Employer of recordGermany
Employer of Record Germany
Finding a compliant hiring solution in Germany can be difficult due to restrictions in place. With our fully compliant entity, Agility can offer you the solution to hire employees and talent locally.
Euro
83 Million
Berlin
EUR 12.41 per hour
German
36 – 40 hours per week
An Employer of Record in Germany is considered a temporary employment agency and must have an AUG (Arbeitsnehmerüberlassung) licence to hire workers compliantly.
Once in place, the Employer of Record can legally hire the employee on a fixed-term contract for up to 18 months.
Employer of record Germany responsibilities:
- Remitting all tax and social security contributions for the employer and employee
- Providing employee payslips
- Making salary payments
- Compliantly employing a worker (as per AUG licensing requirements)
How does an Employer of Record UK work?
Agility
Compliantly employ a worker as a temp agency under the AUG licence, a country-specific requirement for any company in Germany hiring workers on behalf of a client company. The workers are hired on fixed-term 18 month employment contracts.
Company
Under the AUG licence, the client company must sign an additional agreement confirming the equal treatment and fair recruitment process of the employee.
Employee
The employee will sign the contract with the Employer of Record in Germany but performs all work -related activity for the client company.
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What is the Payment Frequency for workers in Germany?
Employees are paid monthly, by the last working day of the month. There is no requirement for a 13th/14th month salary in Germany.
What is German Employee Tax Rate? – 20 to 65%
- Personal income tax is calculated on a progressive rate from 14%-42%
- Employee social security contributions amount to circa 19.5% (subject to maximum thresholds).
- Employees may also be subject to Church Tax (8-9%).
What are the German Employer Contributions? – 19.3%
- Healthcare insurance: 7.3%
- Pension: 9.3%
- Unemployment insurance: 1.3%
- Long-term care insurance: 1.525%
- Additional health levies may be applied (dependent on the employee’s health insurance policy.
- Insolvency Levy: 0.09%
Maximum thresholds vary for contributions and East and West Germany.
- Pension and Unemployment Insurance: €7550 (West), €7450 (East)
- Health and nursing care insurance: €5175
What is the usual Probation Period in Germany?
The probationary period in Germany is up to 6 months for employees with an 18-month fixed-term contract.
German Employment Law
- Written employment contract – in line with AUG (Arbeitsnehmerüberlassung) license
- German Working Time Act (Arbeitszeitgesetz – ArbZG)
- Flexible working
- Unfair dismissal protection
- Monthly payslip
- GDPR
- Discrimination protection
- Whistleblowing
- Equal treatment
How do you Terminate an Employee in Germany?
Terminations in Germany are restricted by the Dismissals Protection Act, awarding greater protection to employees and making the dismissal process very complex. Termination via a mutual settlement agreement is common in this country due to the high levels of protection.
Country-specific labor laws distinguish between ordinary and extraordinary terminations. In the case of ordinary termination, the employer is obliged to provide the statutory notice period. Extraordinary dismissals are only justifiable in the case of gross misconduct or ‘serious cause’ and the employment is terminated with immediate effect. The notice period in Germany is effective from either the 15th or last day of the calendar month.
Severance payments are not a mandatory requirement, provided the termination is justified and the correct notice and procedure is followed. It is not uncommon for severance to be offered as part of a mutual settlement agreement to avoid an unjustified termination.
Employee benefits
Statutory benefits
- Healthcare
- Pension
- Accident Insurance
Common additional benefits
- Car allowance
- Home-working allowance
- Additional Holidays
- Flexible Working
- Dental Plan
- Stock Options
- Transport Allowance
- Supplementary Pension
- Supplementary Healthcare Insurance
- Life insurance
Statutory leave
- Holiday allowance - 20 days
- Sick leave – 6 weeks
- Parental Leave – up to 3 years (unpaid leave; employees may claim parental allowance "Elterngeld"
- Maternity leave – 14 weeks
- Paternity Leave – 10 days (effective early 2024)
Wondering if expanding in Germany is right for you?
FAQs
If you don’t find the answers you need in our FAQ, please reach out directly; Agility’s friendly specialists are always available to help and ensure you feel confident in your decisions. Contact Agility anytime at hello@agilityeor.com or call +44 207 863 2969, and experience the difference of a truly service-led EOR partner.
