Employer of Record (EOR) in Germany

Employment Laws and Regulations in Germany

Employment Contracts

German employment law is governed primarily by the Bürgerliches Gesetzbuch (BGB, Civil Code), the Kündigungsschutzgesetz (KSchG, Protection Against Unfair Dismissal Act), and a range of sector-specific statutes. The Bundesministerium für Arbeit und Soziales (Federal Ministry of Labour and Social Affairs) oversees labour policy and enforcement (BMAS).

Employment contracts in Germany must include all mandatory terms specified by the Nachweisgesetz (Evidence Act), as amended effective January 1, 2025. Required terms include the names and addresses of both parties, start date, workplace location, job description, compensation and payment intervals, working hours, annual leave entitlement, notice periods, probation period duration, and any applicable collective bargaining agreement (L&E Global).

Since January 2025, employers can provide these terms in text form (e.g. by email) rather than requiring a signed paper document, though the employee must be able to save and print the contract. Fixed-term contracts remain subject to the stricter written form requirement under §126 BGB.

Indefinite contracts are the standard in Germany. Fixed-term contracts (befristete Arbeitsverträge) are permitted under the Teilzeit- und Befristungsgesetz (TzBfG) but are limited to a maximum of two years without objective justification, with a maximum of three renewals within that period. Contracts are typically written in German, though bilingual contracts are common for international hires.

Working Hours and Overtime

The Arbeitszeitgesetz (ArbZG, Working Hours Act) sets the legal framework for working time in Germany. The standard working day is eight hours, based on a six-day working week, resulting in a statutory maximum of 48 hours per week.

Daily working time may be extended to ten hours provided the average over six calendar months or 24 weeks does not exceed eight hours per day. Employees are entitled to a minimum rest period of 11 consecutive hours between working days (ArbZG Full Text).

Employees working more than six hours are entitled to a minimum 30-minute break, which may be split into two 15-minute intervals. After nine hours of work, the break entitlement increases to 45 minutes. Managerial staff (leitende Angestellte) and certain other categories defined in §18 ArbZG are exempt from working time limits.

Overtime and Premium Pay Rates

The Arbeitszeitgesetz (ArbZG) does not mandate a statutory overtime premium. Overtime compensation is typically governed by the employment contract or applicable collective bargaining agreement.

Germany does not have a statutory overtime premium. The ArbZG regulates maximum working hours and rest periods but does not mandate a specific pay rate for overtime.

Overtime compensation is determined by the individual employment contract, applicable collective bargaining agreement (Tarifvertrag), or works agreement (Betriebsvereinbarung). The 2025 coalition agreement between CDU/CSU and SPD includes plans to make overtime bonuses tax-free, though implementing legislation is still pending as of early 2026 (Morgan Lewis).

Minimum Wage

Germany’s statutory minimum wage increased to EUR 13.90 per hour on January 1, 2026, up from EUR 12.82 in 2025. A further increase to EUR 14.60 per hour is scheduled for January 1, 2027. The Mindestlohnkommission (Minimum Wage Commission) recommends adjustments, which are enacted by government regulation (Mindestlohnkommission).

The minimum wage applies to all employees aged 18 and over, with limited exceptions for long-term unemployed individuals during their first six months of re-employment, mandatory internships as part of education, and voluntary internships lasting less than three months. The mini-job earnings threshold increased to EUR 603 per month in 2026, linked directly to the minimum wage level (Destatis).

Probation Period

The standard probation period (Probezeit) in Germany is up to six months, as defined in §622(3) BGB. During probation, either party may terminate the employment relationship with just two weeks’ notice, without needing to provide a specific reason. The Kündigungsschutzgesetz (unfair dismissal protection) does not apply during the first six months of employment in establishments with more than ten employees (ICLG Germany Employment Guide).

Probation periods must be explicitly stated in the employment contract. For fixed-term contracts of less than twelve months, the probation period must be proportionate to the contract duration. During probation, employees retain their entitlement to statutory annual leave (accrued pro rata), sick pay, and all social security protections.

