Be compliant with German employment laws and issue law-abiding German employment contracts using our expert PEO Services.
In the heart of central Europe, Germany has quickly become one of the most desired locations for business expansion within the continent. Industries such as automotive, engineering, service and healthcare remain some of Germany’s most dominant areas of economic growth, so it is not surprising that many businesses opt for expansion into this country.
When growing your business and increasing your workforce internationally into a new market, it is crucial you have compliant and fair employment contracts which protects both you and your employees. In particular, Germany has very strict legislation regarding employment contracts, also known as Arbeitsvertrag, and therefore must be dealt with with caution as to not risk non-compliance.
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Employers with employees based in Germany must follow the regulations set out by national employment legislation, collective agreements and works council agreements. In addition to this, employers must be familiar with existing German labour laws and employee entitlements in order to stay compliant when issuing their German employment contracts. For example, regimented labour laws in Germany include employee protections, such as:
- Written employment contracts required by law
- Strict employment termination laws to prevent undue dismissal
- 20 days of annual holiday entitlement
- Strict limits surrounding working on public holidays and Sundays
- Employees must not work for more than 48 hours per week (or 8 hours per day)
- Full pay for the first 6 weeks of sick leave
- Full paid maternity leave
Though this is not a definitive list of laws which must be abided by by employers, there are many other recommended and optional provisions which may be incorporated into the employment contract. This may vary depending on your employment sector, so it is vital you are aware of which terms must be included specifically for your business.
What types of employment contracts are there in Germany?
Similar to multiple countries within Europe, Germany has many different types of employment contracts, with the most common being:
- Permanent labour contracts (unbefristeter Arbeitsvertrag) - relating to an unspecified period of time, which typically includes a 6-month probationary period. After this time, the employer can only terminate the employment if resignation occurs or there are legal grounds to dismiss the employee.
- Fixed-term labour contracts (befristeter Arbeitsvertrag) - relating to contracts which are valid for a specified period. There is the option to renew said contract by the employer, but it is not a legal obligation to do so. This type of contract is limited to a maximum period of two years.
Can I change an employment contract?
Changes to German employment contracts must be done with the consent of both the employee and employer. Any amendments to the contract must be discussed and agreed with the relevant parties prior to this change.
Amendments made to employment contracts in Germany without the knowledge of the essential parties could further increase the risk of non-compliance and could potentially result in further employee disputes. Once again, this can cause unnecessary wasting of time and money, on top of your business being guilty of legal misconduct.
Do I need to translate an employment contract?
Employment contracts should be translated into your employee’s preferred language. While this may come as an obvious statement, the complexities of legal terms can easily be misinterpreted and could potentially create issues of misunderstanding further down the line. This is something which must be tended to properly when expanding your business into Germany.
How do I write a German employment contract?
When it comes to the specifics of employment contracts, it is mandatory that the contract must be concluded in writing and must be given to your employee no more than one month after their employment has commenced. At a standard level, all employment contracts require the following points:
- Role description (including duties, job title and other information)
- Name and address of the employer and employee
- The place of employment
- Duration of employment, including employment commencement date
- Probationary period (or trial period)
- Working hours
- Salary, including bonuses
- Additional company benefits such as car or mobile phone
- Allocated holiday leave
- Pension schemes
- Contract temrination conditions
- Working locations and travel expectations (especially for international companies)
As is expected, employment terms must be correct at the time of writing to prevent the eventuality of employee disputes, based upon incorrect information which was stated within the final employment contract. Disputes are capable of costing your business significant amounts of time, stress and money and will undoubtedly impact your employee’s satisfaction. This is why Germany PEO services are necessary to ensure compliance from the very beginning.
Why use a PEO partner to manage German employment contracts?
Issuing and creating compliant German employment contracts is not only a task which is complicated to navigate, it is also one which is steeped in risk. Failure to comply with the necessary German labour laws and the required employment terms can open your business up to tricky employee disputes, fines and wasted time which could be better spent successfully expanding your business.
Combined with other vital aspects of international company growth, such as payroll, national insurance, tax, entity setup, recruitment, work permits and visas, there’s a lot you need to consider when expanding into Germany.
Thankfully, Leap29 can make your expansion easier and relieve you of all the stresses associated with employment contracts and more. We have a team of PEO experts who are fully certified, and extremely knowledgeable about Germany employment laws who are ready to take on the task of helping you to expand your business.
We have over 20 years of experience providing recruitment services to businesses covering multiple sectors, including Engineering and Construction, Oil & Gas, Pharmaceuticals, Renewable Energy and Technology. With the help of our PEO partners, you can trust Leap29 to aid your expansion into Germany successfully.
If you are interested in learning more about how our PEO services in Germany can benefit your business, contact our specialists today, or call our experts on +44 (0) 20 8129 6860 or email [email protected] to get started.
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