Why Hire in Germany
EUR 4.2T
GDP
2.5M+
Tech Talent
63%
English Proficiency
#1
EU Economy
Germany is Europe's economic powerhouse and the EU's largest economy. With a GDP of EUR 4.2 trillion, it offers access to world-leading industries including automotive, machinery, technology, and pharmaceuticals. For companies expanding into Europe, Germany is often the first and most strategic choice.
- Economic stability: Consistent GDP growth, low unemployment, and strong institutional framework
- Deep talent pool: 43+ million skilled workers with strong engineering culture
- EU gateway: Central location and excellent infrastructure for European expansion
- World-class infrastructure: Reliable internet, transport links, and business services
Germany is the #1 destination for US tech companies expanding to Europe. Source: GTAI 2025
Legal Requirements for Hiring
German employment law provides strong worker protections through the Civil Code (BGB), labor courts, and specialized legislation. Understanding these requirements is essential before hiring your first employee.
| Element | Requirement | Notes |
|---|---|---|
| Job title | Required | Must accurately describe the role |
| Salary | Required | Must meet minimum wage (EUR 13.50/hr in 2026) |
| Working hours | Required | Maximum 48 hours per week |
| Start date | Required | Employment begins on this date |
| Vacation entitlement | Required | Minimum 20 days for full-time |
| Notice period | Required | Statutory minimums apply |
| Probation period | Optional | Maximum 6 months allowed |
Written contracts are required by law under the Nachweisgesetz. Verbal agreements are technically valid but expose you to disputes and fines up to EUR 2,000.
Working time is regulated by the Arbeitszeitgesetz (ArbZG). The standard is 8 hours per day, with a maximum of 10 hours if averaged over 6 months. Employees must have at least 11 hours of rest between shifts.
| Limit | Requirement | Flexibility |
|---|---|---|
| Daily maximum | 8 hours standard | 10 hours with averaging |
| Weekly maximum | 48 hours | Based on 6-day week |
| Rest between shifts | 11 hours minimum | No exceptions |
| Breaks | 30 min after 6 hours | 45 min after 9 hours required |
Understanding Employment Costs
Total employment cost in Germany equals gross salary plus approximately 20-22% in employer contributions. Germany has predictable, transparent costs compared to many other countries.
| Contribution | Rate | Ceiling | Notes |
|---|---|---|---|
| Pension (Rentenversicherung) | 9.3% | EUR 7,550/mo | Matched by employee |
| Health Insurance (Krankenversicherung) | 7.3% | EUR 5,175/mo | Average rate; varies by provider |
| Unemployment (Arbeitslosenversicherung) | 1.3% | EUR 7,550/mo | |
| Long-term Care (Pflegeversicherung) | 1.7% | EUR 5,175/mo | Higher for childless employees |
| Accident Insurance (Unfallversicherung) | ~1.3% | None | Varies by industry risk |
| Total | ~20-22% | - |
Contribution ceilings apply. For 2026: EUR 7,550/month for pension/unemployment, EUR 5,175/month for health/care. Source: Deutsche Rentenversicherung
EUR 60K
Gross Salary
Example base
+21%
Contributions
~EUR 12,600
EUR 72.6K
Total Cost
Annual employer cost
Mandatory Benefits in Germany
| Benefit | Legal Minimum | Market Practice | Notes |
|---|---|---|---|
| Annual Leave | 20 days | 25-30 days | Based on 5-day work week |
| Sick Leave | 6 weeks full pay | Same | Health insurance covers 70% after |
| Parental Leave | Up to 3 years | Same | Job protection guaranteed |
| Public Holidays | 9-13 days | Same | Varies by state (Bavaria has most) |
| Maternity Leave | 14 weeks | Same | 6 weeks before + 8 weeks after birth |
The legal minimum vacation under the Bundesurlaubsgesetz (BUrlG) is 20 days for a 5-day work week. However, most employers offer 25-30 days to remain competitive, especially for technology and professional roles.
Offering only 20 vacation days will make you uncompetitive for skilled roles. 28-30 days is the market standard in tech.
For sick leave, employers pay 100% of salary for the first 6 weeks of illness (Entgeltfortzahlung). After that period, statutory health insurance pays approximately 70% of gross salary through Krankengeld.
Works Councils: What You Need to Know
A works council (Betriebsrat) is an employee-elected body with legal co-determination rights. It is established under the Betriebsverfassungsgesetz (BetrVG). A works council is not a union; unions negotiate industry-wide agreements, while works councils handle company-specific matters.