Leave Entitlements

German employees are protected by a layered system of leave statutes. The Bundesurlaubsgesetz (BUrlG, Federal Holiday Act) governs annual leave, the Entgeltfortzahlungsgesetz (EFZG) covers sick pay, and the Mutterschutzgesetz (MuSchG) and Bundeselterngeld- und Elternzeitgesetz (BEEG) set the rules for maternity and parental leave.

Annual Leave

Under the Bundesurlaubsgesetz, employees working a five-day week are entitled to a minimum of 20 working days of paid annual leave per year. For a six-day week, the minimum is 24 working days. In practice, most employment contracts and collective bargaining agreements provide 25 to 30 days of annual leave (BUrlG Full Text).

Leave accrues from the start of employment but full entitlement requires six months of continuous service (the “waiting period” under §4 BUrlG). Unused leave must generally be taken by December 31 of the calendar year, though the Federal Labour Court (Bundesarbeitsgericht) has ruled that unused leave carries over if the employer fails to actively remind the employee to take their leave. Employees over 50 may receive additional leave days under certain collective agreements.

Sick Leave

Under the Entgeltfortzahlungsgesetz (EFZG), employees who have been employed for at least four weeks are entitled to six weeks (42 calendar days) of full salary continuation (100% of regular pay) per illness from their employer. After this period, the employee’s statutory health insurance fund pays Krankengeld (sickness benefit) at approximately 70% of gross salary (capped at 90% of net salary) for up to 78 weeks within a three-year period for the same illness (EFZG Full Text).

A medical certificate (Arbeitsunfähigkeitsbescheinigung) is required from the first or third day of absence, depending on the employer’s policy. Since January 2023, doctors transmit electronic sick notes (eAU) directly to health insurers, and employers retrieve them electronically.

Maternity Leave

The Mutterschutzgesetz (MuSchG) provides 14 weeks of maternity protection: six weeks before the expected due date (Mutterschutzfrist) and eight weeks after birth. The postnatal period extends to twelve weeks in cases of premature birth, multiple births, or a medically certified disability of the newborn (MuSchG Full Text).

During maternity leave, the employee receives a combination of maternity pay (Mutterschaftsgeld) from the statutory health insurance fund (up to EUR 13 per day) and a top-up payment from the employer to bring total compensation to 100% of the employee’s average net salary. Employers are prohibited from terminating a pregnant employee’s contract from the start of pregnancy through four months after birth.

Paternity Leave

Germany does not have a separate statutory paternity leave entitlement. Fathers and partners access time off through the parental leave (Elternzeit) system under the BEEG. In practice, many fathers take two months of parental leave immediately after the birth, which also maximizes the family’s parental allowance (Elterngeld) entitlement from 12 to 14 months total.

Other Statutory Leave

German law and common contractual provisions provide additional paid leave for specific life events.

Parental leave (Elternzeit) provides up to three years per child for both parents, with full job protection. Parents receive Elterngeld at 65% of previous net income, with a minimum of EUR 300 and maximum of EUR 1,800 per month, for 12 to 14 months under the Bundeselterngeld- und Elternzeitgesetz (BEEG).

Marriage leave is not mandated by federal law but many collective bargaining agreements grant one to two paid days. Bereavement leave follows the same pattern, with most Tarifverträge providing one to three days of paid leave for close family members.

Child sick leave allows each parent up to 10 days per child per year (20 for single parents), paid through the statutory health insurer. Care leave under the Pflegezeit Act permits up to 10 days of short-term leave to arrange care for a close relative, plus up to six months of unpaid care leave with job protection.

Leave Entitlements Summary

German law provides employees with several categories of paid and unpaid leave. The Bundesurlaubsgesetz (Federal Leave Act) guarantees a minimum of 20 days of paid annual leave for a five-day working week.

Statutory Employee Benefits

Beyond leave entitlements and social security contributions, employers in Germany must provide several mandatory benefits that form part of the overall compensation package.

