Employer of recordGermany

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, and an effective way of hiring in Germany without entity, 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.

For a deeper comparison into employing in Germany visit our EOR vs Entity in Germany page.

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.

Employment compliance in Germany 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.

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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.

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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.