While Germany ranks among the countries with the most business-friendly regulations. However, the nation’s strict worker protections — including how to recruit and hire, what benefits to offer, and how to stay compliant — can also be challenging to navigate if you’re not well-versed in the local laws.
Right to work
Your company can and should make sure that any candidates you plan to hire are legally allowed to work in Germany. Because Germany is a member of the European Union (EU), citizens of most member states will be able to work there without issue. However, don’t hesitate to verify eligibility. Employers may face legal consequences if they hire employees who lack the visas or permits needed to work in Germany.
Laws against discrimination in Germany
Under the General Act on Equal Treatment, known in Germany as Allgemeines Gleichbehandlungsgesetz (AGG), employers in Germany are expressly forbidden to discriminate against job applicants on the basis of:
- Race or ethnic origin
- Sexual orientation
- Religion or beliefs
Your company will be subject to the AGG from the moment you begin recruiting in Germany. Under this law, an action as simple as posting a job advertisement seeking an employee to join a “young, dynamic team” could be interpreted as age-based discrimination. To avoid misunderstandings, exclude descriptors in your job posting unless they are explicit requirements for the job.
During the recruitment process, avoid asking questions that would force candidates to disclose their status in any of the categories protected under the AGG. Applicants don’t have to answer any questions related to protected criteria under the law, such as inquiries regarding:
- Pregnancy and family planning
- Political affiliation
- Religious faith
- Sexual orientation
- Membership in trade unions
How to hire employees in Germany
During the interview, only ask questions of legitimate interest, and do not invade your candidate’s right to privacy. Many Germany-based companies ask for references that include a candidate’s previous work history, job description, years of employment, and more.
When asked to provide references, many employers in Germany follow a grading system to evaluate past employees’ performance. 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 an outstanding employee.
It is best to negotiate clear terms in an employment contract as you begin the hiring process. Employers are legally required to draft an employment contract that is locally compliant and states information about compensation, benefits, and termination requirements.
As of Aug. 1, 2022, employers are also required to issue a written document covering the essential terms of employment to an employee within 1 month of their start date. This document must cover employment details including working hours, pension entitlements, termination procedures, and payment schedule, and be signed by the employee. Non-compliance is punishable with a fine of up to EUR 2,000 for each violation.
Germany employment laws
When hiring employees in Germany, it’s essential to stay up to date on all employment laws. Employees cannot work more than 8 hours a day. Working time can be extended to a maximum of 10 hours if the average daily working time does not exceed 8 hours over a period of 6 months. Typical workweeks average between 35-40 hours. Work on Sundays and public holidays is restricted, though exceptions do exist.
The minimum wage in Germany as of Oct. 1, 2022, is EUR 12 per hour, however different minimum wage rates may apply to leased employees.
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 Bargaining Agreements (CBAs) 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.
Onboarding in Germany
Before hiring employees in Germany, you’ll need to establish a subsidiary in the country. It can take 6 weeks to process your company’s registration information, and the entire setup 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 of Germany’s employment compliance requirements. 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 (if applicable).
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