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Employer of Record (EOR) in Germany : 2024 Guide

Updated on:
16 Jan, 2024
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399
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EOR in 
Germany
Monthly
$
449
/month
(billed annually)
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Pay monthly at a discounted rate with a 12-month commitment
$
399
/month
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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: 83.27 million (2024 estimate)

Currency: EUR Euro

Capital: Berlin

Languages frequently used: German, English, French

GDP: USD 4.4 trillion (nominal; 2024)

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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:

Title Explanation
General Equal Treatment Act Employers can not discriminate against employees or candidates based on race, ethnic origin, sex, religion or belief, disability, age, or sexual orientation.
Part-Time and Limited-Term Employment Act The law lays out the provisions and statutory requirements for hiring employees for a limited period.
Continuation of Remuneration Act If an employee has been employed for a minimum of four weeks and is not fit to work due to no personal fault, the employee may claim a continued remuneration for up to six weeks.
Minimum Wage Act The law enforces a minimum wage of EUR 8.50 per hour for all workers in Germany.
Employee Protection and Anti-discrimination Rights The Australian Human Rights Commission 1986 protects people from discrimination in the workplace based on gender, race, religion, political opinion, national extraction, nationality, social origin, and other factors. In addition, the Fair Work Act 2009 covers some of the provisions mentioned earlier.
Protection Against Unfair Dismissal Act Companies, with more than ten employees, must provide a fair reason for the dismissal of an employee or termination of an employment contract.
Minimum Vacation Act for Employees The law provides for a minimum holiday or vacation time of 24 working days for employees every year.
Works Constitution Act The act of the German constitution governs the employer-employee relationship. It allows employees to participate in social, economic, and personnel issues.

Timings, Holidays, And Leave Policies In Germany

Entitlements Explanation
Statutory Working Hours A general working week in Germany is 48 hours, and the maximum working hours per day is ten hours.
Rest Period A worker is not permitted to work for more than six hours without a break. If an employee works between six and nine hours, a minimum break of 30 minutes is mandatory, while this increases to 45 minutes if the work exceeds 9 hours.
Public Holidays German employees are entitled to the following public holidays:
  • January 1 New Years’ Day(Neujahr) All
  • January 6 Ephiphany(Heilige Drei Könige) Baden-WürttembergBavariaSaxony-Anhalt
  • March 8 Women's Day(Frauentag) Berlin Mecklenberg-Vorpommern
  • March 29 Good Friday(Karfreitag) All
  • March 31 Easter Sunday(Ostersonntag) Brandenburg
  • April 1 Easter Monday(Ostermontag) All
  • May 1 Labour Day(Tag der Arbeit) All
  • May 9 Ascension Day(Christi Himmelfahrt) All
  • May 19 Whitsunday(Pfingstsonntag) Brandenburg
  • May 20 Whitmonday(Pfingstmontag) All
  • May 30 Corpus Christi(Fronleichnam) Baden-WürttembergBavariaHesseNorth Rhine-WestphaliaRhineland-PalatinateSaarland
  • August 15 Assumption Day(Mariä Himmelfahrt) BavariaSaarland
  • September 20 World Children's Day (Weltkindertag) Thuringia
  • October 3 German Unification Day(Tag der Deutschen Einheit) All
  • October 31 Reformation Day(Reformationstag) BrandenburgBremenHamburgMecklenburg-VorpommernLower SaxonySaxonySaxony-AnhaltSchleswig-Holstein Thuringia
  • November 1 All Saints’ Day(Allerheiligen) Baden-WürttembergBavariaNorth Rhine-WestphaliaRhineland-PalatinateSaarland
  • November 20 Day of Repentance and Prayer(Buß- und Bettag) Saxony
  • December 25 Christmas Day(Erster Weihnachtstag) All
  • December 26 Boxing Day(Zweiter Weihnachtstag) All
Other public holidays are decided as per the jurisdiction you are a part of.
Maternity Leave Maternity leave of six weeks before and eight weeks after birth is permitted under German Law.

