The questions every international employer asks about hiring in Germany

1

How do you employ someone in Germany?

You employ someone in Germany either by forming your own German entity, usually a GmbH, or by using an employer of record. With an EOR, we employ the person on our German entity and run their payroll, tax and social security, while you direct the work. It is the faster route, because there is no company to set up first.

2

How much does it cost to employ someone in Germany?

The real cost is the gross salary plus employer social contributions of roughly 21 percent, which fund pension, health, long-term care and unemployment insurance. On top of that sits either your own entity’s running costs or a flat monthly EOR fee.

Separately, income tax (Lohnsteuer) and the employee’s own social contributions come out of their gross pay, leaving their net salary.

3

How long does it take to hire someone in Germany?

Forming a GmbH means notarised articles, a Handelsregister entry and tax registration before a single person is paid, which runs to weeks. An employer of record is already set up, so a hire can usually start within days of a signed agreement.

4

Do you need a German company to employ someone there?

Not if you use an employer of record. To employ directly you need a German entity to register as an employer, obtain a Betriebsnummer and run payroll. An EOR already holds all of that, so you can employ a German-based person without forming a company of your own.

5

Should you hire an employee or a contractor?

It depends on the work. For genuinely independent, project-based work a contractor can be fine. The risk is Scheinselbststaendigkeit, bogus self-employment, where someone works like an employee but is paid as a contractor. If reclassified, the employer owes back social contributions for both sides, plus penalties.

6

What must a German employment contract include?

The Nachweisgesetz requires the essential terms in writing: the parties, start date and workplace, the role, pay, working hours, paid leave, notice and any probation, plus any collective agreement that applies. Fixed-term contracts and probation periods are both limited by law.

7

How do Lohnsteuer and social security work?

Each month, payroll withholds income tax (Lohnsteuer) and the employee’s share of the four social insurance branches, and the employer adds its own share on top. The health insurer collects the social contributions and passes on the pension and unemployment portions, while the Finanzamt receives the wage tax.

8

What is the minimum wage in Germany?

Germany has a single statutory minimum wage that applies across almost every sector. For 2026 it is 13.90 euro an hour, and it rises again in 2027. On a full-time week that is roughly 2,410 euro a month, paid over twelve months with no statutory thirteenth salary.

9

What leave are employees in Germany entitled to?

The statutory minimum is 20 paid days on a five-day week under the Bundesurlaubsgesetz, though 25 to 30 days is the market norm. Public holidays vary by federal state, from around nine to thirteen. Employees also have strong parental-leave rights, with Elternzeit of up to three years.

10

How does sick pay work?

For the first six weeks of an illness the employer pays full salary, under the Entgeltfortzahlung rules. After that the statutory health insurer takes over with Krankengeld, paid at 70 percent of gross and capped at 90 percent of net, for up to 78 weeks in total for the same illness.

11

How do social security and pensions work?

German social insurance runs across five branches: pension, health, long-term care, unemployment and accident insurance. Contributions are shared between employer and employee, except accident insurance, which the employer pays alone. The state pension is funded pay-as-you-go, and many employees add a company pension on top.

12

How do you end employment in Germany?

Notice periods are set by section 622 and rise with length of service, and once dismissal protection applies a dismissal needs a valid reason. There is no automatic statutory severance, though a settlement, an Aufhebungsvertrag, often includes an Abfindung to secure a clean exit.

13

What are the rules on remote work?

There is no statutory right to work from home in Germany, so remote work is agreed between the parties. The working-time rules still apply wherever the person works, hours have to be recorded, and for a cross-border remote hire, social security has to stay in the correct country.

14

How can an Employer of Record handle all of this for you?

An employer of record employs your chosen person on its own German entity and takes on the contract, payroll, tax, social security and compliance, while you manage the work. It lets you hire compliantly in Germany, in days, without forming a company or learning German employment law yourself.