Employer of Record in Germany
Skuad’s Employer of Record Germany (EOR) solutions make business expansion to Germany easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Germany, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, Book a demo today.
Germany at a Glance
Estimated Population: 83.31 million (2023 estimate)
Currency: EUR Euro
Languages frequently used: German, English, French
GDP: USD 4.4 trillion (nominal; 2023)
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Employment in Germany
Labor laws in Germany are comprehensive and include all aspects of employment, from discrimination to maternity benefits and from the minimum wage to the hours of work. These laws are followed strictly by local companies.
When companies hire foreign nationals in Germany, these laws will also apply to them. Additional regulations apply to foreign nationals who wish to work in Germany. The laws in Germany on the employment of foreign nationals are not as stringent or discriminatory as they can be in several other counties. Foreign nationals may get the same benefits as Germans.
German laws and regulations on labor and employment are hard to grasp and maneuver through. Hence, an EOR partner can often be essential when you are expanding your company to Germany. Connect with Skuad experts to understand the German employment laws better.
Some of the provisions of Employment Laws to note before hiring in Germany are as follows:
Timings, Holidays, And Leave Policies In Germany
Contractors Vs. Full-time Employees
Germany has a proper legal framework that differentiates between contractors and full-time employees. Courts and other independent parties adopt several methods to determine whether an individual is an independent contractor or a full-time employee. The provisions of employment for the two categories are also different under German laws.
German laws are exceptionally liberal, protective, and generous toward the employees. From a limited period to part-time and full-time, various patterns of work are recognized under German law, and separate rules have been determined for employees in each category.
When an employee enters into a contract with a company, the nature of work should be fully and clearly defined. If the work is full-time and not limited to a certain period, the employer cannot terminate the employee without a reason. In general, contracts in Germany are assumed to be valid for an unlimited period. If the period of employment has been mentioned, the contract can be terminated without any notice to the employee after the given time. The limit to which an employee may be hired by a German for a fixed term is two years.
Know more about the two types of employment and make an informed decision with the help of Skuad experts.
Scope of Negotiating Terms
In Germany, negotiation can be on two fronts. Individual employees may negotiate with employers regarding salary and benefits, and employee or worker associations may negotiate with employers as a bloc. In most cases, negotiations are between the employer and the prospective employee on a one-on-one basis, especially for higher-level positions and positions for which individual employees are hired. Factors such as the age of the employee impact the negotiation since older employees find it hard to get new jobs.
Negotiations between the employee or worker associations and employers mostly happen in the manufacturing industry, where more employees are hired. These employee associations negotiate everything from the salaries to the benefits that they will get and the hours that they will be working for. They may also negotiate specific leaves apart from the ones that are mandated by the law.
Hiring in Germany
With the ease of access to the Internet in various parts of the world, this process has become similar in most countries. Initially, the company must identify the need to recruit new employees and determine that the reason for recruitment cannot be fulfilled by any existing employee.
Once this need has been determined, the job description is drafted. This can go through various drafts and corrections, after which it is published on several different job portals and avenues. LinkedIn is a popular place to advertise jobs in Germany. However, there are also several other portals such as Monster, EURES, and even the Federal Employment Agency.
Once the time for applying for a particular role is over, or an appropriate number of applications has been received, the HR team begins screening and shortlisting applicants. Once this shortlisting has been done, candidates need to go through a series of rounds and interviews to determine their qualifications for the job and knowledge base.
In today’s world, a major portion of hiring is done through online portals, especially so for corporate roles. Hiring online reduces the amount of work that your hiring team needs to carry out in looking for candidates since candidates practically come to you. These candidates are generally decently talented and very qualified.
However, a significant drawback of advertising positions online is the sheer number of applications you are likely to get. Going through hundreds of applications and sorting them is no easy task, however large your HR workforce might be.
This is where the role of an Employer of Record such as Skuad becomes prominent. Skuad provides you immense expertise in the laws and regulations of Germany and makes the task of expanding to a new country significantly easier as well. When it comes to hiring new employees, payroll patrol management and employee record management can be taken care of by Skuad, and you can focus on larger and more important aspects of your expansion. Contact Skuad today to learn more about its services and capabilities.
