German employment law combines federal statutes on minimum wage, working time, leave and dismissal protection with collective agreements and works council rights that often go further. Here is what employers need to know about leave, pay, tax, social security and ending employment.
Statutory minimums come from the Federal Leave Act (BUrlG), the Continued Remuneration Act (EFZG), the Maternity Protection Act (MuSchG) and the Parental Allowance and Parental Leave Act (BEEG). Collective agreements and employment contracts commonly grant more, for example 25–30 days of annual leave.
The law sets 24 working days based on a six-day week, which equals 20 days for a five-day week. The full entitlement applies after 6 months of employment.
Full pay for up to 6 weeks per illness once the employee has worked for 4 weeks. After that, the health insurance fund pays sickness benefit (Krankengeld).
6 weeks before and 8 weeks after the birth, extended to 12 weeks after for premature or multiple births. Paid by the health insurer plus an employer top-up.
Unpaid job-protected leave (Elternzeit) until the child turns 3, of which up to 24 months can be taken between ages 3 and 8.
During parental leave the state pays parental allowance (Elterngeld), generally 67% of prior net earnings, between €300 and €1,800 a month. Germany has no separate statutory paternity leave: fathers use parental leave and parental allowance on the same terms as mothers.
Set up each German leave type in IceHrm with its own accrual, carry forward and approval rules, including pro-rata entitlements for part-time staff and contractual days above the legal minimum. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The statutory minimum wage is adjusted by government ordinance on the recommendation of the Minimum Wage Commission. Sector minimum wages set under collective agreements can be higher.
Gross, from 1 January 2026. It applies to employees aged 18 and over, with limited exceptions such as some interns and apprentices.
Can be extended to 10 hours if the average stays at 8 hours over 6 months or 24 weeks. Working time is counted on a six-day week.
Uninterrupted rest between working days. Work on Sundays and public holidays is generally prohibited, with exceptions.
The law does not set an overtime premium. Whether overtime is paid, paid at a premium or compensated with time off depends on the employment contract or collective agreement. A 13th month salary or holiday bonus is common but is not a statutory requirement.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so you can check working time limits and pay overtime according to your contracts and collective agreements. Time & attendance →
Germany taxes income with a progressive formula rather than fixed bands: the rate rises smoothly from 14% to 42% across the middle brackets. Employers withhold wage tax (Lohnsteuer) monthly based on each employee's tax class, using data from the tax office's ELStAM database, and file wage tax returns electronically.
| Taxable income | Rate |
|---|---|
| €0 – €12,348 (basic allowance) | 0% |
| €12,349 – €17,799 | 14% rising to about 24% |
| €17,800 – €69,878 | About 24% rising to 42% |
| €69,879 – €277,825 | 42% |
| €277,826 and over | 45% |
A 5.5% solidarity surcharge applies only to higher earners above an income tax threshold. Members of recognised churches also pay church tax of 8% or 9% of their income tax, depending on the federal state.
Social insurance contributions are split roughly equally between employer and employee and are paid to the employee's health insurance fund, which passes them on to the other branches. Contributions stop at annual earnings ceilings.
| Contribution | Employer | Employee | Annual ceiling |
|---|---|---|---|
| Pension insurance | 9.3% | 9.3% | €101,400 |
| Unemployment insurance | 1.3% | 1.3% | €101,400 |
| Health insurance (general rate) | 7.3% | 7.3% | €69,750 |
| Health insurance additional contribution | Half | Half | €69,750 |
| Long-term care insurance | 1.8% | 1.8% | €69,750 |
| Insolvency levy | 0.15% | – | €101,400 |
| Statutory accident insurance | Varies | – | Set by the industry insurer |
Employers also pay small levies to the health insurance fund that reimburse sick pay (U1, for smaller employers) and maternity pay (U2, for all employers). Rates vary by fund.
Build German pay the way you already structure it, with your own salary components, deductions and formula columns, such as employer contribution columns with earnings ceilings. Want to know how well IceHrm handles payroll calculations for Germany? Contact us or see Payroll →
Notice of termination must be given in writing with a wet-ink signature; email or text is not valid. Once an employee has worked for more than 6 months in a business with more than 10 employees, the Protection Against Dismissal Act (KSchG) applies and a dismissal must be socially justified. If there is a works council, it must be consulted before every dismissal.
| Length of employment | Notice |
|---|---|
| During probation (up to 6 months) | 2 weeks |
| Less than 2 years | 4 weeks |
| 2 years | 1 month |
| 5 years | 2 months |
| 8 years | 3 months |
| 10 years | 4 months |
| 12 years | 5 months |
| 15 years | 6 months |
| 20 years | 7 months |
Employees who resign need only give the basic 4 weeks' notice unless their contract says otherwise. Pregnant employees, employees on parental leave, severely disabled employees and works council members have special protection against dismissal.
There is no general statutory right to severance pay. In practice, many dismissals end with a negotiated settlement, and half a month's salary per year of service is a common benchmark. The same amount applies by law where an employer dismisses for operational reasons and offers severance in the notice in exchange for the employee not going to court.
Unused annual leave that cannot be taken before the end of employment must be paid out.
Public holidays are set by the federal states. Nine holidays apply nationwide, and each state adds its own, such as Epiphany, Corpus Christi, Reformation Day or All Saints' Day.
Employees are paid as normal for working days that fall on a public holiday. Holidays that fall on a weekend are not moved to a weekday.
Leave groups give each office its own holiday calendar, so staff in Bavaria, Berlin and North Rhine-Westphalia each get the right state holidays automatically. Holiday calendars →
An employment contract can be agreed informally, but the Evidence Act (Nachweisgesetz) requires employers to give employees the essential terms in writing, with some terms due on the first working day. Any fixed-term clause must be agreed in writing before work starts.
A probation period can last up to 6 months, during which either side can terminate with 2 weeks' notice. A fixed-term contract without an objective reason may last up to 2 years in total, with up to 3 extensions, and only if the employee has not worked for the same employer before. New businesses can use fixed terms of up to 4 years in their first 4 years.
Store contracts and written terms on each employee's record, track probation end dates, and use onboarding task lists so registrations are done before day one. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Germany, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Germany? Talk to us.
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