HR Solutions & Employee Relations in Germany with IRIS
IRIS HR consulting has an excellent reputation for helping businesses expand into Germany. It can otherwise be risky to leave local laws and legislation open to interpretation. For a scalable, compliant operation, IRIS can manage your HR in Germany to help businesses hire, recruit, and pay staff overseas. As a popular destination for businesses, IRIS can navigate local barriers – from culture to compliance – to arrive at a rewarding opportunity for your business to thrive in this exciting European marketplace.
Take your business to Germany with IRIS HR Consultancy.
Global expansion in Germany
One of Europe’s largest, dynamic economies, a strong climate of innovation, a central location, and transportation links to bordering marketplaces – Germany is one of the most attractive destinations for businesses looking to expand globally.
Essential to HR in Germany, there is a dense and diverse pool of talent that thrives on an inventive marketplace of ideas and culture. One of Europe’s political and economic leaders, Germany enjoys an interconnected, central position with advantageous proximity to other major cities.
Metropolitan areas such as Paris, Amsterdam, or Barcelona are all linked with Germany’s bustling trade and export market, with a particularly strong manufacturing sector.
Among Germany’s list of popular exports is cars, chemical products, and machinery.
Germany’s urban infrastructure makes it easy for new, or existing businesses to become established within this European marketplace and its surrounding ones. Germany has a reliable, connected transportation network: more than 230,000 km of roads; 37,000 km of railway; and Frankfurt International Airport connects to over 300 destinations.
Become a part of Germany’s Mittelstand
The heart of German commerce, the Mittelstand represents the largest share of its economic activity and recruitment. Largely comprised of SME’s, Germany’s Mittelstand is known for its contributions to the country’s growing economy.
The Mittelstand thrives on a marketplace of relative freedoms and competition. This country recently filed 67,437 patent applications in the previous year, which captures the innovation of Germany’s business culture. With strict copyright and competition laws, your ideas and products are safeguarded.
Businesses with plans to expand into Germany will need to ensure their operation is complaint with local employment and HR laws and legislation. To discover how an expansion could be rewarding for your business, you need an international employment specialist to help you enter the European stage. IRIS HR Consultancy can be your gateway into Europe.
Establishing your business in Germany
Overall, employment relationships in Germany are shaped by the Civil Code, the Working Time Act, and the Protection Against Unfair Dismissal Act. Yet, employment laws are increasingly influenced by European Union law.
It takes roughly 6-months to establish your business in Germany and this is due to a variety of tax considerations. For new businesses, the following route is expected:
- Register your business type depending on company structure, such as a GmbH (Gesellschaft mit beschrankter Haftung).
- Notarize articles with the Commercial Register.
- Tax registration.
- Collect certificates of registration.
Employment laws in Germany
When first expanding your business into Germany, navigating employment laws and remaining complaint is no easy feat, especially if you’re unfamiliar with local employment and labour laws. Throughout Europe, these laws are not always universal. Rather, employment is reflected in local policies and is constantly shifting.
Did you know?
In establishments with over 20 employees, the employer must notify the works council in advance of all recruitment, providing it with the relevant information.
Hiring & recruitment in Germany
When getting your first hire in Germany, you will need to negotiate terms of employment contracts and reflect this in an offer letter. But that requires local knowledge and strict compliance.
Employment contracts in Germany
It’s imperative that an offer letter, and corresponding employment contract, captures the conditions of employment, including the compensation, salary (in Euros), benefits, working hours, and termination information.
Equal Opportunities in Germany
Regarding a European Directive on equal treatment within the workplace, Germany falls under the jurisdiction of the equal opportunities act. This means that discrimination of any kind is not permitted in the workplace – before, during or after employment.
What are the working hours in Germany?
In Germany, there is some flexibility regarding the typical working hours. Usually, for most employees, a regular working week consists of 36-40 hours, which means eight working hours daily. Within this, Saturday is considered a usual working day. On Sunday, however, most businesses are closed with a few exceptions, such as petrol stations.
Working overtime in Germany
Normally, any overtime compensation will be specified in the employment contract. It is not uncommon for companies to maintain that overtime in small amounts is normal and not worthy of remuneration.
Yet, overtime must conform to hourly restrictions. Typically, employees on overtime can work a maximum of 60-hours a week.
Sick leave in Germany
Absences, formal or informal, must be documented by the employer and adhere to compliance. For the first six-weeks of sickness, employees can be put onto paid leave. Thereafter, an employee can receive the statutory sick pay which is 70%. This entitlement can last for a maximum 78 weeks.