Probation & Termination
In Germany, no laws specifically address the question of probation. Hence, employers generally have the option of choosing the probation period themselves for newly hired candidates. In general, a candidate can expect to be on probation for a period ranging from three months to even as long as a year.
Employees are protected from unfair termination by their employer by German law. If a firm has been employing a person for more than six months and has more than ten employees, it must give a fair reason for terminating its contract with an employee. A contract may also be terminated if the period of the contract has expired, a notice has been given by either the employee or the employer, or by mutual consent between the employee and the employer.
When an employer seeks to terminate an employee, reasons may be related to the conduct of the employee or certain unavoidable circumstances that have arisen in the company and warrant the reduction of the employee force. Redundancy may also be a valid reason for termination of employment.
Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete but by choosing the EOR route for hiring employees in Germany, you can fast-track the expansion process. Employer of Record Germany (EOR) solutions by Skuad can make expansion to Germany much simpler and a lot quicker for business. Our global outreach and a tech-enriched HR platform ensure compliance with local labor laws by managing employment responsibilities such as monthly payroll, work permits, employment contracts as well as taxation for your employees in Germany. Contact Skuad to learn more.
Types of Visas in Germany
Germany does not have special work permits through which foreign nationals can start or continue working in Germany. The only way to be employed in Germany as a foreign national is through a work visa, which you can apply for at your nearest German embassy or consulate.
Payroll & Taxes in Germany
Payrolls and taxes are governed by different rules and regulations in different countries. These are extremely important parts of your expansion into a new country and must be detailed out with legal expertise. Such expertise can be provided by your EOR partner. Skuad offers EOR solutions that help you manage payroll as well as taxation and reduce the time it might take you to determine the structure of your employment contract.
Taxation in Germany
Germany has traditionally been a country that has welcomed businesses of all types. Setting up a subsidiary in Germany is simple if you know the local laws and regulations.
You will first need a registered address or business domicile in Germany to apply for registration. During registration, you need to select the type of company as well as a unique name for your company.
Next, you will need to approach the nearest local, regional court for the registration of your entity, where you will also be asked for certain documents to help in proving your identity as an owner as well as the legitimacy of your business. Finally, you will need to register your company at the tax office. Make use of Skuad’s rich experience in German company laws to simplify the process of setting up a subsidiary here. Talk to Skuad experts and delegate the hard work.
Professional Employer Organization (PEO)
A Professional Employer Organization (PEO) is an organization that shares the responsibility of managing employees and payroll with your company. Unlike EOR services where the complete responsibility of compliance management lies with the outsourced company, a PEO works jointly with your business. The basic points of differences between the two solutions are as follows.
Organizations planning to expand into new territories are better suited with a global EOR which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of a EOR solution. The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks as the EOR bears every legal liability for the organization. In addition to these, the EOR handles payroll, tax, and employment law compliances. To know more about Skuad's EOR solution, Contact Skuad today.
Conclusion: What Gives Skuad’s Germany Solutions An Edge?
If you are looking to expand operations in Germany and want to collaborate with an employer of record, look no further and join hands with Skuad. It is a trusted name with rich and diverse experience in over 150 countries.
Contact Skuad today to give your business expansion plans a much-needed boost.
FAQs for EOR in Germany
What is an Employer of Record in Germany?
An Employer of Record in Germany provides legal employment for employees, managing payroll, benefits, tax filings, and ensuring compliance with German employment laws, helping companies to efficiently expand their workforce to Germany.
What is the 18-Month Rule in Germany?
The 18-month rule in Germany refers to regulations surrounding temporary employment and contracting. According to German law, a temporary employment relationship, including contracting, should not exceed 18 months with the same hirer. After this period, the employee may be considered a permanent employee, subject to the rights and protections that come with permanent employment. Businesses using an Employer of Record service should be mindful of this rule to ensure compliance and mitigate legal risks.
What are the Benefits of EOR?
Using an Employer of Record in Germany provides several benefits. It enables companies to quickly hire and onboard talent without the need to establish a legal entity in the country. The EOR ensures compliance with German employment laws, minimizing legal and financial risks. It also streamlines HR processes such as payroll and benefits administration, allowing businesses to focus on their core operations. Additionally, the EOR can provide valuable local market insights, aiding in seamless business expansion and talent management in Germany.