A US company’s guide to hiring in Germany

Germany is the largest economy in the European Union and sits at the centre of the continent, which makes it a natural base for a company expanding out of the US. A German hire gives you a foothold in the biggest single market in Europe and a person on the ground in a time zone that overlaps with the rest of the region.

It is also a market where customers and partners take a local presence seriously. Having someone employed in Germany, on a German contract, signals commitment in a way that a remote contractor does not.

Germany has deep pools of talent in engineering, manufacturing, software and industrial sectors, backed by a strong apprenticeship and university system. For US companies in technical fields, it is one of the richest hiring markets in Europe.

English is widely spoken in professional settings, so a US company can usually operate in English day to day, even though the employment paperwork itself has to follow German law. The mix of skilled people and workable language makes a first German hire less daunting than it sounds.

The biggest adjustment for a US company is that Germany has no employment-at-will. You cannot let someone go with two weeks’ notice and no reason. Notice periods are set by law and rise with service, dismissals need a valid reason once protection applies, and an employee can challenge a dismissal in the labour court.

There are other differences to absorb. Employees are entitled to at least twenty days of paid leave, six weeks of full sick pay from the employer, and strong data-protection rights. Larger sites can have a works council, a Betriebsrat, with a real say in working conditions. None of this is a barrier, but a US playbook applied unchanged will cause problems.

On cost, budget for employer social contributions of roughly 21 percent on top of the salary, which is well above the US employer payroll-tax burden, though it funds far more of the employee’s healthcare and pension. Paid leave and sick pay are part of the package rather than optional benefits.

The time zone works in your favour for European coverage. Germany is on central European time, several hours ahead of the US, which gives a working-day overlap with the afternoon on the US east coast and a head start on the European day.

A US company cannot simply put someone on its US payroll and call them a German employee. To employ compliantly you either form a German entity, which takes weeks and carries ongoing cost, or you use an employer of record.

With an EOR, we employ the person on our German entity and handle the contract, payroll, tax and social security, while you direct their work. It is the fastest compliant way for a US company to make its first German hire, and it avoids the permanent establishment risk that comes from having staff operate in a country where you have no proper presence.