- Required threshold: 5+ permanent employees can initiate formation
- Employee-initiated: The employer cannot prevent formation
- Protected election process: Interference is illegal
- Members have special termination protection during and after their term
| Area | Right Type | Practical Impact |
|---|---|---|
| Hiring | Information + Objection | Must inform before hiring; council can object to candidates |
| Terminations | Consultation | Must consult before any dismissal; failure voids termination |
| Working Hours | Co-determination | Schedule changes require council agreement |
| Workplace Rules | Co-determination | Policies on conduct, dress code, IT require agreement |
| Social Matters | Co-determination | Bonus schemes, break times, holiday scheduling |
Failing to consult a works council before termination can make the dismissal legally void. Always involve them early in any termination process.
For foreign companies, the practical implication is to budget time for consultations, build relationships with works council members, and treat them as partners rather than obstacles. Many works councils are pragmatic and want the company to succeed.
Typical Hiring Timeline
| Phase | Duration | Notes |
|---|---|---|
| Job posting to applications | 2-4 weeks | Longer for senior or niche roles |
| Interview process | 2-3 weeks | 2-4 interview rounds are typical in Germany |
| Offer to acceptance | 1-2 weeks | German candidates typically negotiate |
| Notice period (candidate) | 4 weeks - 3 months | From current employer; increases with tenure |
| Onboarding preparation | 1 week | Contract, equipment, account setup |
| Total | 10-16 weeks | Traditional hiring route |
With Virmondo EOR, you can have a signed, compliant contract within 3-5 business days of providing candidate details. We handle all registrations and compliance setup.
Termination and Dismissal Protection
Germany has strong employee protection under the Kundigungsschutzgesetz (KSchG). After 6 months of employment in companies with 10+ employees, you need a valid reason to terminate. This is one of the strictest dismissal protection regimes in Europe.
| Employee Tenure | Employee Notice | Employer Notice |
|---|---|---|
| During probation | 2 weeks | 2 weeks |
| < 2 years | 4 weeks | 4 weeks |
| 2+ years | 4 weeks | 1 month |
| 5+ years | 4 weeks | 2 months |
| 8+ years | 4 weeks | 3 months |
| 10+ years | 4 weeks | 4 months |
| 12+ years | 4 weeks | 5 months |
| 15+ years | 4 weeks | 6 months |
| 20+ years | 4 weeks | 7 months |
After 6 months and in companies with 10+ employees, employers need a valid reason to terminate: personal (performance), behavioral (misconduct), or operational (redundancy).
- Personal: Inability to perform the job due to illness, loss of qualifications, or similar factors
- Behavioral: Misconduct or policy violations. A warning is usually required first.
- Operational: Business downturn or restructuring. Social selection rules apply to determine who is terminated.
Severance is not legally required but is common in practice. The typical formula is 0.5 months salary per year of service. Severance is often negotiated in settlement agreements (Aufhebungsvertrag) to avoid litigation.
Contractor vs. Employee Classification
Misclassification (Scheinselbstandigkeit, or "bogus self-employment") is heavily penalized in Germany. The DRV (Deutsche Rentenversicherung) actively audits companies and can impose significant fines.
| Factor | Employee Indicator | Contractor Indicator |
|---|---|---|
| Work location | Employer-determined | Self-determined |
| Work hours | Fixed schedule required | Flexible; result-focused |
| Equipment | Provided by employer | Uses own tools |
| Integration | Part of org structure, attends meetings | Independent; project-based |
| Economic risk | None (salary guaranteed) | Bears business risk |
| Client dependency | Single client | Multiple clients |
Fines for misclassification can reach EUR 500,000. The DRV can demand 4 years of back-contributions plus penalties. Source: SGB IV
How EOR eliminates this risk: Virmondo EOR employs your workers as proper employees from day one. There is no classification ambiguity because they are legally employees with contracts, payroll, and benefits.
5 Common Mistakes When Hiring in Germany
- Underestimating total employment costs: Forgetting the ~21% employer contributions on top of gross salary leads to budget shortfalls.
- Using US-style at-will language: German contracts cannot include at-will termination clauses. Such clauses are void under German law.
- Ignoring works council requirements: Failing to consult before terminations or policy changes can invalidate your decisions.
- Misclassifying contractors: Using contractors for permanent, integrated roles creates significant legal and financial risk.
- Offering only 20 vacation days: While legal, this is uncompetitive. Skilled workers expect 28-30 days as standard.
Work with a local expert or EOR to avoid these pitfalls from day one. The cost of mistakes far exceeds the cost of getting it right.
How Virmondo EOR Simplifies Hiring in Germany
- Compliant employment contracts drafted in 24 hours
- Full payroll processing with German tax compliance
- Benefits administration including health insurance enrollment and pension
- Ongoing HR support in German and English
- Works council guidance and compliance monitoring
- AUG-licensed for full legal compliance in Germany
3-5 days
Time to Hire
€599/mo
Per Employee
€0
Setup Cost
Unlike global competitors, Virmondo EOR also offers recruiting services. We can source, vet, and hire DACH talent for you. One partner for the entire process.