What is an Employer of Record?
Think of it like this: Agility EOR becomes the legal employer of your employees, taking care of all the paperwork and compliance headaches.
Agility EOR
- We manage the onboarding process and ensure everything’s in order before your employee starts
- We make sure your employees are treated fairly and compliantly in their relevant territory
- We take care of all HR matters, and can answer any and all HR queries you may have e.g. maternity/paternity leave, holidays, sick pay, and more
- We provide compliant contracts, process local payroll, and file taxes
- We issue payslips and handle payments to the employee and authorities
Your Company
- You find and manage your employees’ daily tasks
- You support their development through their work
- You follow our guidance on employment laws and best practices
- You ensure payroll bills are paid to Agility EOR on time
Benefits of using an Employer of Record (EOR)
- Faster and easier hiring: No need to set up your own legal entity.
- Reduced risk and compliance burden: We handle the legal and administrative complexities.
- More time and resources: Focus on your core business while we manage your employees.
There are a number of different ways to employ people in Germany with different levels of compliance, and different costs.
Employee is employed by you and paid by you from your overseas Company
Pros: Seems to be a cost-effective solution
Cons: Option is only compliant if the company registers the employee and company for tax and social security deductions. The contract of employment will be bound by German legislation.
Using an Employer of Record
Pros: The Employer of Record (EOR) Germany can streamline your operations by handling all the payroll, HR, and compliance tasks for you. This can be the most cost-effective way to set up a legal employer-employee relationship, especially if you have a small team (under 15 employees) and want to save time and money.
Cons: The solution proves expensive with more than 15 employees.
Entity Set-up
Pros: With 15 or more employees, this becomes the most cost-effective choice.
Cons: Compliance with employment and tax laws can be a hurdle and very costly. Requirement to stay on-top of changes in regulations.
Hire a contractor in Germany
Pros: Is an easy and cost effective solution if the worker isn’t working solely for one company, Responsibility for registration and taxes is borne by worker.
Cons: Hiring a contractor who works solely for one company is illegal in Germany. Contractors are classified differently to employees and workers do not receive the same protection and benefits.
Provided the worker is correctly registered as self-employed either as a freelancer (Freiberufler) or tradesperson (Gewerbetreibender) and is not working solely for your company, you may hire a contracted worker in Germany.
The worker must be correctly registered with the IHK and is responsible for filing their own taxes and social security contributions.
When hiring independent contractors in Germany, you should provide a service contract or Werkvertrag. The worker must have the freedom to perform tasks on their own schedule and must not be integrated into the workplace. Breach of this risks misclassification of the worker and the company will be required to award all benefits and entitlements.
Companies in Germany must be correctly registered in accordance with the German Commercial Code (HGB – §§ 1 – 104).
A registered address must be provided and the company must be registered, by a notary, in the local jurisdiction (Handelsreigster). Articles of association and shareholder details must also be notarised.
The German company must then be registered locally for tax and payroll with the local and federal tax offices (Finanzamt and BZSt)
Hiring employees in Germany comes with specific legal responsibilities. HR compliance simply means making sure your company follows all the rules and regulations regarding employment and work practices.
Compliance protects both your employees and your business, ensuring your workers receive the working conditions and statutory benefits they are entitled to. This not only creates a happy workplace, but it also shields you from hefty fines, legal trouble, and headaches down the road.
When you use Agility EOR as your Employer of Record in Germany, we handle everything related to filing and paying your employees’ taxes and social insurance contributions. We ensure everything is compliant and you don’t have to worry about a thing.
Though Agility EOR handles German employment law and compliance, your company retains responsibility for day-to-day management and communication with your team. This includes informing employees about performance issues or disciplinary actions.
Put simply, Agility EOR takes care of the legal paperwork, while you manage the people and their day-to-day work.
Put simply, Agility EOR handles the legal side, while you manage your team and their daily tasks.
In Germany, both employers and employees contribute to the social and tax system.
Employers: Pension, unemployment insurance, health insurance, nursing insurance
Employees: Income tax, Church tax (if applicable), Pension, unemployment insurance, health insurance, nursing insurance
German employment law fully protects employees hired through an Employer of Record (EOR). They receive a legally compliant local contract, statutory benefits including maternity leave, annual leave, and illness payments, along with relevant tax credits.
