Can you hire employees in Germany without a legal entity?

Yes, with an Employer of Record (EOR), you can hire employees in Germany without establishing a local entity. EuroDev becomes the legal employer while you direct the employee’s daily work.

What’s the difference between EOR and PEO in Germany?

An EOR employs the worker on your behalf (no entity required). A PEO typically supports companies that already have a local entity and want help administering payroll, HR, and compliance processes.

Are permanent contracts common in Germany?

Yes. Indefinite (unbefristet) contracts are common and often preferred. Fixed‑term contracts are possible but must meet legal requirements.

What are the limits for fixed‑term contracts in Germany?

As a general rule, fixed‑term contracts can often be extended up to three times and usually cannot exceed 24 months total, unless an exception applies.

How does payroll work when hiring in Germany through an EOR?

Payroll is typically processed monthly and includes wage tax withholding and social security contributions. EuroDev handles calculations, filings, and payments as part of the EOR service.

What are typical employer costs in Germany?

Employer costs are often about 19–20% above gross salary due to statutory social contributions. Exact percentages vary based on salary levels and contribution ceilings.

What notice period applies in Germany?

Germany has statutory notice periods that increase with tenure, starting at four weeks and rising up to seven months for long service.

How much vacation do employees receive in Germany?

Minimum statutory leave is 20 days per year for a five‑day week (or 24 days for a six‑day week), typically fully applicable after six months.

Do public holidays differ across Germany?

Yes. Holidays vary by federal state. There are several nationwide holidays, plus additional state-specific holidays depending on location.

Is using an EOR legal in Germany?

Yes, using an Employer of Record is legal when structured correctly and compliant with employment and payroll requirements. EuroDev ensures the employment model is set up and administered appropriately.

Hire Employees in Germany with an Employer of Record

Hiring employees in Germany doesn’t have to mean incorporating a German company first.

With EuroDev’s Employer of Record (EOR) and PEO services in Germany, you can employ staff compliantly, run payroll correctly, and stay aligned with German labor requirements, while EuroDev handles local employment execution.

We manage:

German employment contracts (aligned with local rules and collective agreements where applicable)
Payroll processing and wage tax withholding
Social security registrations and contributions
Ongoing HR administration and employment compliance

Talk to our EOR experts today

Hiring Employees in Germany with an Employer of Record

An Employer of Record (EOR) enables your company to hire employees in Germany without setting up a German subsidiary or branch. EuroDev becomes the legal employer for compliance and payroll purposes, while you keep full control over the employee’s day‑to‑day work, performance, and priorities.

If you already have a German entity and need support with HR, payroll coordination, and compliance administration, EuroDev’s PEO model can support your internal setup.

How hiring in Germany through EuroDev works

Employees can often be onboarded within a few weeks, depending on role, documentation, and any registration requirements.

1. Employee selection

You choose the candidate you want to hire in Germany.

2. Employment contract setup

EuroDev prepares a German‑compliant employment contract (fixed‑term or indefinite), reflecting labor law requirements and any applicable collective bargaining agreement (CBA).

3. Payroll & tax administration

We run monthly payroll, calculate wage tax and social security contributions, and ensure correct filings and payments to the relevant German institutions.

4. Ongoing compliance & HR support

EuroDev supports the full employment lifecycle - HR administration, statutory benefits, leave tracking, and compliance guidance.

Employer of Record vs Setting Up a Legal Entity in Germany

When an EOR is the right choice:

You want to hire in Germany quickly without waiting for entity setup
You’re entering the German market and want flexibility
You’re building a small team or hiring in multiple locations
You prefer to reduce employment compliance exposure

When a local entity makes sense:

You’re planning a large, long‑term workforce in Germany
You require a permanent commercial footprint
You want payroll and HR fully operated in‑house

Key differences at a glance

	Employer of Record	Local Entity
Setup time	Weeks	Several months
Legal responsibility	EuroDev	Your Company
Payroll & Compliance	Managed by EuroDev	In-house
Upfront costs	Lower	Higher
Risk exposure	Reduced	Full exposure

Employment Contracts Through a German EOR

Permanent (Indefinite) Employment Contracts

Indefinite contracts are the most common form of employment in Germany. German labor law strongly favors permanent employment relationships and provides employees with extensive statutory protections.

Key characteristics of permanent contracts:

No predefined end date
Full statutory employment rights from the start of employment
Protection against unfair dismissal under the German Protection Against Dismissal Act (Kündigungsschutzgesetz) after qualifying periods apply
Mandatory notice periods apply upon termination
Can be full‑time or part‑time
Probation periods are permitted, typically up to 6 months
CBAs may impose additional obligations regarding salary, working time and benefits

Because German law assumes employment to be indefinite by default, incorrectly structured temporary contracts may be automatically reclassified as permanent.

