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SALARY PAYMENT IN Euro (EUR, €)
CONTRACT LANGUAGES German / English
PAYROLL TAX 20.645%
PAYROLL CYCLE Monthly
TIME TO HIRE 12 hours
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Germany, the economic powerhouse of Europe, is a global business destination, especially for businesses looking to expand across the continent. With the fourth largest economy in the world in terms of GDP and a reputation of innovation, quality, and efficiency, Germany is the perfect place for companies to start a European expansion.
However, just because Germany is a good place to do business doesn’t mean that it’s always simple. Common challenges of doing business in Germany include the complex tax system, cultural misunderstandings, and others related mostly to the bureaucracy (property registration, construction permits, etc.). These challenges can be overcome however, especially if you choose the right expansion partner.
Read on for our comprehensive guide to hiring in Germany.
Population 83.2M (42M labor force) | Capital City Berlin | Languages Spoken German (#1 in the EU) |
Currency Euro (€) | GDP per capita $50,801 | Ease of Doing Business 22nd in the world |
Minimum Wage €12/hour | Average Wage €47,700/year | Paid Leave 20 days minimum, 25-30 days in practice |
Germany’s economic outlook is comparable to the rest of Europe. Most businesses in the world were impacted by the Covid-19 pandemic; businesses in Germany were no exception. However with the easing of restrictions related to the pandemic in Q2 2022, consumer confidence and spending grew. For 2022, the Germany economy is set to make gains that are expected to continue through 2023 and beyond; inflation is also expected to slowly taper through 2023 and 2024.
There are risks of growth stagnation in Germany, with chances increased by the conflict in Ukraine and rolling lockdowns in key manufacturing areas in China. However, these risks are not unique at all to Germany; in fact, as one of the strongest economies in the world, Germany may be well-situated to hedge against and handle these issues if they continue to escalate.
Germany, as a developed country in central Europe, has significant protections for employees. Labor law in Germany covers topics like annual leave, sick leave, parental leave, working hours, overtime, union membership, and termination procedures.
As an employer, it is essential that you understand relevant laws when hiring in Germany. At Horizons, we have Germany expansion experts based in Berlin who are able to guide your hiring, ensuring compliance every step of the way.
German business culture is unique in Europe. Hallmarks of German business culture include forward-thinking models of working, strong attention to detail, and well-defined, regulated structures and processes. Germany is a highly individualistic society that puts an emphasis on personal responsibility; as such, only the highest standards are acceptable in business, including for business ethics. Germany’s individualistic nature also informs its love of privacy; Germany is well-known to be one of the most aggressive countries in the world when it comes to data privacy and personal information security.
Business culture in Germany also puts considerable importance on punctuality. Germans have a tendency to plan carefully and break work into small measurable units; this tendency expands into how many Germans manage their calendars. Time is valuable, so it is best to be on time; being even a few minutes late can possibly offend in Germany.
Finally, business culture in Germany rewards clear, sharp communication. This might be surprising or offputting if one is not expecting it, but be assured it is completely normal when working with Germans to receive such communications.
Most job postings and recruitment efforts in Germany are done online. The internet in Germany is reliable, with average speeds around 55Mbps. Social media platforms like LinkedIn is common for recruitment.
Depending on the industry and urgency of the role, it might be best to use a local specialist recruitment firm since talent in the EU is tight, particularly in in-demand fields like tech and B2B sales.
There are several local job boards you can use when conducting your candidate search in Germany. The most popular recruitment tools in Germany include:
If you need specialist support for your candidate search in Germany, you might also consider a specialist recruitment firm. Horizons provides such support to over 185 countries worldwide. Contact us for a free consultation and demo.
Normally in Germany, if a company moves to the interview phase, then it’s likely that the candidate has been shortlisted. German candidates typically prefer to be notified by email that they have been selected for an interview. Make sure to be clear in the invitation in what language the interview will be. In Germany, it is expected that there will be more than 1 round of interviews. Usually interview lifecycle will include an interview with HR, an interview with the hiring manager, and an interview with company leadership.
When interviewing candidates in Germany, it is best to be punctual and to expect punctuality. Clarity, honesty, and straightforward communication are all qualities that are valued by jobseekers in Germany.
Finally, when interviewing candidates in Germany, be sure to leave time for questions at the end of the interview – they will almost certainly have questions to ask. Questions could be wide-ranging and could relate to topics like:
Be prepared for tough questions from the candidate, and remember: interviews aren’t just a company assessing a candidate. The candidate is also assessing the company.
Employers should not ask about a candidate’s previous salary in Germany during the recruitment process. Exceptions apply only when that information is relevant to the vacancy and when they information could somehow impact the work done.
While it is true that there is no legislation regarding asking salary history in Germany, case law indicates that it may be a breach of privacy to ask candidates for such information; and indeed, candidates are permitted to lie without any consequences. In general, asking about salary history in Germany is not standard, and is sure to make candidates uncomfortable, hurting the chances of hiring. Instead, it is better to ask the candidates what their expected salary is and use that as a starting point.
When changing jobs in Germany, candidates typically target a 7% – 15% increase from their previous salary.
