The employment contract - as well as EU and German laws and regulations - shape the employment conditions.
A contract of employment setting out the terms and conditions of the employer-employee relationship is usually drawn up in writing. Collective agreements between employer associations and trade unions apply only to those employers and employees who are members of an employer association or a trade union. An exemption applies for agreements that have been declared universally applicable by the Federal Ministry of Labor and Social Affairs. An overview of universally applicable collective agreements is available on the German Customs Authority’s website. Some employment regulations do not allow any deviation by way of employment contract and/or collective agreement. Below we provide a quick overview of German minimum wage regulations, working times and vacation rules as well as sick leave.
The German General Act on Equal Treatment, often referred to as the Anti-Discrimination Act, implements EU regulations on anti-discrimination. It mandates a general prohibition of discrimination against any person for reasons of ethnic origin, gender, religion or ideology, disability, and age as well as sexual orientation.
Salaries and Wages
Wages are generally subject to individual negotiation in Germany. However, a general minimum wage applies. The minimum hourly wage was EUR 12.00 as of October 2022.
Higher minimum wages must be set in certain industries (e.g. those with universally applicable collective wage agreements). The German customs authority provides an overview of these sector-specific minimum wages online.
There are also general exemptions from the national minimum wage. For instance, the following group categories are not covered by the minimum wage regulation:
- Young people under 18 years of age
- Students completing compulsory internships or other internships for up to three months
- Long-term unemployed (one year or longer) for the first six months in employment
Bonuses must only be granted if they have been agreed in the individual employment contracts or in collective agreements.
Working hours in Germany are in line with the EU Working Time Directive. Employees may work eight hours per day (48 hours per week). Saturday is considered a normal working day. With a five-day week, the permitted weekly working time totals 40 hours. Most business is conducted from Monday to Friday but retailers and manufacturing industries usually operate on Saturdays as well. Sundays, in contrast, are generally considered to be days off. An extension of the working time to a maximum of ten hours per day is possible under certain conditions. Executive staff are exempted from the scope of the German Working Time Act.
Overtime has to be compensated for with additional time off. An overtime bonus is possible but is not legally specified. Overtime bonuses only have to be paid when required by individual contracts or in applicable collective labor agreements.
The statutory amount of work breaks depends on the total number of hours worked per day. Employees are entitled to a break of 30 minutes when working between six and nine working hours per day. Employees are entitled to 45 minutes break when working more than nine hours a day. Breaks may be split up throughout the day, but divisions may not be shorter than 15 minutes. There are statutory breaks of at least eleven hours between shifts.
Vacation and Public Holidays
Full-time employees working six days per week are entitled to a minimum of 24 paid vacation days (the equivalent of four weeks) per year. Accordingly, full-time employees working five days per week are entitled to a minimum of 20 days per year.
The employee is entitled to a pro-rated period of paid vacation when working for less than six months within one calendar year. During the typical six-month probationary period at the beginning of any new employment contract, employees are not normally entitled to take any vacation days.
The number of public holidays varies from one federal state to another, with a minimum ten public holidays to a maximum 13 holidays in some regions of Germany.
Employees are obliged to inform their employer of any sickness requiring an absence from work and the expected duration of this absence as soon as possible (generally on the first day of the sick leave). Where the period of sick leave exceeds three days, employees are obliged to have a general practitioner provide proof of their incapacity to work. Notwithstanding this, employers may also request medical certification of an employee’s incapacity to work beginning on the first day of sick leave. The employer can access the certificate online via the employee's public health insurance provider.
Employees are entitled to sick pay amounting to 100 percent of the normal salary until the time of recovery limited to a maximum of six weeks.
When expanding to Germany, international companies often not only employ new staff in Germany. It may also be necessary to second personnel with management or specialist tasks from the parent company abroad to a new German entity for a limited time. Sometimes these employees are posted to Germany based on their existing foreign employment relationship. In such cases, EU and German law prescribe the applicability of certain German minimum employment conditions. Websites of the European Commission on posted workers and of the German Customs’ Authority on foreign-domiciled employers provide detailed information on rules to consider.