Hiring in Germany: Tips and Insights
Every country in Europe is different when it comes to hiring employees. Things to keep in mind are, for example, the culture and the labor laws. Among them, Germany remains one of the most attractive countries for finding and hiring talent for our US clients as it has one of the strongest economies in the world and its central spot in Western Europe.
In this article, you will find a brief summary of hiring in Germany, including topics such as employment contracts, compensation for a sales representative and payroll.
Hire in Germany Strategically: Understand Employment in Germany
“Employment at will” is not an option in Germany, as it is not an option in Europe in general. German notice periods can be long (up to 6 months in management positions), and this is an important aspect to keep in mind when hiring someone in Germany.
In general, employment law in Germany is quite employer-friendly.
German employment contracts
When hiring in Germany, you can offer your employee a fixed-term or unlimited employment contract. A fixed-term contract has a specific end date on which the service from your employee will end.
When creating a contract for one of your German employees, we always advise you to have the contract drafted in German in order to avoid any legal risks coming from its eventual misinterpretation.
More information about the legal specifics of fixed-term contracts in the EU can be found in our blog Fixed-Term Contracts in Germany, France, and Denmark: Detailed Guide.
Common employee perks in Germany
The mandatory minimum days of vacation in Germany is 20 (based on a five-day working week), but it is our experience that everyone expects at least 25.
Another important item for German employees is their car. In most jobs, when it is relevant, the employee receives a lease car or a contribution from the employer so they can cover the costs of getting a car themselves.
Unlocking Salary and Compensation Insights to Hire in Germany
What is a suitable salary and compensation for a sales representative in Germany? In Germany, just like in most countries, salaries differ based on years of experience and the responsibilities that come with the job.
In the table below, you can find a small comparison of the average salaries of hiring a sales representative in Germany, the Netherlands and Italy. Learn more about the Costs of Hiring Employees in Europe.
Annual Salary Range
|€29,000 - €56,000
|€25,000 - €49,000
|€23,000 - €45,000
|Average Annual Salary
|Average Income Tax
Navigating Payroll Processes for Successful Hiring in Germany
If you consider hiring in Germany, know that both employers and employees need to make regular contributions to the social security system, mainly with regard to:
- Statutory health insurance,
- Unemployment benefit and
- Long-term care insurance.
The percentage of contributions is split equally between the employer and the employee. In total, the employer's share of social insurance contributions amounts to approximately 21% of the employee's gross wage. The highest contribution is for pension, with 18.6% of the gross salary in total, followed by the health insurance contribution with 14,6%. For tax purposes, it is mandatory that the employee is registered with their local German tax office.
Please note that the German Tax Authorities will not accept direct payments from a foreign bank account. All other additional expenses need to be processed through monthly payroll, too (car allowance, reimbursement for meals and travel etc.), and you also need to make sure the right taxes are paid.
Insights into German Culture
Perhaps the first things that pop to mind are the cliché German characteristics like directness, arrogance or lots of red tape. But this is not our experience at all. In fact, Germany’s business world is far more appealing than that. Don’t worry if some German business people seem slightly aloof, correct and rather blunt at the same time. Hierarchy, directness, and a certain measure of separation between work and private life are essential values in German business culture.
Germans generally have very good work ethic and a professional attitude. They are often very thorough, detail-oriented, and keen on producing good results and value good education and diplomas. Another German quality is formality. The German word ‘pünktlich’ summarizes this very well and means something like precise/on time/punctual.
Other words that fit the German culture are fairness and loyalty. They will be honest about, for example, a job offer and usually mean exactly what they say. This can come across as perhaps rude or blunt, but it is not meant that way at all.
All in all, you can rely on the German tendency to be interested in long-term relationships. Once they have made a commitment, they will try to develop a mutually beneficial relationship based on trust.
Marina Babic Walton
Marina is an HR consultant with experience in organisational development, employee relations and HR management. She holds an MBA degree from University of London with specialization in Leadership and an MA in European studies of culture from University of Thessaloniki.
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