How the employer of record process works in Germany, step by step

Everything starts with a short service agreement between your company and ours. It sets out the role, the salary you have agreed with the employee, the start date, and our flat fee of 499 euro a month for carrying the employment. There is no minimum headcount, so a single hire is enough to begin.

This is the point where we confirm the German specifics of the role, such as the working hours, any probation period, and the notice terms, so the contract we issue next matches what you and the employee expect.

Next we collect what German payroll and social insurance need from the employee. This is a routine step, and we guide the person through it so nothing is missed.

• Personal and address details, and a photo ID
• Their Steuer-ID, the tax identification number
• Their social insurance number, the Sozialversicherungsnummer
• Their chosen statutory health insurer, the Krankenkasse
• Bank details for salary payment
• Tax class and any relevant family or church-tax status

With those in hand, we can register the employee correctly and make sure the first payslip reflects the right tax class and deductions.

We then issue the German employment contract, the Arbeitsvertrag, with the written terms the Nachweisgesetz requires, including pay, working time, leave and notice. The employee signs with us as the legal employer.

Alongside the contract we handle the registrations that make the employment official. That means registering the person with their Krankenkasse, reporting them to the Deutsche Rentenversicherung for social security, and running the payroll under our Betriebsnummer from the Bundesagentur für Arbeit.

At the end of the first month we run the Lohnabrechnung. We withhold Lohnsteuer and, where it applies, the solidarity surcharge and church tax, and we deduct the employee share of pension, health, long-term care and unemployment contributions.

On top of the gross salary we add the employer contributions, which come to roughly 21 percent, and we pay both halves to the Finanzamt and the social insurance funds. The employee receives a clear German payslip and their net salary in their account, and you receive one invoice covering the salary, the on-costs and our fee.

After the first payroll the employment simply runs. We keep the monthly payroll going, track statutory leave against the 20-day floor and whatever you have agreed above it, and handle sick pay at full salary for the first six weeks under the Entgeltfortzahlung rules.

When things change, we handle them. That covers pay rises, parental leave, and eventually offboarding, where German notice periods under section 622 of the civil code apply by length of service. You tell us what you want to happen and we make it compliant.

The split of work is the same at every stage. You keep the relationship with your employee. We carry the German employment.