Germany · Employment Law

What Are the Employment Laws for Hiring in Germany?

Employment law in Germany is detailed and strongly favors employee protection. Key areas employers must comply with include mandatory written documentation of employment terms, statutory minimum leave of 20 days per year, continued salary during illness for up to six weeks, strict working-time limits, and notice periods that extend with an employee's length of service. Once certain thresholds are met, the Dismissal Protection Act (Kündigungsschutzgesetz) requires employers to show a socially justified reason before terminating an employee. Companies hiring in Germany, whether through their own entity or an Employer of Record, must build these protections into contracts and HR processes from day one.

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Why Do Companies Ask About German Employment Law?

Germany's labor market is attractive for international hiring, but its legal framework is significantly more protective of employees than markets like the US or UK.

Companies unfamiliar with German rules often assume employment works similarly to their home country, particularly around at-will termination. This assumption can create serious compliance risk, since German law limits how and when an employer can end an employment relationship, and mandates specific benefits regardless of company size.

Understanding these laws helps companies:

check_circleDraft compliant employment contracts from the start.
check_circleSet realistic expectations for hiring and termination timelines.
check_circleBudget for statutory leave, sick pay, and notice period costs.
check_circleAvoid disputes, penalties, or invalid terminations.

Key Areas of German Employment Law

Written Employment Documentation

Under the Nachweisgesetz (Verification Act), employers must provide employees with written documentation of essential employment terms, generally at or before the start of employment.

Probation Periods

Employers may agree on a probation period (Probezeit) of up to six months. During probation, either party can terminate the relationship with two weeks' notice, rather than the longer notice periods that apply afterward. Probation must be explicitly stated in the contract; it is not automatic.

Working Time

The Working Hours Act (Arbeitszeitgesetz) generally limits the working day to eight hours, extendable to ten hours if average working time over six months does not exceed eight hours per day. A minimum rest period of 11 consecutive hours between shifts is required, and Sunday and public holiday work is generally restricted.

Paid Leave

Employees are entitled to a statutory minimum of 20 days of paid annual leave per year, based on a five-day work week. Leave must be granted as time off and generally cannot be paid out in lieu, and unused leave typically expires at year-end unless carried over under specific conditions.

Sick Pay

Employers are generally required to continue paying an employee's salary for up to six weeks during illness (Entgeltfortzahlung), after which statutory health insurance may take over.

Notice Periods

Employee resignations generally require four weeks' notice regardless of tenure. Employer-initiated notice periods, however, increase with length of service, ranging from four weeks in the early years up to seven months for employees with twenty or more years of service.

Dismissal Protection

The Kündigungsschutzgesetz (KSchG) applies once a company regularly employs more than ten employees and the employee has been with the company for more than six months. Under this law, termination must be socially justified and generally falls into one of three categories: conduct-related, person-related, or operational reasons.

Anti-Discrimination Law

The General Act on Equal Treatment (AGG) prohibits discrimination based on race, ethnicity, gender, religion, disability, age, or sexual orientation across recruitment, employment, and termination.

In Practice

lightbulbExample scenario

Imagine a UK company hires its first employee in Frankfurt without fully understanding German dismissal rules.

Six months into employment, the company decides the role is no longer needed and attempts to terminate the employee with two weeks' notice, similar to what might be standard elsewhere.

Under German law, this approach creates two problems: the statutory notice period for an employee who has passed probation is longer than two weeks, and if the company has more than ten employees, the termination must also be socially justified under the KSchG. Without meeting these requirements, the termination risks being legally challenged.

Companies that understand these rules in advance can plan headcount changes, budget for notice periods, and structure terminations correctly from the outset.

Employment Law Overview at a Glance

Area	Key Rule
Written Terms	Required at or before start date
Probation	Up to 6 months, 2 weeks' notice either way
Working Hours	Generally 8 hrs/day, extendable to 10
Paid Leave	Minimum 20 days/year
Sick Pay	Up to 6 weeks of continued salary
Notice Period (Employer)	4 weeks to 7 months, based on tenure
Dismissal Protection	Applies after 10+ employees and 6+ months' tenure

Common Mistakes

report_problemAssuming At-Will Termination Applies

Unlike the US, German law does not allow termination without notice or justification once dismissal protection applies.

report_problemSkipping Written Documentation

Failing to document employment terms in writing can create compliance exposure under the Nachweisgesetz.

report_problemUnderestimating Notice Period Costs

Employers often overlook that notice periods for longer-tenured employees can extend to several months, during which salary and employer contributions must continue.

report_problemTreating Probation as Automatic

If a probation period is not explicitly written into the contract, full employment protections may apply from day one.

report_problemOverlooking Leave and Sick Pay Obligations

Statutory leave and up to six weeks of continued sick pay are mandatory and apply regardless of company size.

Hiring Through an EOR in Germany

Given the complexity of German employment law, many international companies use an Employer of Record to manage compliance. The EOR typically handles:

check_circleDrafting legally compliant employment contracts
check_circleManaging statutory leave, sick pay, and benefits
check_circleApplying correct notice periods and termination procedures
check_circleEnsuring adherence to working-time and anti-discrimination rules
check_circleOngoing payroll and employment law compliance

This allows companies to hire confidently in Germany without needing deep in-house expertise in German labor law.

Bottom Line

German employment law provides strong protections around contracts, working time, leave, sick pay, and termination. Employers must understand notice period rules, dismissal protection thresholds, and mandatory benefits before hiring, since non-compliance can create significant legal and financial risk. For companies without in-house German employment law expertise, working through a local entity's HR team or an Employer of Record is often the safest way to stay compliant while building a team.

Can I hire employees in Germany without a local entity?

Yes. Companies can hire in Germany without a local entity by using an Employer of Record, which becomes the legal employer and manages compliance obligations on the company's behalf.

How long does it take to hire an employee in Germany?

Hiring timelines depend on recruitment and documentation, but companies using an EOR can generally onboard employees faster than those setting up a local entity first.

How much does an Employer of Record cost in Germany?

EOR costs combine the provider's service fee with employer social security contributions, which typically add 20%–23% to gross salary.

What are employer social security contributions in Germany?

Employers contribute to pension, health, long-term care, unemployment, and accident insurance, which together generally add roughly 20%–23% to gross salary.

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What Are the Employment Laws for Hiring in Germany?

Why Do Companies Ask About German Employment Law?