HR Software for Germany

Leave Policy

Maternity Leave

Pregnant employees are entitled to 14 weeks of paid vacation. 6 weeks must be taken before the birth of the child and the remaining 8 weeks after the birth of the child.

During this period, the employee receives 100% of the average net salary of the last 3 months. The employer and the health insurance company are responsible for paying part of the salary. However, the employer receives 100% reimbursement from the health insurance company during the “U2 procedure”.

The employee must provide the employer with a medical certificate stating the expected date of birth.

A special regulation applies to premature or multiple births as well as to children with disabilities for whom maternity protection is available for up to 12 weeks after birth.

The employee cannot extend the vacation, but she can take unpaid parental leave.

You can use the leave module in IceHrm to manage maternity leave in Germany

Paternity Leave

In Germany there is no special law for paternity leave. However, employees are entitled to parental leave.

Parental Leave

Employees are entitled to a maximum of 3 years of parental leave per child, which can be taken up to the child’s third birthday. The employee receives a minimum amount of EUR 300 and a maximum amount of EUR 1,800.

This payment is made if the employee worked before the parental leave and is calculated by the “Parental Allowance Office” on the basis of the gross wages of the last 12 months and after deducting the flat-rate amounts for taxes and health insurance.

The employee must announce the parental leave 7 weeks before it begins.

Parental leave cannot be extended.

Sick Leave

In Germany there is no upper limit for paid sick leave. During sick leave, the employee receives 100% of his salary. The first 6 weeks (42 days) of the vacation are paid by the employer, after which the health insurance company covers the costs of the vacation.

To apply for vacation, the employee must submit a sick note to the employer and the health insurance company.

The employee must work for at least 4 weeks before being entitled to sick pay from the employer. If the employee falls ill in the first 4 weeks of their employment, the vacation will be covered by the health insurance company. In order to take advantage of the insurance, the employee must submit an application and send a sick note to the health insurance company.

Employees can receive 30 days of paid leave per parent if their child is sick. This payment is made by the health insurance company. In order to take advantage of the vacation, the employee must submit a sick note for the child and submit an application to the health insurance company.

Pay & Tax

Minimum Wage Requirements

The minimum wage is between 2088 EURO per month (12 EURO per hour) and 2253.30 EURO per month (13 EURO per hour).

Individual Income Tax

Individual income tax ranges from 14% to 45%. Income tax is calculated according to a progressive rate. The tax rate depends on the employee’s tax class (marital status, employee with one or more sources of income, etc.) and the amount of the monthly salary.

These rates are updated annually by the federal government.

Payroll Cost

Employer costs are generally estimated at 22.6% of employee salary.

  • Retirement – 9.30%
  • Health Insurance Estimate – 8.61%
  • Unemployment insurance – 1.30%
  • Long-term insurance contribution – 1.7%
  • Accident insurance – 1.14%
  • Maternity – 0.51%
  • Insolvency tax levy – 0.06%
  • One-time mandatory wet ink employment contract processing fee – $80

Some employers have contribution caps so percentages may vary.

Overtime Pay & Maximum Hours

The standard working hours are 8 hours per day and 40 hours per week. Standard working hours are Monday to Friday.

Pay for overtime is not mandatory. Overtime can be compensated through compensatory time off or financially at the employer’s discretion. Hours outside of normal working hours are considered overtime. Employees can work a maximum of 2 hours of overtime per day and 12 hours per week. For additional hours, employees receive the same hourly wage as their regular salary.

If overtime is planned, the employee must inform the employer 4 days in advance.

Termination

Termination Requirements

Dismissals must take into account complex rules and the regulations of the country in which an employee is employed. Off-boarding is always carried out by the employer with the main participants. It may include ad hoc fees as well as required or recommended steps for specific termination cases.

Terminations in Germany can be complex. In Germany, employers cannot terminate at will outside of the probationary period, and the termination must be for a valid reason.

Proper terminations include:

  • Voluntary by the employee
  • By mutual agreement
  • Unilaterally by the employer due to:
    1. Probationary period
    2. Dismissal for Conduct: Violation of Terms and Conditions of Employment
    3. Dismissal for personal reasons: The employee loses a license required for his position, admission as a lawyer to work as a legal advisor 4. Dismissal for operational reasons: only very limited scope of application for EOR
  • When the contract expires

Notice Period

The statutory minimum notice period for employees is four weeks before the 15th or last day of the next month. The length of the period depends on how long the employee to be terminated has worked for the company. If the employee worked for the company:

  • Up to 2 years of service – 4 weeks’ notice on the 15th or last day of the following month
  • If you have been with the company for 2 to 4 years: 1 month’s notice to the last of the following month
  • 5 to 7 years of service – 2 months’ notice to the last day of the following month
  • 8 to 9 years of service – 3 months’ notice to the last day of the following month
  • Between 10 and 11 years of employment – 4 months’ notice to the last day of the next month
  • Between 12 and 14 years of employment – 5 months’ notice to the last day of the next month
  • 15 to 19 years of service – 6 months’ notice to the last day of the following month
  • Over 20 years of service – 7 months’ notice to the last day of the following month

The parties can agree on a notice period of 2 months. However, if the employee has been with the same employer for more than 7 years, the notice period is 3 months.

Severance for Employees

Although there is no statutory severance payment requirement in Germany, it is local practice to offer severance pay after six months of service in order to reduce the risk of legal disputes.

In order to protect you from unforeseen financial risks arising from the termination of the employment relationship, IceHrm includes a severance payment provision in all employment contracts in this country. IceHrm has extensive expertise in global litigation risk management and our severance provision calculation is based on applicable common law or statutory requirements and best local practices. If your employee resigns or is not entitled to severance pay, you will receive a refund of any unused amounts.

Statutory Time Off

Paid Time Off

Both full-time and part-time employees are entitled to 20 days of paid vacation per year. Part-time employees who work less than 5 days per week receive pro-rated vacation. PTO eligibility is calculated monthly at 1.67 days per full month of employment.

Public Holidays

In Germany there are 9 national holidays and up to 8 regional holidays, depending on the employee’s location.

National holidays include:

  • New Year’s Day
  • Good Friday
  • Easter Monday
  • Labor Day
  • Ascension Day
  • Whit Monday
  • German Unity Day
  • Christmas Day
  • Second Day of Christmas

Onboarding

Onboarding

Onboarding takes up to 4 business days after signing the SOW.

Additional Info

Employment Contract Details

The contracts must be written in English or German and can be bilingual. They must be in writing and signed by both parties.

A contract must contain:

  • Name (both parties)
  • Address (both parties)
  • Start date End date (if applicable)
  • Place of work
  • Description of the position
  • Salary (including all allowances)
  • Date of payout
  • Working hours
  • Duration of annual leave
  • Notice periods

Probation Period

Probationary periods are not mandatory. There is no minimum probation period. The maximum duration of the probationary period is 6 months (180 days).