What you need to know about Employers of Record (EORs) and Hiring in Germany
With a strong economy and a large talent pool, Germany is a top choice for international hiring. However, like in most countries, hiring across borders is easier said than done. Given the complications involved in setting up a legal entity, many hiring companies look to Employers of Record (EORs) in Germany to solve the problem. A global employment platform such as Oyster, may provide another avenue for hiring in Germany.
Hiring in Germany
Under the EOR model, German companies are only allowed to employ someone on behalf of another company under their labour leasing law called the AÜG ("Arbeitnehmerüberlassungsgesetz"), which limits employees’ contracts to 18 months.
However, there are ways that employees can have an unlimited contract length, for example, if they’re employed by a non-German company that is licensed to work in Germany or if they’re employed by a consulting company such as Oyster.
Oyster’s global employment service makes it simple to employ across borders by managing all aspects of employment, including:
- Compliance with local laws
- Monitoring changing laws and regulations
- Onboard and offboarding
- Time off management
Talk to one of our advisors today or create an account to find out how our global employment platform can help onboard team members from Germany easily and efficiently.
A few things to know about hiring in Germany
1. Health insurance is mandatory
Health insurance is mandatory in Germany and can be provided through the public healthcare system or under certain circumstances a private entity. Unlike some other countries, some vision and dental are included in standard policies; and workers can be reimbursed for additional coverage to defray the cost of upgraded treatments.
2. There are strict overtime laws
Much like the typical work schedule in the United States, employees in Germany generally work eight hours a day and a maximum of 40 hours a week. Employers are also required to provide a minimum of 11 hours of rest between two working days.
Overtime pay is required for any employee who works more than the contractually agreed working hours (typically 40 hours per week) . However, overtime can be waived if an employee’s compensation exceeds a certain threshold.
3. Payroll is handled monthly
Monthly payroll is the most common arrangement for employees based in Germany, with paychecks generally distributed on or around the 25th day of the month or the 1st day of the following month.
While not required, German employees receive a “13th paycheck” at the end of the year as a bonus.
Other important details to keep in mind include:
- Employment contracts should be written in German
- Public holidays vary by region
- Employers often contribute to private pension funds, but it’s not required
Learn more about hiring in Germany in our complete guide.
Questions to ask before hiring in Germany
Here’s a list of questions to answer if you’re considering an hiring in Germany:
How many employees do you plan to hire in Germany?
This is an important consideration and it impacts the type of international hiring service you need to adopt. First, think about the nature of your business in Germany and the work that needs to be done. Do you need full-time or part-time employees? Once you have a good understanding of your needs, you can begin to develop a staffing plan. You'll also need to take into account the size of your budget and the amount of space you have available. With these factors in mind, you can start to develop a plan for hiring new employees in Germany.
What services do you want to receive from a global employment platform?
Or, alternatively, consider your prospective German employees and the services that will be attractive to them. There are certain services that they will expect to receive from their employer, like a regular paycheck, health insurance, and paid vacation days. However, there may be additional benefits you wish to add, like employee equity or bonus payments. Before you choose a global employment platform you need to explore what additional benefits they can assist with and if they are capable of taking on the administrative and compliance aspects of these.
Do you have a platform in place for onboarding, training, and managing international employees?
With Oyster’s global employment platform every employee receives seamless onboarding and continued support. The Oyster Academy offers courses to get your employees up to speed with remote, distributed work to help you build an efficient international team.
How much does it cost to hire in Germany?
Check out our cost of hiring in Germany tool to work out how much tax you and your employee might have to pay on top of salary payments.
Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.