Payroll and Benefits Guide - Germany

Germany
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Currency

Euro (EUR)
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Capital

Berlin
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Employer Taxes

20.645%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Germany is located in Central Europe and shares borders with nine other countries, making it a crossroads of European cultures.

Germany is known for its automotive industry and is home to famous car manufacturers such as Volkswagen, BMW, Mercedes-Benz, and Audi.

The Oktoberfest, held annually in Munich, is the world’s largest beer festival.

Germany is known for its love of bread.

Germans are passionate about football (soccer) and have a successful national team.

Germany is known for its efficient and extensive public transportation system.

Contributions

Employee Payroll Tax

Health insurance (KV 7.90%
TK-specific supplementary contribution rate 0.6%
Long-term care insurance (PV) 1.525%
Pension Insurance (RV) 9.30%
Unemployment Insurance (AV) 1.20%%
Care Insurance (PV) 1.525%
Church Tax 0% to 9%

Employer Payroll Tax

Health insurance(KV 7.90%
TK-specific supplementary contribution rate 0.60%
Pension Insurance(RV) 9.30%
Unemployment Insurance(AV) 1.20%
Long-term care insurance(PV) 1.525%
Insolvency Charge 0.12%

Payroll

Payroll Cycle

Germany pays its employees on a monthly basis, usually on or near the 25th of the month.

13th Salary

In Germany, 13th-month wage payments are traditional and made on the last day of the month.

Work Hours and Week

In Germany, a typical workweek consists of 40 hours, or 8 hours every day. If, within six months or 24 weeks, the overall average working time does not exceed eight hours per day, the work week cannot be greater than 48 hours, or 10 hours per day.

Overtime

The maximum working hours stated in the employee contract or collective agreement must be followed when scheduling overtime.

There are two common kind of overtime: Mehrarbeit, or working longer than the Working Hours Act’s cap of 48 hours per week (8 hours per day during a 6-day workweek), and Overtime. If the employee’s total working hours over the course of six months average 8 hours per day, this can be increased to 10 hours per day.

The second is lawful and usually requires payment. √úberstunden are defined as any additional hours performed over those covered by a contract.

Leave

Paid Time Off

According to the Federal Holidays Act, employees who work a regular five-day workweek are entitled to a least of 20 working days of yearly leave and those who work a regular six-day workweek are entitled to a minimum of 24 working days. Employees in Germany will be permitted to carry over their unused vacation days for up to three years starting in 2023.

Urlaubsanspruch is the German term for the right to paid vacation. Depending on the industry, the Urlaubstage number is stated in the employment contract or collective agreement (Tarifvertrag).

Employees who work in hazardous or high-risk workplaces frequently have additional leave rights, and many collective agreements expand this entitlement to 30 working days.

Public Holidays

State-specific holidays exist in Germany. However, all 50 states observe the same nine national holidays.

On weekends, public holidays are typically lost.

Sick Days

Employees who are eligible (those who have worked for the company for four weeks prior to taking sick leave) are entitled to sick pay that is equal to 100% of their usual wage for a maximum of six weeks. For incapacity brought on by the same illness, measured from the first day of illness, the health insurance fund pays between 70% and 90% of the regular wage for up to 78 weeks in three years, depending on the insured employee’s fund level.

The employee is required to notify the employer as soon as possible if they will be unable to work and for how long. An employee must provide a doctor’s certificate no later than the next business day if an illness lasts more than three days.

Maternity Leave

According to the Mutterschutzgesetz, a pregnant employee is entitled to 14 weeks of paid maternity leave, which can be extended to 18 weeks in cases of complex or multiple births.

There are two parts to maternity leave: prenatal leave, which an employee must take at least six weeks before to the anticipated due date, and postnatal leave, which she must take the remaining eight weeks of commencing on the day the baby is born.

The maternity payment is provided by the national health insurance fund. The payment is equal to the average of the net salaries paid by the employee’s public health insurance (or the state in the case of employees with private health insurance, up to 210 EUR) and the employer for the three months prior to the pregnancy. Maternity benefits are only paid by the public health insurance up to a daily maximum of 13 EUR. A grant must be paid by the employer if the daily net wage over the previous three months was higher.

Paternity Leave

Parental leave includes paternity leave.

Parental Leave

In order to be eligible for unpaid parental leave (Elternzeit), new parents must submit a written request at least seven weeks before the start date.

The 36 months of parental leave, which also includes the eight weeks of postpartum leave, can be split between the parents. However, the first three years of parental leave must be spent by the parents for at least 12 months; the remaining time can thereafter be used, with the employer’s approval, at any time between the child’s second and seventh birthdays. With prior approval from the employer, parents can also choose to work a part-time schedule of up to 30 hours per week while on parental leave.

Termination

Termination Process

Depending on the type of contract and the grounds for termination, the termination procedure differs according to the employment agreement and collective agreement. The German Termination Protection Act provides protection to employees after the initial six months of employment.

Notice Period

In Germany, notice periods are typically four weeks long, however they may differ depending on the employment contract or collective bargaining agreement and how long the employee has been with the company:

Up to 2 years 4 weeks (per the 15th or last day of the month)

2 to 4 years 1 month

5 to 7 years 2 months

8 to 9 years 3 months

10 to 11 years 4 months

12 to 14 years 5 months

Severance Pay

When an employer terminates an employment relationship without providing notice, severance pay is only applicable; in this scenario, the amount is equal to what the employee would have received with notice.

If operational changes at the company are the reason for the termination, the employer is required to provide severance compensation, which is typically equal to two weeks of regular salary for each year of service.

Probation Period

Probation Period

In most cases, probationary or trial periods are included in collective bargaining agreements. In Germany, up to six months is the custom.

Immigration

To work in Germany, one needs a long-term (national) German visa type D, which permits visitors to stay for more than three months. The minimal level of abilities required by the German law for applicants changed in 2020; it is now diploma level, along with proficiency in the German language.

VAT

In Germany, the typical VAT rate is 19.00%.