Guide to hiring employees in Germany

Employee benefits in Germany

In Germany, there are mandatory benefits that employers are required to provide their employees and supplementary/optional benefits that employers may choose to offer. Here are some examples of each:

Mandatory benefits in Germany

Health insurance: Employers must provide health insurance to their employees, with the employer and employee contributing to the insurance cost.

Pension insurance: Employers must also provide pension insurance to their employees, with employer and employee contributions to the insurance cost. The amount of the contributions is based on the employee's salary.

Unemployment insurance: Employers must provide unemployment insurance to their employees, with employer and employee contributions to the insurance cost. The insurance provides income replacement for employees who lose their jobs.

Accident insurance: Employers must provide accident insurance to their employees, with the employer paying the total cost of the insurance. The insurance provides compensation to employees who are injured on the job.

Maternity/paternity leave: Employers must provide maternity leave to female employees, with the length of the leave varying depending on the circumstances. In addition, fathers are entitled to paternity leave.

Supplementary/optional benefits

Retirement savings: Employers may offer retirement savings plans to their employees, such as 401(k) plans or pension plans that provide additional retirement benefits beyond what is required by law.

Health and wellness benefits: Employers may offer additional health and wellness benefits, such as gym memberships or wellness programs, to promote employee health and wellbeing.

Education and training: Employers may offer educational and training opportunities to their employees, such as tuition reimbursement or professional development programs, to help them acquire new skills and advance their careers.

Flexible working arrangements: As remote workers are increasingly common, employers may offer flexible working arrangements, such as telecommuting or flexible schedules, to help employees balance their work and personal lives.

Childcare support: Employers may offer childcare support to their employees, such as on-site daycare or subsidies for childcare expenses, to help working parents manage their childcare responsibilities.

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Working hours in Germany

In Germany, the maximum working hours are regulated by law to protect workers' health and safety. According to the German Working Time Act, the maximum weekly working hours are 48 hours. However, in most cases, full-time employees' average weekly working hours are typically around 40 hours per work week.

In addition to the maximum weekly working hours, the law also requires employers to provide a minimum of 11 hours of rest between working days, which means that employees must have at least 11 hours of uninterrupted rest between finishing one workday and starting the next. This ensures employees have enough time to recover and rest between work shifts.

It's important to note that there are some exceptions to these regulations for specific industries or job roles, such as shift workers, medical staff, or employees in the transportation sector. In these cases, different regulations may apply to ensure the safety and well-being of workers.

Starting in 2023, employers in Germany will be required to record the start and end times of their employees' daily working hours. This is no longer optional; employers must ensure that their employees record their working hours. The method of recording is not specified and will depend on the circumstances of the individual case, such as the industry, size of the company, and specific employee group.

It's also worth mentioning that Germany has a strong culture of work-life balance, and many employers offer flexible working hours or part-time employment options to their employees. This allows workers to balance their work commitments with their personal lives and is often seen to boost employee satisfaction and productivity.

Overtime pay

The compensation for overtime in Germany does not necessarily require employers to pay their employees an additional amount for working beyond regular working hours unless specified in the employment contract. If the contract allows it, a certain amount of overtime may be compensated with the regular monthly salary, up to 15% of the regular working time. Employers must pay for any overtime above this amount. If the overtime compensation exceeds the pension insurance contribution ceiling, the regular monthly salary may compensate for the overtime.

Working on weekends

Unless specific exceptions exist, working on Sundays and public holidays is generally prohibited in Germany. If an employee does work on these days, the employer must compensate them with time off within two weeks for Sunday work or eight weeks for public holiday work.

Night shifts

Night work in Germany is allowed for a maximum of 8 hours per working day but can be increased to 10 hours if the employee's average shift duration in the following month does not exceed 8 hours. Employers must provide appropriate compensation such as paid days off or a suitable supplement to the worker's salary for working during night hours.

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Types of leave available in Germany

In Germany, there are several types of leave available to employees, including:

Annual leave

Employees are entitled to a minimum of 20 days of paid vacation per year, which increases with seniority and may be specified in employment contracts. Some collective bargaining agreements provide for even more vacation time.

Public holidays

There are nine public holidays in Germany, which vary by region. Employees are generally entitled to paid time off on these holidays, although some industries (such as healthcare and hospitality) may require employees to work these days.

fTable 4: Public holidays in Germany

Note that some of these holidays may be observed on different days depending on the state or region in Germany.

Sick leave

Employees who cannot work due to illness or injury are entitled to paid sick leave, which typically begins on the third day of illness. The length of sick leave varies depending on the employee's illness and length of service.

Maternity/paternity leave

In Germany, maternity benefits are available to pregnant and working women. These benefits are designed to support women during their pregnancy and after the birth of their child. The statutory maternity leave in Germany is 14 weeks, which can be taken up to 6 weeks before the expected due date. During this period, the employee receives a maternity allowance, which is calculated based on her average earnings in the last 12 months before the start of the maternity leave. The health insurance provider pays the allowance and is up to 100% of the net income.

Male employees are entitled to a minimum of two months of paternity leave, which may be taken immediately after the birth of the child or later.

Parental leave

In addition to maternity and paternity leave, employees are entitled to parental leave of up to three years for each child, during which time their job is protected. Either parent can take parental leave and may be taken full-time or part-time.

Other leave

In addition to the above, employees may be entitled to other types of leave, such as bereavement or jury duty, depending on their circumstances and employer's policies.

