Germany Hiring/Employment Compliance
While Germany ranks as the 114th easiest country in which to open a new business, its complex employment laws can lead to hefty fines and non-compliance. The nation’s strict worker protections — including how to hire, what benefits to offer, and how to stay compliant — can also be challenging to navigate if you’re not well-versed in national regulations.
How to Hire Employees in Germany
It is best to negotiate clear terms in an employment contract as you begin the hiring process. You are legally required to draft an employment contract that is locally compliant and states information about compensation, benefits, and termination requirements.
During the interview, only ask questions of legitimate interest, and do not invade your candidate’s right to privacy. Many German companies ask for references that include a candidate’s previous work history, job description, years of employment, and more.
Many previous employers follow a rough code to “grade” past employees. The word “average” on a candidate’s references typically means that the person was a non-satisfactory employee, while “good” indicates an average employee and “great” is used to designate a good or outstanding employee.
Germany Employment Compliance
When hiring employees in Germany, it’s essential to stay up-to-date on all employment laws. Your employees cannot work more than eight hours a day. Typical work weeks average between 35-40 hours. The minimum wage in Germany in 2018 is 8.84 euros an hour. The minimum wage is expected to increase to 9.19 euros an hour in 2019 and 9.35 euros an hour in 2020.
As part of Germany’s employment compliance, employees can join a union, work council, or collective labor agreement if they want to. Through these organizations, workers can discuss working decisions, times, and wages.
Germany’s Civil Code, Industrial Code, and other collective agreements also regulate payment and wages. Employees and third parties must be paid through Germany’s File Transfer and Access Management (FTAM) protocol. An employer must approve a given payroll so that the bank can release payments to employees while the business withholds other contributions such as health insurance payments.
Hiring and Onboarding Germany Employees
Before hiring employees in Germany, you’ll need to establish a subsidiary in the country. It can take six weeks to process your companies’ registration information, and the entire process might take months before you are officially incorporated. During this time, some employers lose valuable talent who cannot afford to wait for a job.
Whenever you onboard a new employee, make sure you have every piece of paperwork necessary to set up payroll and meet all Germany employment compliance policies. It is also helpful to send employees an outline of the onboarding process. Review policies such as the company’s code of conduct, break times, and dress code.
Can I Outsource Hiring & HR?
On April 1, 2017, Germany instituted new licensing requirements that make it difficult to start a subsidiary or choose a company to hire people to work on your behalf. You can no longer employ any Germany hiring outsourcing company. Instead, you’ll need a global PEO that has an AUG or temporary agency license.
Globalization Partners is the first global PEO to be fully compliant in Germany. Contact us today to learn more about our services and how we can help you with Germany employment compliance.