DACH Compliance. Guaranteed.
German employment law has 47 ways to go wrong. We have mastered all of them so you do not have to.
The True Cost of Getting DACH Compliance Wrong
The DACH region has some of the world's strictest employment laws. Here is what is at stake.
Contractor Misclassification
EUR 500,000+ fines, back taxes, personal liability
Invalid Employment Contracts
Contracts void from day one without AUG license
Works Council Violations
Criminal charges for management
GDPR Data Breaches
EUR 20M or 4% global revenue fines
Termination Errors
12+ months back pay, reinstatement orders
Country-by-Country Compliance
Each DACH country has unique employment regulations. Here is what makes each one challenging.
| Requirement |
|---|
AUG License Mandatory license from Bundesagentur fur Arbeit to employ staff for third parties. Without this, employment contracts are void. |
18-Month Rule Temporary workers must become permanent employees or leave after 18 months at the same client. |
Works Council Rights Companies with 5+ employees can form works councils with co-determination rights on hiring, firing, and working conditions. |
Termination Protection Employees with 6+ months tenure at companies with 10+ employees have full protection under the Kundigungsschutzgesetz. |
Sick Leave 6 weeks full salary paid by employer, then Krankengeld from insurance (70% of gross, capped). |
Vacation Minimum 20 days for 5-day week (24 for 6-day). Industry standard is 25-30 days. |
Working Time Max 8 hours/day, can extend to 10 if averaged over 6 months. Electronic time recording mandatory since 2022. |
Germany requires an AUG (Arbeitnehmeruberlassungsgesetz) license to legally employ workers for client companies. Operating without one makes all employment contracts void from day one.
| Requirement |
|---|
Collective Bargaining Agreements 98% of employees are covered by CBAs. You must identify and apply the correct CBA or face back-pay claims. |
13th & 14th Month Salary Mandatory bonus payments (Urlaubsgeld and Weihnachtsgeld) that are tax-advantaged. Not optional. |
Abfertigung (Severance) Employers contribute 1.53% of gross salary monthly to employee severance fund. Employees keep this when leaving. |
Working Time Standard 40 hours/week, max 10 hours/day. Overtime premiums: 50% for regular overtime, 100% for Sundays/holidays. |
Notice Periods Employer notice: 6 weeks to 5 months based on tenure. Employee notice: typically 1 month. |
Austria has near-universal collective bargaining agreement coverage (98%). Failing to identify and apply the correct CBA exposes you to back-pay claims for the difference.
| Requirement |
|---|
Cantonal Variations Each of 26 cantons has different tax rates, social security implementations, and employment practices. |
Work Permits Non-EU/EFTA nationals need L (short-term) or B (residence) permits. Process varies by canton and takes 4-12 weeks. |
AHV/IV Contributions State pension (AHV), disability (IV), and loss of earnings (EO) contributions total ~10.6% split between employer and employee. |
BVG Pension Mandatory occupational pension for salaries above CHF 22,050. Contributions increase with age. |
Source Tax Non-permanent residents pay Quellensteuer (withholding tax) that varies by canton, marital status, and income. |
Switzerland is not in the EU, has 26 cantons with different rules, and requires work permits for non-EU nationals. Cantonal tax rates alone vary from 11% to 36%.
Everything We Handle. Nothing Left to Chance.
We manage every compliance requirement so you can focus on growing your DACH team.
Full Liability. Zero on You.
As the Employer of Record, we are the legal employer. That means compliance responsibility rests with us, not you.
What This Means for You
When you use Virmondo EOR as your EOR in Germany, Austria, or Switzerland, we become the legal employer of your team members. All employment compliance obligations transfer to us.
Our Compliance Infrastructure
We Track Changes So You Do Not Have To
Employment law in Germany, Austria, and Switzerland changes constantly. Our compliance team monitors regulatory updates and proactively adjusts your employees' terms to stay compliant.
Frequently Asked Questions
Common questions about DACH employment compliance and our EOR services.
As the legal employer, Virmondo EOR bears full responsibility for employment compliance. If an issue arises, our legal team handles it directly. We carry professional liability insurance and have never had a compliance violation result in fines for a client.
Yes. We hold a valid Arbeitnehmeruberlassungslizenz (AUG license) from the Bundesagentur fur Arbeit. This is mandatory for legally employing workers in Germany for client companies. Without this license, employment contracts would be void.
We automatically calculate and process the mandatory Urlaubsgeld (vacation bonus) and Weihnachtsgeld (Christmas bonus) payments. These are paid in June and November respectively, at the tax-advantaged rates required by Austrian law.
Yes. We handle the full work permit process for non-EU/EFTA nationals in Switzerland, including L permits (short-term) and B permits (residence). Processing times vary by canton, typically 4-12 weeks. We advise on the optimal permit type based on the role and duration.
The monthly fee covers: compliant employment contracts, payroll processing, tax withholding and filing, social security contributions, statutory insurance, time tracking compliance, regulatory monitoring, and dedicated account management. The only additional costs are the employee salary and mandatory benefits.
We specialize exclusively in the DACH region (Germany, Austria, Switzerland). While global EORs cover 150+ countries, we go deeper on DACH compliance. We have in-house German lawyers, direct AUG licensing, and local expertise that generalist providers cannot match.
We fully support entity transitions. When you are ready to establish your own German, Austrian, or Swiss entity, we help transfer employees cleanly. This includes TUPE-equivalent compliance in Germany, proper notice periods, and seamless payroll handover.
We focus on compliant employment through EOR. However, we can advise on contractor classification in DACH jurisdictions. If a role is at risk of misclassification, we recommend converting to employment through our EOR to avoid the EUR 500,000+ fines for Scheinselbststandigkeit (false self-employment).
Have a compliance question we did not answer?
Contact Our Compliance TeamReady to Expand Into DACH. Compliantly?
Talk to our compliance team. Get answers to your specific situation. No commitment required.