Maternity leave and Parental Allowance in Germany
Under maternity leave, pregnant employees are typically entitled to 14-weeks leave. This consists of time-off up to six-weeks prior to birth, and eight weeks after.
In Germany, employees can request time-off under the Parental Allowance and Parental Leave Act. This agreement should be reached with an employer.
Vacation in Germany
The Federal Holiday Act (Bundesurlaubsgesetz) outlines the minimum statutory holiday entitlement.
Those in full-time employment in Germany, or working a five-day week, are entitled to 20 days of annual leave, or vacation. Those working longer weeks, such as six-day weeks, may be entitled to 24 vacation days. Many employers, however, offer between 27 and 30 days for annual leave.
Public Holidays in Germany
Employees will typically undertake their eight-hour working day between Monday and Saturday. Sunday and Public Holidays are, generally, considered non-working days unless otherwise stated by statutory law.
In addition to enjoying annual leave, employees can expect nine national holidays per year. There may be more national holidays depending on the region of your employment.
The main holidays include:
- New Year
- Good Friday
- Easter Monday
- Labour Day
- Whit Monday
- Day of German Unity
- St. Stephen’s Day
Retirement & pension in Germany
In Germany, public retirement insurance (gesetzliche Rentenversicherung GRV) works along a ‘pay-as-you-go’ structure. Yet, there are private company plans and private individual pension plans, too. The particulars of pension, regarding an employee’s retirement plans, should be negotiated with the employer and captured in a contract.
Occupational pensions are very common, and are normally provided alongside the State pension. In few circumstances is the State pension replaced. This is more common in self-regulating professions (such as medical or legal).
Private health insurance is rare. The mandatory health insurance for employees under the law is generous, where the cover is comprehensive and waiting times are relatively short.
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End of Service
HR in Germany means being compliant not only during an employee’s service, but also at the end of it. End of service might include severance, termination, redundancy, and leaving packages. Or, for globally mobile companies with international teams, this could be repatriation services for those returning from an assignment overseas.
For these more complicated matters, you will need expert HR guidance in order to navigate German employment laws and remain compliant.
For termination to commence on an active contract, an employer must provide a minimum notice period of four-weeks before the 15th of the month. Any employee who has been with a company for six-months or more is covered by the German Termination Protection Act.
The statutory minimum notice period will depend on the length of employment:
- During probationary period (maximum duration of six months): two weeks’ notice.
- After or without probationary period: four weeks’ notice, effective at the 15th or the end of a month.
- After two years’ service: one month’s notice, effective at the end of a month.
- After five years’ service: two months’ notice, effective at the end of a month.
- After eight years’ service: three months’ notice, effective at the end of a month.
- After ten years’ service: four months’ notice, effective at the end of a month.
- After 12 years’ service: five months’ notice, effective at the end of a month.
- After 15 years’ service: six months’ notice, effective at the end of a month.
- After 20 years’ service: seven months’ notice, effective at the end of a month.
Social Security in Germany
Under the German Social Security System, there are four pillars that are shared by employees and employers and are jointly contributed to, involving unemployment insurance, health insurance, pension, nursing care and accidental insurance. Employers are responsible for paying half of these contributions, and deducting the remaining from employee wages.
Workers Compensation (otherwise known as Accident Insurance) is administered by Berufsgenossenschaft, which is an employers’ association, and forms a compulsory work-injury scheme. The contribution rate can vary between 0.7% to 2%, depending on the industry, and is a responsibility for the employer.
Any non-compliance with these laws could be costly and accrue fines and penalties for your business, hurting your overseas expansions.
Social Security in Germany
Employers should closely watch how long – daily and monthly – their employees are working. Anything exceeding the national average of eight-hour days against 48-hour weeks could breach the law. During their employment, you will need to pay salaries to employees at the minimum wage or above.
Additional Benefits in Germany
Determining the difference between mandatory and additional working perks is a key concern for businesses looking to expand into Germany.
- General wellness
- Extra vacation
- Employee product allowances
- Additional insurances and childcare allowance
- Shorter weeks (30-35 hours is still full time)
Why Partner With IRIS?
When entering new, exciting countries in Europe, like Germany, you will need an employment specialist to navigate the parts of local laws that are mandatory and those that are not. Delivering a compliant solution, IRIS can help your business arrive into new marketplaces whilst protecting your workforce – our partners can discover power and protection through us.
Overseas expansions can seem risky to those who dare it alone. Understanding the complexity of a fully complaint solution, IRIS can help businesses establish a foreign branch in Germany without the hassle.
Our cost-effective, knowledgeable approach to HR in Germany makes us an ideal partner to commence your overseas plans.