TL;DR, Hiring in Germany
- Known employer contribution subtotal: scenario-specific; some charges remain unresolved
- 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
Last reviewed:
Statutory employer costs in Germany
In Germany, the employer contribution percentage varies by salary because contribution bases are capped. For 2026, the health and long-term-care ceiling is €69,750 a year and the pension and unemployment ceiling is €101,400. Statutory accident insurance is employer-paid but cannot be expressed as one national rate because it depends on the employer's industry hazard class, so the displayed calculation remains a subtotal.
| Contribution | Employer rate | Notes |
|---|---|---|
| Health insurance (Krankenversicherung) | 7.3% + 1.45% average Zusatzbeitrag | Capped at €69,750 annual salary; actual supplementary rate depends on the employee's sickness fund |
| Pension (Rentenversicherung) | 9.3% | Capped at €101,400 annual salary |
| Unemployment (Arbeitslosenversicherung) | 1.3% | Capped at €101,400 annual salary |
| Long-term care (Pflegeversicherung) | 1.8% employer share | Capped at €69,750; Saxony has a different employer split |
| U1 sick-pay apportionment | Conditional | Applies to qualifying small employers; rate depends on the sickness fund and reimbursement level, so it is not included in the displayed subtotal |
| Accident insurance (Unfallversicherung) | No single national rate | Paid by the employer; depends on the Berufsgenossenschaft and industry hazard class |
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. Employer-side contribution rates are salary-dependent because the main contribution bases are capped. The calculator shows a known subtotal: statutory accident insurance remains excluded because its rate depends on the employer's Berufsgenossenschaft and industry hazard class.
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.