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Attracting talent in Germany

Germany is a top destination for job seekers worldwide due to its strong economy, high standard of living, and diverse culture. However, attracting and hiring the right talent can take time and effort for companies. This essay will explore the current employee engagement trends in Germany, the demands of job seekers, and recommendations for companies when hiring and sourcing talent.

Employee engagement trends in Germany

Employee engagement is a crucial factor for the success of any organisation. In Germany, employees value a positive work environment that fosters collaboration, creativity, and innovation. Studies found that German employees prioritise work-life balance, job security, and professional development opportunities. They also value feedback from their superiors and want to feel valued and appreciated in the workplace.

Another critical trend is diversity and inclusion in the workplace. German employees increasingly demand a diverse and inclusive work environment where they feel respected and supported regardless of gender, ethnicity, or sexual orientation. Companies prioritising diversity and inclusion can attract and retain top talent in the competitive German job market.

Demands of job seekers

Job seekers in Germany have specific demands when it comes to job opportunities. According to recent surveys, German job seekers prioritise the following factors when considering a job offer: salary, work-life balance, job security, and career development opportunities. They also value a positive work environment, a strong company culture, and a good reputation for the employer.

In addition, job seekers in Germany prefer to have clear communication and transparency throughout the hiring process. They expect a fast and efficient recruitment process, timely feedback, and regular updates on the status of their application. Companies that provide a positive candidate experience during the hiring process can increase their chances of attracting top talent.

Recommendations for companies

To attract and retain top talent in Germany, companies should prioritise employee engagement, diversity and inclusion and meet the demands of job seekers. Here are some recommendations for companies when hiring and sourcing talent:

1. Offer a positive work environment fostering collaboration, creativity, and innovation: Prioritise work-life balance, job security, and employee professional development opportunities.
2. Create a diverse and inclusive workplace where all employees feel valued and respected. Provide training and resources to support diversity and inclusion initiatives.
3. Offer competitive salaries, benefits, and perks that meet the demands of job seekers. Communicate these benefits clearly during the recruitment process.
4. Provide a positive candidate experience during the hiring process. Communicate transparently, provide timely feedback, and keep candidates informed throughout the recruitment process.

Attracting and hiring talent in Germany can be challenging. Still, companies that prioritise employee engagement, diversity and inclusion and meet the demands of job seekers can increase their chances of attracting top talent. Germany's current employee engagement trends emphasise the importance of a positive work environment, work-life balance, and professional development opportunities. Companies that provide these benefits and prioritise diversity and inclusion can create a strong employer brand and attract top talent in the competitive German job market.

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Hiring best practices in Germany

Advertising your roles

It is recommended to post on job boards, use global outsourcing and join professional networks in order to reach potential candidates in Germany. It's important to tailor your job postings to the local market and culture.

Posting your job advertisements in this way can also attract passive candidates, who may not be actively searching for work, but would be open to a new opportunity if they came across an attractive one. 

The interview process

In Germany, the customary practice for job interviews is in-person meetings, as the country places significant value on formalities. However, over recent years, online interviews have gained popularity, aligning with the global trend.

Generally, one-on-one interviews are the standard, although panel interviews are also conducted. Candidates can expect the conventional Western interview format, including handshakes, small talk greetings, and adherence to a business attire dress code.

Reference checks

Background checks are legal in Germany, but they must comply with federal data protection laws. You can request information from your new staff related to their industry and job position, as long as you have their informed consent to conduct a reference check.

The onboarding process

Onboarding practices in Germany vary across companies. It is crucial to prioritise transparency by providing clear information about the position from the start. Additionally, ensure that important legal details are included in a written contract for the employee's records.

The fundamentals of onboarding an employee still apply in Germany. For instance, it is essential to familiarise the new employee with company policies and procedures, offer adequate training and development, and introduce them warmly to their team. Creating channels for feedback and addressing their needs through open communication is always beneficial. A well-executed onboarding process will yield valuable employees in the future.

It's also worth noting that this process may look different when onboarding contract vs. permanent roles. 

Termination of employment in Germany

Termination of employment in Germany is subject to strict legal regulations and must be handled with care. Employers must comply with the relevant rules and requirements when terminating an employee’s employment.

Severance pay

Under German law, there is no statutory requirement for severance pay, except in cases where the employee is entitled to it under a collective agreement or an individual employment contract. However, employers may offer severance pay as a settlement agreement to avoid legal employee disputes.

Probationary period

Probation periods are standard in Germany and typically last up to six months. During the probationary period, the employer or employee can terminate the employment relationship without notice or severance pay.

Notice period

Notice periods for terminating employment are governed by law and may be extended by collective bargaining agreements or individual employment contracts. The minimum notice period depends on the length of the employee’s service with the company and ranges from four weeks to seven months.

In cases where the employer initiates the termination of employment, they must provide the employee with a written notice that includes the reason for the termination. The employee can challenge the termination in court if they believe it was unlawful.

If the employee has been employed for more than six months, the employer must also provide them with a certificate of employment. This document confirms the duration of the employment and the tasks and activities the employee performs during their time with the company.

Companies must follow legal requirements and regulations when terminating an employee’s employment in Germany. Failure to do so may result in legal disputes, compensation claims, or fines. It is recommended that companies seek legal advice and guidance to ensure compliance with the relevant laws and regulations.

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