All employees in Germany are entitled to statutory health insurance (gesetzliche Krankenversicherung), covering medical treatment, hospitalization, and prescription drugs. The employer and employee each pay approximately 7.3% of gross salary plus a supplementary contribution averaging 1.45% per side. Pension insurance under the Deutsche Rentenversicherung guarantees retirement benefits, with each side contributing 9.3% of gross salary up to the annual ceiling of EUR 101,400.

Unemployment insurance (Arbeitslosenversicherung) is funded by equal 1.3% contributions from employer and employee. Long-term care insurance (Pflegeversicherung) provides coverage for nursing care needs, at 1.7% each for employees with children and a higher rate for childless employees over 23. Occupational accident insurance is funded entirely by the employer through the relevant Berufsgenossenschaft, with rates varying by industry risk class.

Recent Regulatory Updates (2026)

Germany has enacted several significant employment law changes effective in 2025 and 2026 that affect employers and EOR providers operating in the country.

The statutory minimum wage increased to EUR 13.90 per hour on January 1, 2026, with a further increase to EUR 14.60 scheduled for January 1, 2027. This raised the mini-job earnings threshold to EUR 603 per month (Ogletree Deakins).

Social security contribution assessment ceilings increased for 2026: the general ceiling for pension and unemployment insurance rose to EUR 101,400 per year (EUR 8,450 per month), and the health and long-term care insurance ceiling rose to EUR 69,750 per year (EUR 5,812.50 per month). The average supplementary health insurance contribution rate increased to 2.9% in 2026, up from 2.5% in 2025 (Nettolohn-Rechner).

The EU Pay Transparency Directive must be transposed into German law by June 7, 2026, requiring employers to provide salary range information in job postings and enabling employees to request pay comparison data. The coalition government is also planning mandatory electronic time recording under a modernized Arbeitszeitgesetz, though final legislation is still pending as of early 2026 (Mayer Brown).

Work Permits and Visas in Germany

Work Permit Requirements

Who Needs a Work Permit

Citizens of EU, EEA, and Swiss nationals have full freedom of movement and do not require a work permit or residence permit to work in Germany. All other foreign nationals (third-country nationals) need a residence title that authorizes employment before they can legally work in Germany. Citizens of Australia, Canada, Israel, Japan, New Zealand, South Korea, the United Kingdom, and the United States may enter Germany without a visa and apply for a residence permit after arrival (Make it in Germany).

Eligibility and Required Documents

The specific requirements depend on the visa category, but common documentation includes a valid passport, a signed employment contract or binding job offer from a German employer, proof of recognized qualifications (university degree or equivalent professional qualification), health insurance coverage, proof of adequate accommodation in Germany, and a completed visa application form with biometric photos. For the EU Blue Card, applicants must demonstrate a minimum annual gross salary of EUR 50,700 (or EUR 45,934.20 for shortage occupations and recent graduates) as of 2026.

Processing Time and Validity

Processing times vary significantly by visa type and the applicant’s country of origin. EU Blue Card applications typically take four to twelve weeks at German embassies, though some locations report wait times of up to twenty weeks.

The initial EU Blue Card is valid for the duration of the employment contract plus three months, up to a maximum of four years. Standard work visas under the Fachkräfteeinwanderungsgesetz are typically issued for one to four years depending on the contract duration (German Embassy EU Blue Card Requirements).

Renewal Process

Residence permit renewals are handled by the local Ausländerbehörde (foreigners’ authority) and should be initiated at least six to eight weeks before expiry. Required documentation includes the current residence permit, updated employment contract, recent payslips, proof of continued health insurance, and a valid passport. A Fiktionsbescheinigung (fictional certificate) is issued if the renewal is not processed before the original permit expires, allowing the employee to continue working legally during processing.