Agility EOR takes care of your HR compliance headaches. Here’s how:
Trusted Partners: We team up with top employment lawyers and advisors in Germany, ensuring your contracts and documents meet all local requirements.
In-Depth Knowledge: We stay updated on complex topics like payroll, social security, data privacy, notice periods, and remote work regulations.
Swift Action: If an issue arises, our internal team immediately contacts our Irish experts for prompt resolution.
Considering switching your EOR?
Switching your EOR provider can be smooth and stress-free. Learn how to streamline the process, minimise disruption, and ensure your team feels supported in every step.
Navigating German Labor Laws and Contracts
Navigating German Labor Laws and Contracts
Germany imposes strict legal frameworks governing employee contracts, working hours, leave entitlement, and workplace protections. Every employment contract must comply with the German Working Time Act (Arbeitszeitgesetz), include mandatory clauses for probation, statutory leave, notice periods, and GDPR protection. Agility’s employer of record service in Germany ensures every worker—whether remote or onsite—receives a compliant contract, with regular reviews reflecting the latest German regulation.
Payroll Processing: Germany’s Monthly, Exacting Requirements
German payroll is governed by local wage tax offices (Finanzamt) and federal authorities. Payroll administration in Germany requires the deduction and remittance of personal income tax (up to 42%), solidarity surcharges, church tax (if applicable), and mandatory employee social security. Agility’s payroll specialists process monthly payslips, ensure salary payments on schedule, and guarantee all filings meet German statutory deadlines—a requirement not found in many other countries.
Unique German Social Security and Employer Contributions
Unlike several countries, Germany splits employer and employee contributions for healthcare, pension, unemployment, and nursing care insurance. Germany’s system is deeply regulated, with distinct contribution caps by region and mandatory enrollment for almost all residents. Agility’s payroll compliance covers all required contributions—tailored to East and West Germany maximum thresholds—with direct registration for every employee with national and local authorities.
Employee Protections: German Dismissal, Termination, and Dispute Resolution
German dismissal protection law (Kündigungsschutzgesetz) places strong requirements on employers, including formal notice periods and valid cause for extraordinary dismissal. Common German practice includes the option for mutual settlement agreements, with strict avoidance of unlawful termination actions. Agility’s EOR Germany experts ensure every employer and worker follows Germany’s substantive and procedural requirements, minimizing risk and supporting fair, lawful terminations.
Statutory and Supplementary Benefits: The German Context
Health insurance, pension, and accident coverage are mandatory for employees under German law. In addition, popular supplementary German benefits include paid commuting allowances, meal subsidies, extra vacation days under local tariff agreements, and private dental or health plans. Agility manages all statutory and common additional benefits, working only with local, regulated benefit providers to offer German employees and companies maximum coverage.
Regional Expertise for German Hiring
German labor laws, unions, and wage agreements differ between states and metropolitan regions. Agility’s Germany experts collaborate with local advisers and employment lawyers in cities such as Berlin, Munich, Frankfurt, and Hamburg to ensure that recruitment, onboarding, and payroll practices remain current with state-level changes—ensuring every employer and employee is governed by the proper jurisdiction and sector requirements.
German Remote Work and Home Office Compliance
Germany’s approach to remote work involves formal contract amendments, home office cost reimbursement, and compliance with workplace health and safety (Arbeitsschutzgesetz). Agility EOR Germany handles all documentation, payroll adjustments, and ongoing compliance for remote workers, ensuring that companies meet the unique administrative and legal burdens of German home office employment.
German Payroll Services and Local Compliance
Agility delivers robust German payroll services that ensure monthly salary payments, payroll tax withholding, and the completion of all employer and employee contributions to health, pension, and unemployment insurance. Every payroll run is executed with local compliance in mind, satisfying Germany’s payroll laws and regulatory requirements for labor contracts, data protection, and payslip documentation.
Labor Laws and Legal Workforce Management for German Employers
German labor laws are among Europe’s strictest, with requirements for fair pay, employment contracts, and anti-discrimination. As a German employer, Agility follows all legal workforce management standards—offering support for hiring employees, contract drafting, statutory leave, remote work agreements, and workforce expansion to ensure each employer meets their labor laws and legal obligations.
