An employer of record, usually shortened to EOR, is a company that becomes the legal employer of your staff in a country where you have no entity of your own. You still choose the person, agree the salary and run the work day to day. The EOR holds the contract and takes on the legal and payroll duties that come with employing someone in Germany.

Germany makes this split useful because employing a person here pulls in several institutions at once. There is a written contract under the Nachweisgesetz, monthly wage tax through the Finanzamt, and social security across pensions, health, long-term care and unemployment. Doing all of that yourself normally means a German company. An employer of record in Germany lets a business based anywhere put someone on a compliant local contract without registering one.

That last point is what most people are really asking about. You get a German employee on the books, paid correctly and covered by the right social insurance, while your own company stays out of the German registration system.

This is the part that tends to surprise people. When you use an EOR, our German GmbH is named as the employer on the contract. Your company is the client that directs the work. The employee reports to you and does the job you hired them for, while the entity that signs their Arbeitsvertrag and appears on their payslip is ours.

For the employee, very little about the job feels different. They get a German contract with written terms as the Nachweisgesetz requires, a monthly payslip showing Lohnsteuer and social security deductions, and registration with a health insurer and the Deutsche Rentenversicherung. The salary, the role and the manager are all yours.

Because we already hold a Betriebsnummer and run German payroll, the person can start without waiting for you to build any of that. The registration work that would otherwise sit at the front of a hire is already done.

The clearest way to understand an EOR is to see which parts of the job you keep and which parts move across to us. You run the work. We run the employment.

Put simply, you run the job and we run the paperwork behind it. The employee sees one coherent role. Behind the scenes the duties sit where they legally have to sit.

The headline job is payroll and everything the German system attaches to it. Each month we run the Lohnabrechnung, withhold Lohnsteuer and the solidarity surcharge where it applies, and pay employer and employee social contributions to the right funds. Employer on-costs add roughly 21 percent on top of gross salary, and we calculate and remit them so the numbers are right the first time.

Beyond payroll, we keep the employment compliant as the rules move. That covers the written contract under the Nachweisgesetz, the statutory leave floor of 20 working days on a five-day week, sick pay at full salary for the first six weeks under the Entgeltfortzahlung rules, and Mutterschutz and Elternzeit when they come up. It also means keeping pace with the minimum wage, which is 13.90 euro an hour in 2026.

We can employ your staff on our own German GmbH, which holds an Arbeitnehmerüberlassung licence from the Bundesagentur für Arbeit. That licence is what lets a provider place employees with a client company on a lawful basis in Germany, and not every EOR operating here holds one. It is worth knowing how German payroll works in more detail, which walks through Lohnsteuer and the social security split line by line.

Companies reach for an EOR in Germany for a few clear reasons. The first is time. Forming a GmbH means notarised articles, a Handelsregister entry, share capital and tax registration, which runs to weeks before a single person is paid. An EOR lets the hire start in days.

The second is scale. If you want one or two people in Germany to test a market or keep a key hire, standing up a full entity is a large commitment for a small headcount. The model lets you start with one person and add more only if the market justifies it.

The third is staying on the right side of the law. Paying someone in Germany as a contractor when the working relationship looks like employment is the classic route into misclassification, known here as Scheinselbstständigkeit, which can bring back-dated social contributions and penalties. There is also the works council question. Larger sites can have a Betriebsrat with real rights, and an experienced employer helps you handle that correctly from the start.

Engaging someone as a freelancer, a Freiberufler or Gewerbetreibender, can look simple, and for genuinely independent work it is a fair choice. The risk comes when the person works like an employee, on your systems and your hours, because German authorities look at the substance of the relationship rather than the label on the invoice.

An EOR sits between the freelancer route and a full entity. You get a proper employee without the cost and time of a GmbH.