restrictions, work with a German compensation outsourcing company such as Globalization Partners. As a global PEO, we can take care of your payroll and act as the employer of record to place the liability is on our shoulders instead of yours. Contact us today to learn more.