Common Visa Types for Foreign Workers

Germany has significantly modernized its immigration framework through the Fachkräfteeinwanderungsgesetz (Skilled Immigration Act), originally enacted in 2020 and substantially amended in 2023 and 2024. The Federal Employment Agency (Bundesagentur für Arbeit) and the local Ausländerbehörde jointly process work-related residence permits. An EOR with an AÜG license can sponsor most work visa categories.

Visa types not covered above that do not permit employment in Germany include the following.

Other visa categories that do not authorize employment include the Tourist/Schengen visa (Type C), which permits stays of up to 90 days within a 180-day period for business meetings but not paid work. Student visas allow enrollment at German universities with limited work rights of 120 full days or 240 half days per year. Language course visas permit attendance at intensive language programs but do not include any work authorization.

How an EOR Handles Work Permits

An employer of record in Germany can sponsor work visa applications because it holds the AÜG license and acts as the legal employer. The EOR prepares the employment contract that meets the salary and qualification thresholds for the relevant visa category, coordinates with the Ausländerbehörde for residence permit issuance, and manages the Federal Employment Agency’s approval process where required.

The employee is responsible for submitting the visa application at their local German embassy or consulate, attending the interview, providing personal documentation (passport, qualifications, health insurance), and completing any required credential recognition process through the Zentralstelle für ausländisches Bildungswesen (ZAB) or relevant professional chamber. Work permit processing adds four to twenty weeks to the standard onboarding timeline described in the EOR onboarding section above.

One important limitation: the AÜG caps the duration of a single temporary employment assignment at 18 months with the same client company. EOR providers structure their arrangements to comply with this limit, often through direct employment models rather than pure temporary staffing, depending on the specific legal structure and the labour authority’s interpretation.

Payroll, Taxes, and Social Security in Germany

Employer Contributions

German employers are responsible for paying their share of social insurance contributions on behalf of each employee. These contributions are calculated as a percentage of gross salary up to the applicable assessment ceiling.

Employee Contributions

Employees in Germany pay their own share of social insurance contributions, which are withheld from gross salary by the employer. The employee rates mirror many of the employer contributions.

Income Tax

Germany applies a progressive income tax system under the Einkommensteuergesetz (EStG). The rate ranges from 0% on the basic allowance up to 45% on income above EUR 277,826.

Germany uses a progressive tax formula rather than fixed bracket steps. The marginal rate increases smoothly from 14% at the bottom of the taxable range to 42% at EUR 69,879, calculated using mathematical formulas defined in §32a of the Einkommensteuergesetz (EStG). Married couples filing jointly benefit from income splitting (Ehegattensplitting), which effectively doubles all bracket thresholds (PwC Germany Tax Summary).

A solidarity surcharge (Solidaritätszuschlag) of 5.5% of income tax liability still applies, but an exemption threshold of EUR 20,350 in annual tax liability (2026) means approximately 90% of taxpayers are fully exempt. Church tax (Kirchensteuer) of 8% or 9% of income tax (depending on the federal state) applies to registered members of recognized churches.

Payroll Cycle

Payroll in Germany is processed monthly, with most employees receiving their salary by the 25th of the month or on the last business day. Bank transfers are the standard payment method; cash payments are extremely rare and subject to documentation requirements. Employers must issue a monthly payslip (Lohnabrechnung) detailing gross salary, each deduction, employer contributions, and net pay.

Wage tax (Lohnsteuer) must be remitted to the Finanzamt by the 10th of the following month. Social security contributions are due on the third-to-last banking day of the current month (estimated based on the previous month) with a reconciliation in the following month. Annual wage tax certificates must be submitted electronically to the tax authorities by February 28 of the following year.

13th Month Salary and Bonus Pay

Germany does not have a statutory requirement for a 13th month salary. The Christmas bonus (Weihnachtsgeld) and holiday bonus (Urlaubsgeld) are voluntary benefits governed by the individual employment contract, applicable collective bargaining agreement, or established company practice (betriebliche Übung). If an employer pays a Christmas bonus consistently for three or more consecutive years without reservation, it may become a binding entitlement under German case law (Rotwang Law).