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

Under the employment laws in Germany, the German temporary contract allows maximum probation of 6 months, though it's not mandatory to have an employee on probation.

The statutory minimum notice during probation is 2 weeks. The statutory guideline for a notice period after probation is 1 month.

EOR Solution

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

Visa Category Explanation Duration
Tourist Visa Apart from the countries with which Germany has a visa-free agreement, citizens of other countries need a tourist visa to visit for a short period. Up to three months.
Business Visa This visa is meant for foreign nationals apart from those of exempt countries who wish to visit Germany for business reasons. Up to 90 days.
Work Visa The German work visa is meant for gainful employment in Germany. As long a period as is mentioned in your employment contract, up to four years.

Work Permits

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.

Payroll Details

Process Details
Tax ID All companies need to collect the tax account number of their employees to process their payroll. It is through this number that the identification of the personal income tax of employees is made at the government level.
Choosing a Payroll System The choice of payroll system is based on the prevalent healthcare facilities, social security, and other provisions that are mandated by the law.
Basic Employee Information All information regarding your employees needs to be a part of the employee record. This will aid you in simplifying multiple processes inside the office as well as in compliance with government regulations.

Taxation in Germany

Tax Explanation
Income Tax Rate In Germany, the income tax law operates on a slab-based system. This means that the difference between one tax level and the next is taxed at a particular rate instead of the entire income.
Taxable Income Rate
0 - EUR 9409 No Tax
EUR 1450 - EUR 14532 14% - 24%
EUR 14533 - EUR 57051 25% - 42%
EUR 57052 - EUR 270500 42%
EUR 270500 and over 45%
Financial Year End date 31st December
Corporate tax 30%
Social Security rate 40%
Social Tax 20%
Sales Tax State and Central GST ranging from 0% to 28%
Employer Contribution Towards Social Security 20.33%
Employees’ Contribution Towards Social Security 19.68%

Incorporation

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

1) What is an employer of record in Germany?

In Germany, an Employer of Record (EOR), like Skuad, is a third-party service provider that employs individuals on behalf of another company. The EOR handles all employment-related responsibilities, including payroll, benefits administration, taxes, and compliance with local labor laws, enabling companies to operate in Germany without establishing a local entity. 

2) What is the time limit in months for using an EOR in Germany?

In Germany, a foreign company is generally allowed to employ a team member through an Employer of Record (EOR) for a maximum duration of 18 months. After this period, the company must observe a waiting period before they can redeploy the same employee through the same or another EOR. This regulation ensures compliance with local labor laws and promotes fair employment practices.

3) What is an employer certificate in Germany?

An employer certificate in Germany, known as an "Arbeitsbescheinigung," is a document issued by an employer that provides details of an employee's employment history. This certificate is typically required when an employee leaves a company and needs to claim unemployment benefits. It includes information such as the duration of employment, salary, and reason for termination.

4) How much does an employer of record cost in Germany?

The cost of using an Employer of Record in Germany typically ranges from 20% to 25% of the employee's gross salary. This fee covers the management of payroll, social security contributions, taxes, and other administrative duties associated with employment. The exact cost can vary based on the services included and the specific needs of the company. Try Skuad’s cost calculator for more information.

5) What is the 183 rule in Germany?

The 183 rule in Germany refers to a tax rule under which non-resident individuals are subject to German income tax if they are physically present in the country for more than 183 days in any 12-month period. This rule is crucial for determining tax residency and obligations for foreign workers in Germany. It ensures that individuals who spend a significant amount of time in Germany are taxed on their income generated within the country.

limited-offer-banner
EOR in 
Germany
Monthly
best value
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
399
/month
(billed annually)
G2 badge

Employ contractors and employees in 160+ countries

G2 badge
limited-offer-banner
EOR in 
Germany
Monthly
$
449
/month
(billed annually)
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
399
/month
(billed monthly)
G2 badge

Employ contractors and employees in 160+ countries

G2 badge

Table of Content

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EOR in 
Germany
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329
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$
349
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(billed monthly)

Employ contractors and employees in 160+ countries