Temporary Employment, Remote Work, and Agency EOR Services
Employer of record Germany is a top solution for businesses needing temporary employment arrangements, fully compliant with the AUG license and German agency law. Agility’s EOR services cover employee onboarding, legally compliant contract management, and support for remote work—whether workers are based in Berlin, Munich, or elsewhere in Germany.
Hire Employees, Scale Your Workforce, and Integrate Global Payroll
Agility supports companies as they hire employees in Germany, scaling their workforce legally and efficiently. For multinational firms, we provide global payroll integration—managing multiple currencies, locations, and compliance regimes, with Germany’s payroll system as a cornerstone for European expansion.
Full-Service Legal HR and Employee Benefits
Legal employment in Germany demands detailed HR documentation, payslip record keeping, and worker protections. Agility’s workforce services guarantee employee benefits, compliance reviews, and legal support for both permanent and temporary employment contracts. Our employment agency partnership ensures every worker receives fair treatment and access to statutory and supplementary benefits.
German Payroll Services for Every Employer
Agility provides comprehensive German payroll services tailored to every company, ensuring payroll processing is handled in full compliance with German labor law. Our payroll team delivers payslips, calculates payroll tax, and makes accurate salary payments for each employee, whether the workforce is onsite or remote. Through our employer of record Germany solution, every payroll service is matched to local compliance regulations and the evolving needs of modern companies.
Local Compliance and Permanent Legal Employment
German employer and employee obligations go far beyond payroll. Each company must offer employment contracts and employee benefits that fully adhere to German labor laws, guaranteeing legal protections for employees at every stage of their employment. Agility’s employer of record services guide companies through onboarding, local compliance, and the creation of legally sound employment contracts for new hires and existing staff alike.
Temporary Employment and Remote Workforce Management
Temporary employment remains a popular option in the German market, but it demands adherence to the AUG license, German labor law, and robust payroll practices. Agility’s services support the hiring, onboarding, and payroll of both temporary and permanent employees across Germany, including remote workers. Our workforce management platform enables companies to scale up quickly, hire employees anywhere in Germany, and offer remote roles with complete German legal compliance.
Expanding Your Company in Germany
For companies seeking to grow their workforce in Germany, Agility offers legal hiring, payroll integration, and full-service HR management. Every German payroll process is optimized for accuracy, transparency, and statutory compliance. As your employer of record, Agility ensures all hiring procedures, company documentation, and employee agreements are updated for German employment law.
German Labor Law Compliance and Employee Benefits
Adhering to German labor law is essential for company growth, employee satisfaction, and legal risk management. Agility’s payroll services include the administration of statutory leave, the processing of German payroll tax, and the management of both mandatory and supplementary employee benefits. Our comprehensive legal and HR services ensure each employee receives every protection, whether under permanent or temporary employment contracts.
Global Payroll Integration and Germany-Focused HR Solutions
Agility helps international businesses integrate their German payroll services with global payroll platforms. This approach delivers full visibility, streamlined payroll management, and unified compliance across all company offices, ensuring every German employee is paid accurately and legally, regardless of their location.
Germany Employer of Record Benefits
When you choose Agility EOR to expand in Germany, we guarantee EOR Services tailored to the needs of your business
Compliance
We are on top of regulatory changes in the UK so you can relax.
Cost reduction
Allow our economies of scale to work in your favour.
High Service Levels
You and your employees have a dedicated account manager.
Fixed Cost Pricing
We will agree our professional fees up front based on your needs – no nasty surprises!
Consolidated Invoicing & Payments
Make one monthly payment to cover all your tax, social and wages costs from one to one thousand employees.
Fast delivery
You can have 'boots on the ground' within days on our infrastructure.
Reduced Risk
All wage taxes are remitted in full to the UK authorities by professionals ensuring liabilities are met, giving you peace of mind.
Supply Chain Transparency
We only pay employees through local full employed solutions meaning United Kingdom payroll tax is paid on all funds.
Save Time and Money
Our expertise is at your disposal. The need for you to have internal HR, Payroll and admin staff is eliminated.