COUNTRY

Written Agreements

Written contracts are not mandatory for beginning an indefinite employment relationship in Germany. However, a document with the work conditions must be put in writing, signed, and given to the employee no later than one month after the agreed-upon start date.

The written transcript must contain at least the following:

• Name and address of the employer
• Name and address of the employee
• Start date and, if it is a fixed-term contract, the end date or duration, as well
• Location(s) where work will take place
• Job type and brief job description
• Salary, incentives, and any other additional payments
• Work hours, annual leave, and notice periods for termination
• Reference to collective bargaining agreements and other agreements, if applicable

Employers and employees can include a non-competition clause in the contract to restrict the employee's professional activity for a maximum of two years after the employment relationship has ended by agreement. While employers can conclude non-solicitation agreements with other employers to stop them from hiring their employees, such agreements are not enforceable in court.

Oral Agreements

Indefinite employment contracts can be entered into orally or in writing. However, a document with the basic work conditions has to be written, signed, and given to the employee no later than one month after the agreed-upon start date. A fixed-term contract can also be entered into orally; however, the expiry date must be set out in writing.

Apprenticeship contracts must be in written form.

Implied Agreements

German law does not explicitly enumerate implied contracts. However, German civil law addresses obligations created without an explicit agreement by regulating unjust enrichment. Even without a concluded agreement, a party may find itself bound to act when it is unjustly enriched by the actions of another party. This dynamic can facilitate an implied agreement in the absence of an actual contract.

The Hours of Work Act regulates the working hours, which states that a regular, full-time workday may not exceed eight hours. There is a ten-hour limit, including overtime, as long as an eight-hour average is maintained over six calendar months. Employees must have an uninterrupted rest period of at least eleven hours after the end of daily working hours. Young people under 18 cannot be employed more than 8 hours a day and not more than 40 hours a week. They must have a daily rest of at least 12 hours.

These limits can be extended in emergencies when work cannot be postponed, in extraordinary circumstances, or if agreed upon in collective agreements.

In Germany, public holidays are predominantly regulated at the state level. The minimum number of paid public holidays is 9 – these are the national public holidays. In addition to the national holidays, state-specific public holidays are regulated by individual state laws.

All German employees are entitled to a public holiday for the following days:

• New Year’s Day (Neujahr) - January 1
• Good Friday (Karfreitag) - date subject to change annually
• Easter Sunday (Ostersonntag) - date subject to change annually
• Easter Monday (Ostermontag) - date subject to change annually
• Labor Day (Maifeiertag) - May 1
• Ascension Day (Christi Himmelfahrt) - date subject to change annually
• Whit Sunday (Mit Sonntag) - date subject to change annually
• Whit Monday (Pfingstmontag) - date subject to change annually
• German Unification Day (Tag der Deutschen Einheit) - October 3
• Christmas Day (Weihnachtstag) - December 25
• Boxing Day (Weihnachtstag) - December 26

Employees in Germany are entitled to a minimum of 24 working days of leave per year. This number is based on a 6-day workweek and can further be amended by collective agreements or employment contracts. Leave is granted continuously but can be divided for operational or personal reasons, such that at least one of the leave allotments lasts 12 consecutive days. Annual leave can be transferred to the following year for personal or business reasons but must be taken before March 31 of that following year. Home workers are also entitled to the same benefits unless otherwise stated in their contracts. While annual leave should be taken the same year that it has accrued, the statute of limitations for unclaimed vacation leave is 3 years.

Employees are entitled to one-twelfth of the annual leave for each full month of employment and acquire full leave entitlement after six months of work. The right to annual leave does not exist if a previous employer has granted the employee the same type of leave in a calendar year. If the vacation can no longer be granted in whole or in part due to the termination of the employment relationship, the employee must be compensated.

In Germany, sick pay leave is regulated under the Continued Remuneration Act (Entgeltfortzahlungsgesetz). The Act requires employers to provide employees with 6 weeks of paid sick leave for each illness that results in an incapacity to work. Employees are required to inform their employer in due course if they are incapable of working and also how long such incapability may presumably last. If the work incapacity lasts longer than 3 calendar days, an employer must request electronically the employee’s certificate of incapacity from the health insurance company.

During sick leave, the employee has an entitlement to full remuneration paid by the employer for the first 6 weeks. Following 6 weeks of sick leave compensated by the employer, employees will receive a sickness allowance through their health insurance in the amount of 70% of their last salary. The maximum time for this coverage is 78 weeks within a period of 3 years. The employee is entitled to paid sick leave after 4 weeks of continuous employment.

According to the German Maternity Protection Act, female employees are entitled to 14 weeks of paid maternity leave: six weeks of prenatal leave, and eight weeks of postnatal leave. The postnatal leave may be extended to 12 weeks if the female worker gives birth to a child with a disability, or in the case of premature birth or multiple births. Employers cannot terminate the employment contract of a female employee during her pregnancy.

Female workers, even if unemployed, are entitled to paid maternity leave for the six weeks of prenatal leave, the day of the delivery, and the eight weeks of postnatal leave (12 in case of multiple or premature births). The paid maternity leave is calculated at a rate of 100% of the average regular net wages over the last three months before the prenatal maternity leave period. This benefit - up to EUR 13 (euros) per day - is paid by the mother’s health insurance and the employer, who covers the difference between the money provided by the health insurance and the mother’s previous earnings.