Fixed‑Term Contract Rules (Temporary Contracts)

Fixed-term employment contracts in Germany are permitted but are strictly regulated under the Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz)

Key limitations include:

Fixed-term contracts may usually only be renewed up to 3 times
Fixed-term contracts without objective justification are generally limited to a maximum duration of 2 years
A fixed-term contract without objective reason is generally prohibited if the employee has previously been employed for the same company
Continued employment beyond the lawful fixed-term period may automatically convert the contract into indefinite employment
Misuse of fixed‑term contracts can leads to mandatory reclassification

EuroDev ensures all German employment contracts are structured in compliance with local labor law and applicable collective bargaining agreements.

Termination, Notice Periods & Severance in Germany

Germany is not an “at‑will” employment market. Terminations must follow defined legal grounds and processes, and notice periods are regulated.

Statutory notice periods (minimums)

The minimum notice for employer termination:

4 weeks for less than 2 years of employment
1 month for 2–4 years
2 months for 5–7 years
3 months for 8–9 years
4 months for 10–11 years
5 months for 12–14 years
6 months for 15–19 years
7 months for 20+ years

Employee notice period: 4 weeks unless contractually extended

EuroDev supports termination planning and ensures documentation and timelines follow compliant procedures to reduce risk.

Severance pay

Severance pay is not automatically granted in Germany. However severance pay is common in practice
Most severance packages range between 0.25 to 1 month's salary per year of service
Severance amounts usually are determined by employee seniority, age, CBAs, and strength of dismissal protection claims

EuroDev guides you through termination procedures to ensure compliance and risk mitigation.

Payroll, Employer Costs & Working Hours in Germany

Payroll costs when hiring through an EOR in Germany

When hiring employees in Germany through EuroDev’s Employer of Record service, employer costs are typically around 20–25% on top of gross salary, driven mainly by statutory social security obligations.

Example:

Average gross annual salary: €53,335
Estimated total employment cost: €64,002
(EuroDev manages payroll calculations, filings, and statutory payments.)

Social Security & Employer Contributions in Germany

When hiring employees in Germany through an Employer of Record, EuroDev manages all social security registrations, filings, and payments as part of the payroll process.

Employer responsibilities handled by EuroDev

Registering employment contracts with German social insurance authorities
Monthly payroll processing and contribution reporting
Withholding employee social security contributions
Paying employer social security contributions

Typical employer contribution structure

Pension insurance: 9.30%
Health insurance: 7.30% + ~0.8% half of supplemental rate (depending on insurer)
Unemployment insurance: 1.30%
Long-term care insurance: 1.70%-1.80% depending on employee circumstances and federal rules
Accident insurance: 1%- 1.60% depending on industry risk classification

Total estimated employer contribution: 20%-25% on top of gross salary

Working Hours & Overtime in Germany

Standard pattern: 5 days/week, typically 8 hours/day
Maximum weekly working time is generally 48 hours
Daily hours can extend up to 10 hours, provided average working time limits are respected over a reference period
Overtime terms are usually defined by contract or collective agreement
Certain senior roles may be excluded from overtime eligibility

EuroDev ensures working‑time rules are correctly applied based on contract type and applicable agreements.

Paid Vacation Leave & Public Holidays

Employees hired through an EOR in Germany receive statutory paid leave entitlements, and EuroDev tracks and administers leave correctly.

Annual leave

20 days per year for employees working a 5‑day workweek
24 days per year for employees working a 6‑day workweek
Full vacation entitlement typically applies after six months of employment
Collective agreements or contracts may grant additional leave

Public holidays

Germany has between 9 and 13 public holidays per year, depending on the federal state
Several nationwide public holidays apply across all states
Additional public holidays are determined at the state (Bundesland) level
Employees are entitled to paid time off on applicable public holidays

Maternity & Paternity Leave in Germany

EuroDev ensures maternity and parental leave are administered correctly and in line with German employment law when hiring through an EOR or PEO.

Maternity leave

Total entitlement: 14 weeks
6 weeks before the expected birth date
8 weeks after childbirth
Extended to 18 weeks in cases of:
- Premature birth
- Multiple births
- Birth of a child with a disability
During maternity protection periods, employees typically receive income replacement financed through the statutory health insurance system
Strong dismissal protection applies before and after childbirth

Paternity leave

Available to both parents
Can be taken during the child’s early years, subject to statutory rules
Job protection applies throughout approved parental leave
Parents may return to the same or an equivalent role after leave
Payroll execution and leave administration follow statutory requirements and applicable agreements

Why Companies Choose EuroDev for EOR in Germany

No need to establish a German legal entity to hire employees (EOR model)
Payroll and compliance execution handled by local specialists
Support navigating German employee protections and procedural requirements
One point of contact for HR, payroll, and compliance
Flexible hiring that scales as your team grows

Hire Employees in Germany with Confidence

German employment law is structured and employee‑protective, which makes compliant contract setup, payroll execution, and termination handling especially important.

EuroDev helps international companies hire in Germany quickly and compliantly, without taking on unnecessary administrative burden. Whether you’re onboarding your first hire or expanding an existing team, our EOR and PEO services give you a practical path to growth in Germany.

Get in touch with our team today to discuss hiring in Germany.