The notice period in Germany is usually four (4) weeks. Employees generally start at the new company immediately after the notice period is served at the previous company.
The onboarding period is crucial for hiring employees in Germany. If you have a standardized onboarding process that you use for all employees of your company, then it should be suitable to use with your new German staff. Making your new German employee feel welcome, and giving them adequate information about the company and their role will go a long way to forming a strong, long-term employment relationship.
The German internet is open and does not usually block websites, and is not likely to. That means whatever remote working tools your company uses can also be used when you hire employees in Germany.
Tools like Microsoft Teams, WhatsApp, Slack, Jira, Trello, WeChat, and others are all suitable for your German employees to download and use.
Germany has a range of national public holidays that are celebrated annually. In 2023 these holidays are:
| Date | Holiday name |
|---|---|
| 01-Jan | New Year’s Day |
| 06-Jan | Epiphany |
| 08-Mar | International Women’s Day |
| 15-Apr | Good Friday |
| 17-Apr | Easter Sunday |
| 18-Apr | Easter Monday |
| 01-May | Labour Day |
| 26-May | Ascension Day |
| 05-Jun | Whit Sunday |
| 06-Jun | Whit Monday |
| 16-Jun | Corpus Christi |
| 15-Aug | Assumption Day |
| 03-Oct | Day of German Unity |
| 31-Oct | Reformation Day |
| 01-Nov | All Saints’ Day |
| 16-Nov | Repentance Day |
| 25-Dec | Christmas Day |
| 26-Dec | 2nd Day of Christmas |
Employees in Germany do not typically have high expectations for annual pay raises. Usually pay raises represent a 1%-5% annual increase. In order to keep your employees satisfied, you may consider a slighty higher increase, especially to keep pace with inflation in Germany.
The question of whether to hire freelancers or hire employees in Germany comes down to exactly what your business is looking for in German employment.
Not only in Germany, but anywhere, hiring an employee comes with far fewer risks related to employee misclassification, IP loss, or the employee taking on too much work and letting your tasks slide.
Hiring employees in Germany compliantly is not out of your grasp, even if you don’t have an established presnece in the country. Contact us for a free consultation and we can go over your options for hiring employees in Germany.
Yes, it is possible to hire foreigners in Germany. The best city to target for hiring foreigners in Germany is Berlin.
The process to create a German company is relatively simple, but there are many steps and it can take a lot of time (6-8 weeks on average, but it can take longer). See below each step needed to open a German entity.
1) Obtaining a German residence or business domicile
Before making any moves in Germany, it is necessary to have an address or a company domiciliation in order to begin the subsidiary creation procedure.
2) Choosing the appropriate legal form
You can choose a legal structure for establishing a German subsidiary based on your business goals because German company law provides a variety of options.
The following are the main business categories in Germany:
3) Verify your company’s name with the commercial registration (Unternehmensregister)
You must confirm that you are permitted to use the desired company name. You can quickly and simply ensure that your company name is unique by using the Unternehmensregister website to look for already registered company names.
4) Establish a bank account
The next step is to open a bank account on your own in Germany. Due to the fact that everything is done in accordance with accepted international procedure, opening a bank account is relatively paperless. You can complete this step remotely because many German banks allow you to open an account online. However, keep in mind that the majority of bank websites will only be available in German. Make sure you provide identification; you can do this at the post office in your area or by asking a notary or attorney to verify your identity.
You can submit your request in person by visiting the bank. In this situation, your passport or identification card may also be required, along with a Meldebescheinigung (your evidence of residency in Germany), from you or a representative.
5) Provide the paperwork required to open a business.
The required paperwork and documentation are determined by the company’s legal structure. The following administrative procedures must always be followed:
It should be mentioned that specific authorization is needed for several types of activity in Germany (e.g. transports, estate agencies, surveillance companies, etc.). Any extra measures that need to be taken will probably be indicated by the Gewerbeamt.
6) Registration in the lower regional court’s Commercial Register (Amtsgericht)
Step two: Your listing in the lower regional court’s Commercial Register (Amtsgericht).
Your paperwork must be delivered by the notary to the Commercial Register. Your new company will be made public on the Handelsregister website if the necessary details regarding your registered company (company name and registration office, authorized representatives, legal form, as well as share capital or shares) are accepted.
The last step is to register your new company with the nearby tax office within four weeks of its launch and within a month after the articles of association’s notarial certification.
7) Registering with the tax office
The final step after all others are done. After successfully registering with the tax office, you can start business.
There are usually two options for hiring employees in Germany.
Option 1: Start a German company
The above process outlines what it takes to open a German company. Companies choosing this option might want to work with German partners on the Ground in their preferred city of business.
Option 2: Hire through a partner such as an EOR like Horizons
In Germany, only certain companies are permitted to hire employees on behalf of other companies. If you engage an EOR partner in Germany, you will want to ensure they hold a valid AUG license, allowing them to take care of employees they aren’t directly managing. This option is by far the best option for companies in the following situations:
The speed, ease to end the engagement, and affordable price make it a clear option for any-sized companies who want to try the German market or scale up their German team incrementally. Contact us and get started in less than 24h.
Your business can easily hire employees in Germany without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.
Holiday Schedule in Germany [2023]