Where a Christmas bonus is provided, it typically ranges from 50% to 100% of one month’s gross salary, paid in November or December. Many collective bargaining agreements mandate the bonus for covered employees.

The Christmas bonus is fully subject to income tax and social security contributions. Employers should include a voluntary nature clause (Freiwilligkeitsvorbehalt) in the contract if they wish to retain discretion over bonus payments.

Cost of Hiring Through an EOR in Germany

EOR Service Fees

EOR service fees in Germany typically range from $300 to $600 per employee per month. This fee covers the full scope of employer responsibilities: employment contract management, monthly payroll processing, tax withholding and filing, social security registration and contributions, employee benefits administration, leave tracking, and ongoing compliance with German labour law. Some providers offer volume discounts for companies hiring multiple employees.

Total Employment Cost Breakdown

The following table provides a complete cost breakdown for employing one worker in Germany through an EOR. It uses a hypothetical gross monthly salary of $5,000 and includes all mandatory employer contributions plus the EOR service fee.

The total cost of employing a worker through an EOR in Germany at a gross monthly salary of $5,000 is approximately $6,621, or about 32.4% above gross salary. Employer social security contributions account for roughly 22.4% of this premium, with the EOR service fee adding approximately 10%. Companies hiring employees with salaries above the contribution assessment ceilings (EUR 69,750 for health/care, EUR 101,400 for pension/unemployment) will see a lower effective contribution rate as contributions are capped.

Ready to hire in Germany? Get started with Remote People: we handle employment contracts, payroll, tax withholding, and full Germany compliance. No local entity needed.

Benefits of Using an EOR in Germany

German employment regulation is among the most detailed in Europe. Strong employee protections, mandatory works council rights, and statutory requirements at every stage of the employment relationship mean that compliance mistakes are both easy to make and expensive to fix. An employer of record addresses these challenges directly.

Using an EOR in Germany eliminates the months-long process of incorporating a GmbH and registering with the Handelsregister (commercial register), Finanzamt (tax office), and social insurance carriers. Companies can have their first German employee on payroll within one to two weeks, compared to the three to six months typically required for entity setup.

The EOR model also eliminates the fixed costs of maintaining a German entity, including trade tax registration, annual financial statements, and managing director liability. For companies with fluctuating German headcount or those testing the market before committing to a permanent presence, the EOR provides the flexibility to scale up or down without the exit costs of dissolving a GmbH. The EOR’s local HR and legal expertise ensures continuous compliance with German employment law updates, which change frequently through collective bargaining rounds and legislative amendments.

For companies that want to build a team in Germany without the complexity and fixed costs of a local entity, an EOR provides the fastest and most compliant path. Contact Remote People to discuss your Germany hiring needs.

Termination and Offboarding in Germany

Notice Periods

Statutory notice periods in Germany are defined in §622 BGB and increase with the employee’s length of service.

During the probation period (up to six months), either party may terminate with two weeks’ notice to any date. After probation, the basic statutory notice period for the employer is four weeks to either the 15th or the end of a calendar month.

This period increases based on tenure, as shown below. Employees can agree to longer notice periods in their contract, but the employee’s notice period may not exceed the employer’s (SE Legal).

Extraordinary (summary) dismissal without notice is permitted under §626 BGB only for serious cause (wichtiger Grund), such as theft, fraud, or gross misconduct. In cases of mutual agreement (Aufhebungsvertrag), the parties may agree to any notice period or immediate separation. Fixed-term contracts end automatically on the agreed date without requiring notice.

Severance Pay

Severance pay (Abfindung) is not a statutory entitlement in Germany for most types of dismissal. It comes into play in specific situations rather than as an automatic right. Under §1a KSchG, if an employer terminates for operational reasons (betriebsbedingte Kündigung) and offers severance in exchange for the employee not filing an unfair dismissal claim, the standard formula is 0.5 months’ gross salary per year of service (§1a KSchG).

