TL;DR, Hiring in Germany
- Fully-loaded employer cost: ~21% on top of gross salary
- Health insurance, pension, unemployment, long-term care split ~50/50 employer/employee
- No 13th-month requirement, but Weihnachtsgeld (Christmas bonus) is customary
- Probationary period max 6 months; termination heavily protected after
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Statutory employer costs in Germany
In Germany, employers contribute roughly 21% on top of gross salary: 7.3% statutory health insurance (plus ~0.85% supplemental), 9.3% pension (Rentenversicherung), 1.3% unemployment insurance, 1.7–2.4% long-term care (Pflegeversicherung), and accident insurance. Contribution bases are capped (Beitragsbemessungsgrenze) at ~€90,600/year (general) and ~€62,100/year (health/care) for 2026.
| Contribution | Employer rate | Notes |
|---|---|---|
| Health insurance (Krankenversicherung) | 7.3% + ~0.85% Zusatzbeitrag | Capped at ~€62,100 annual salary |
| Pension (Rentenversicherung) | 9.3% | Capped at ~€90,600 annual salary |
| Unemployment (Arbeitslosenversicherung) | 1.3% | Capped at ~€90,600 |
| Long-term care (Pflegeversicherung) | 1.7–2.4% | Higher rate for childless employees over 23 |
| Accident insurance (Unfallversicherung) | ~1.2% | Paid 100% by employer; rate varies by Berufsgenossenschaft (industry) |
Mandatory employee benefits
Beyond statutory contributions, Germany law requires the following benefits the employer must fund.
- Vacation
- Minimum 20 days/year (5-day week); 24 days for 6-day week. Most employers offer 25–30 days.
- Sick pay
- Employer pays 100% of salary for first 6 weeks of illness; statutory health insurance covers 70% after.
- Maternity leave (Mutterschutz)
- 6 weeks before + 8 weeks after birth at 100% salary; protected from termination.
- Parental leave (Elternzeit)
- Up to 3 years per parent, unpaid by employer; state pays Elterngeld (~65% of net salary).
Termination, notice and severance
Probation
Up to 6 months; during probation either party can terminate with 2 weeks' notice and no cause.
Notice period
Statutory minimum: 4 weeks to the 15th or end of month. Extends with tenure: 1 month after 2 years, up to 7 months after 20 years.
Severance
No statutory severance under the Kündigungsschutzgesetz (Dismissal Protection Act), but in practice termination of long-tenured employees triggers a settlement of 0.5–1.0 months per year of service (Abfindung) to avoid wrongful-termination litigation in Arbeitsgericht.
Common compliance pitfalls
- Dismissal Protection Act (Kündigungsschutzgesetz) applies to employers with 10+ employees in Germany; after 6 months tenure, terminations require operational, behavioral, or personal cause, very hard to prove.
- Works council (Betriebsrat) consultation rights kick in at 5+ employees. EORs typically don't have a Betriebsrat, which can be a recruiting handicap vs local employers.
- Sachbezugswertfreigrenze (in-kind benefits tax-free threshold) is €50/month, meal vouchers, gym, etc. above this become taxable wages.
- Permanent establishment (PE) risk: if your EOR-employed engineer has authority to sign contracts or works in client-facing sales, Germany may deem you have a PE and tax your profits.
Frequently asked questions
EOR platform fees for Germany range from $199–$699 per employee per month. On top, employer-side contributions add ~21% to gross salary (capped at Beitragsbemessungsgrenze thresholds). Accident insurance adds another 1–2% depending on industry classification.
There is no statutory severance, but the Dismissal Protection Act makes termination of employees with >6 months tenure very difficult to defend. In practice, employers pay a settlement of 0.5–1.0 months' salary per year of service to obtain a mutual termination agreement (Aufhebungsvertrag) and avoid labor court.
Statutory health insurance (gesetzliche Krankenversicherung, GKV) is mandatory for employees earning under ~€69,300/year. Above that threshold, employees can opt into private (PKV); employer contributes the same amount it would to GKV, capped.
Works council law (BetrVG) applies to the legal employer, i.e. the EOR. Since EORs employ workers across many client companies, a Betriebsrat is rarely established. For a 50+ engineer team, setting up your own German GmbH and a works council often becomes the better option.
If your German EOR-employee has authority to conclude contracts on your behalf (e.g. sales executives, country managers), Germany's tax authority may deem your foreign company has a PE in Germany and tax a portion of your profits. EORs are safe for engineering, R&D, and support roles, risky for revenue-generating sales leadership.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.