The benefits are paid directly to the mother by the employer, who can then apply for reimbursement from the relevant health insurance institution. Benefits for mothers with an income below EUR 390 per month are paid by the mother's health insurance alone and match their prior income.

The labor law does not offer a specific provision on paid paternity leave, other than the regulations for parental leave (which can be taken by either parent).

There is no entitlement to paid paternity leave; however, employees are entitled to parental leave for their natural or adopted child and can request up to 3 years of leave to take care of a newborn until the child turns three years of age. This time can be claimed by both parents at the same time, or separately. Up to 12 months of parental leave can be postponed with the permission of the employer until the child reaches eight years of age.

The state pays 67% of the employee's average monthly income during parental leave (uo to a maximum of 1,800), generally for 12 months. The minimum benefit amount is EUR 300.

Minimum Wage

The government of Germany has increased the nationwide minimum wage to EUR 12.82 per hour from January 2025. Therefore, collective bargaining agreements with wages below EUR 12.82 are no longer permissible as of January 2025.

Sectoral minimum wages may be higher than the statutory minimum wage and are adjusted in accordance with the Basic Collective Agreements Act (Basis Tarifvertragsgesetz), the Posting of Workers Act (Arbeitnehmerentsendegesetz), and the Act on the Provision of Temporary Workers (Arbeitnehmerüberlassungsgesetz).

Overtime, Holiday & Vacation Pay

Overtime work must at least be compensated at the rate of the employee's regular wage. There are no explicit statutory provisions on rates for overtime; however, collective agreements often stipulate a premium of 10% to 20% of additional pay for overtime work. If agreed to in writing, overtime hours can be entered into a working time account, from which the employee can use the hours to take time off in lieu of pay. A provision in a collective agreement that entitles full-time workers to overtime bonuses also applies to part-time employees.

It is a mandatory requirement in Germany that work is not done on a public holiday. It is also a prerequisite for the payment of remuneration that the holiday is the sole cause of the loss of work. Employees who are absent from work without a valid excuse on a working day before or after a public holiday will not be entitled to any payment for these holidays.

Employees are entitled to full remuneration during their annual leave. If leave is not granted in whole or in part due to termination of employment, remuneration must be paid to the employee.

Notice Period

Notice for an employer seeking to terminate an employment relationship ranges from four weeks for employees with less than two years of service to seven months for employees with more than 20 years of service. Notice must be given in writing. Termination without notice can only be given if there is good cause.

An employee may terminate the employment relationship with a notice period offour weeks to the fifteenth or the end of a calendar month. In case of termination during the probationary period, the notice period is two weeks. Collective bargaining agreements can provide for shorter notice periods.

Severance Benefits

In Germany, employees are entitled to severance pay under the following circumstances:

• Operational termination - if employees are dismissed due to operational issues, they are entitled to severance pay equal to 50% of their monthly salary for each year of employment.
• Termination of employment by the judgment of a court - if a court determines that dismissal was unfair and the employee cannot continue the employment relationship, the court may decide to dissolve the employment contract and order the payment of severance (up to 12 months earnings).
• Immoral or extraordinary dismissal - if the court decides that the dismissal is unfair or without reason, it can order the employer to pay an appropriate severance payment if the employee cannot continue the employment relationship.

Severance benefits may vary for employees covered under a works council social plan or collective agreement.

Pension

The old-age pension scheme is based on three pillars. The statutory old-age pension is the most important component of the old-age security system. In general, contributions are borne by the employee and the employer, who each pay half of the contributions. Germans usually have additional company pension schemes administered by their employer, and some also subscribe to private retirement savings plans.

Insured persons who have reached the retirement age, can claim the statutory old-age pension. Since 2007, the statutory retirement age has been increasing to match the aging of the German population. The retirement age has been gradually rising from 65 from 2012 and will reach 67 by 2031. The minimum age is 65 for people born before January 1, 1947, and 67 for people born in 1964 or later. For people born between 1953 and 1964, the retirement age is incrementally higher for each year closer to 1964.

The amount of the individual pension depends primarily on the amount of the insured wages and income from work during the insurance life.

Dependents/Survivors Benefits

In Germany, a person is entitled to a widow or widower's pension under the following conditions:

• If the deceased spouse or partner in a registered civil partnership had completed the general qualifying period of five years
• If the marriage lasted at least a year
• If the surviving spouse has not remarried

The amount of the pension is a percentage of the deceased spouse/partner's full statutory pension and depends on the surviving spouse's revenue. The maximum widow's benefit amount is 55% of the deceased spouse's pension.

Dependent children of the deceased spouse benefit from an orphan's pension up to the age of 18. It can be extended until 27 for orphans who are still studying, or are in vocational training, in an interim period for less than four calendar months between two phases, or performing voluntary service.

Invalidity Benefits

Victims of work-related accidents or illnesses receive occupational accident insurance injury benefits as long as they are unable to work and receive no salary. The injury benefit is 80% of the person’s gross pay and is granted for a maximum of 78 weeks.

If an occupational accident or disease reduces the person’s earning capacity by at least 20% for 26 weeks, they are entitled to a pension. The amount depends on the reduction of the person’s earning capacity and the income they earned over the 12 calendar months preceding the occupational accident or disease.

A complete loss of earning capacity will trigger a full pension of two-thirds of the gross annual earnings before the accident or disease. In case of a loss of earning capacity of 50%, the pension will represent one-third of the previous gross earnings.