Calculation Method

The standard severance formula under §1a KSchG is 0.5 months’ gross salary per completed year of service, with periods of six months or more counting as a full year. The base salary includes the regular monthly gross salary and any recurring bonus or allowance components. Variable compensation, overtime pay, and one-time bonuses are typically excluded unless they form a regular part of compensation.

In practice, severance amounts negotiated in labour court settlements or mutual termination agreements (Aufhebungsverträge) often exceed the §1a formula. Amounts of 0.75 to 1.5 months’ salary per year of service are common in contested dismissals, depending on the strength of the employee’s unfair dismissal claim and the employer’s financial resources.

Caps and Exceptions

There is no statutory cap on severance amounts in Germany, though §10 KSchG provides that labour courts may award up to 12 months’ salary as severance (increasing to 15 months for employees over 50 with 15+ years of service, and 18 months for employees over 55 with 20+ years). Severance is not owed in cases of dismissal for just cause (§626 BGB), during the probation period, or when the employee resigns voluntarily.

Fixed-term contracts that expire on their agreed end date do not trigger severance obligations. Severance payments are subject to income tax but exempt from social security contributions.

Grounds for Termination

The Kündigungsschutzgesetz (KSchG) applies to employees with more than six months of service in establishments with more than ten employees. Under the KSchG, ordinary termination must be socially justified based on one of three grounds: conduct-related (verhaltensbedingt), person-related (personenbedingt, such as long-term illness or loss of qualification), or operational (betriebsbedingt, such as restructuring or downsizing) (ICLG Germany Employment Guide).

Before terminating for conduct, the employer must typically issue at least one prior warning (Abmahnung) for the same or similar misconduct. Operational dismissals require the employer to demonstrate that the position is genuinely redundant and to conduct a social selection (Sozialauswahl) among comparable employees based on tenure, age, disability status, and maintenance obligations. Works council consultation under §102 BetrVG (Works Constitution Act) is mandatory before any dismissal in establishments with a works council; failure to consult renders the dismissal invalid.

EOR vs. Other Hiring Models in Germany

EOR vs. Setting Up a Local Entity

Companies hiring in Germany must choose between establishing a local GmbH and using an EOR. The table below compares the two approaches across compliance, cost, and operational complexity.

For companies hiring one to fifteen employees in Germany, the EOR model eliminates the upfront investment and ongoing overhead of a GmbH. The EUR 25,000 minimum share capital, notary fees for the articles of association, Handelsregister (commercial register) filing, and appointment of a local Geschäftsführer create fixed costs that are disproportionate for a small team.

An EOR is best suited for market entry, distributed teams, and situations where the company needs operational flexibility. The GmbH becomes more cost-effective as headcount grows beyond fifteen employees, when the company needs to bid on German government contracts, or when the business requires a permanent legal presence for banking, real estate, or IP holding purposes.

The transition from EOR to own entity is straightforward: the EOR transfers employees to the new GmbH through a mutual agreement, and the new entity assumes all employment obligations. Remote People supports this transition process for clients that outgrow the EOR model.

EOR vs. Hiring Independent Contractors

Choosing between an EOR and a contractor arrangement in Germany depends on the nature of the working relationship. Germany enforces strict misclassification rules under the Scheinselbstständigkeit doctrine.

Germany enforces strict rules against Scheinselbstständigkeit (pseudo-self-employment). The Deutsche Rentenversicherung (German Pension Insurance) and customs authorities (Zollverwaltung) actively investigate contractor relationships. A contractor who works exclusively or predominantly (more than 80% of revenue) for one client, follows the client’s instructions on how and when to work, uses the client’s equipment, and is integrated into the client’s organizational structure is likely to be reclassified as an employee.

The consequences of misclassification are severe: the client company must pay retroactive social security contributions (employer and employee shares) for up to four years, plus interest and potential criminal penalties for intentional evasion under §266a StGB. The worker gains full employee status with all associated protections, including unfair dismissal protection and paid leave entitlements.

Hiring contractors is only appropriate in some cases, such as genuine project-based work with a defined deliverable, where the worker controls their own schedule and methods. For ongoing, integrated roles, the EOR model provides compliance certainty. Remote People also offers contractor management solutions for companies that need both employment types in Germany.

EOR vs. PEO (Professional Employer Organization)

An EOR and a PEO both manage employment functions, but they differ in legal structure. In Germany, a PEO requires the client to maintain its own registered entity, while an EOR serves as the legal employer directly.

Germany has no separate PEO regulatory framework. Under German law, any arrangement where a third party places workers with a client company falls under temporary staffing (Arbeitnehmerüberlassung) and the AÜG. This means a PEO-style arrangement requires an AÜG license from the Bundesagentur für Arbeit, the same license an EOR holds.

A traditional PEO co-employment model, as used in the United States, does not exist in German law. Any PEO-like arrangement would be treated as temporary staffing under the AÜG, subject to the 18-month assignment cap and the equal treatment principle (requiring temporary workers to receive the same conditions as comparable permanent employees after a specified period).

For companies without a German entity, the EOR is the only viable third-party employment model. For companies that already have a GmbH and want to outsource HR administration, a payroll service provider or HR outsourcing firm is the appropriate alternative, as true co-employment does not exist under German law.

Public Holidays in Germany

Germany observes a set of nationwide public holidays established by federal law, plus additional holidays that vary by state (Bundesland). Employees are entitled to paid time off on all public holidays that apply in their state of employment.

Germany has nine nationwide public holidays in 2026. Individual federal states observe additional regional holidays: Epiphany (January 6) in Bavaria, Baden-Württemberg, and Saxony-Anhalt; Corpus Christi in Bavaria, Baden-Württemberg, Hesse, North Rhine-Westphalia, Rhineland-Palatinate, and Saarland; Reformation Day (October 31) in the five eastern states plus Schleswig-Holstein, Hamburg, Bremen, Lower Saxony, and most other northern states; and All Saints’ Day (November 1) in Bavaria, Baden-Württemberg, North Rhine-Westphalia, Rhineland-Palatinate, and Saarland. Employers must account for the applicable state holidays based on where each employee is located, as the number of total public holidays ranges from 9 to 13 depending on the federal state (timeanddate.com).

Employees who work on a public holiday are entitled to a compensatory rest day within a specified period under §11 ArbZG. Public holidays that fall on a Saturday or Sunday are not rescheduled to a weekday.

How to Get Started with an EOR in Germany

• First, define your hiring needs: Identify the roles you need to fill in Germany, the required qualifications, expected compensation range, and whether the candidates are EU nationals or will require work visa sponsorship. This information determines the onboarding timeline and any additional immigration steps.
• Second, select your EOR provider: Evaluate providers based on their AÜG license status, experience with German labour law, payroll processing capabilities, and ability to support work visa sponsorship. Confirm that the provider handles all five pillars of German social insurance and can manage compliance across different federal states.
• Third, finalize employment terms: Work with the EOR to draft a compliant employment contract that meets Nachweisgesetz requirements, reflects the agreed compensation package, and includes any supplementary benefits such as a company pension contribution, meal allowances, or additional annual leave beyond the statutory minimum.
• Fourth, onboard your employee: The EOR registers the employee with the Krankenkasse, Rentenversicherung, Finanzamt, and Berufsgenossenschaft. For non-EU employees, the EOR coordinates the work visa application process in parallel. The employee receives their contract, social insurance card, and payroll details.
• Fifth, manage and scale your team: Once onboarded, the EOR processes monthly payroll, manages leave requests, handles tax filing, and ensures ongoing compliance. You retain full operational control over your team’s work while the EOR manages the employer obligations. As your team grows, you can add employees through the EOR or transition to your own GmbH when the headcount justifies it.

Ready to hire your first employee in Germany? Contact Remote People to get started. We handle the entire employment process from contract to payroll to compliance, so you can focus on building your team.