Flexible Models of Employment

Regular Employment

Regular employment contracts are unlimited in time and can be terminated by a written letter of termination - provided a mandatory notice period has been observed. In companies with more than 10 employees, a justified reason is required for regular termination. In a regular employment contract, employer and employee usually agree upon a six-month probationary period during which the contract may be terminated by either party at any time with two weeks notice.

Fixed-term Contracts

Companies are free to offer fixed-term contracts to new employees without a justified objective reason for the fixed term. Such fixed-term contracts expire automatically on a specific date. A termination is not required for this type of contract - unless the contract needs to be terminated before expiring. It is for the employer to decide whether to renew the contract or not. This category of fixed-term contracts is generally limited to a maximum of two years. A fixed-term contract may be extended up to three times, provided the total duration of contract does not exceed the maximum of two years. During the first four years of a company’s existence in Germany, employment contracts may be limited or extended several times up to a total duration of four years.

Apart from fixed-term contracts for a specific duration, it is also possible to use fixed-term contracts for specific justified objective reasons. This may, for instance, be the case if the employee is hired to fill in for another temporarily absent employee.

In order to be effective, any fixed-term employment agreement must be provided in writing.

Temporary Employment

Temporary employment means that a company can hire staff without concluding an employment contract. Instead, the company leases staff from a temporary employment agency. The employee is legally employed and paid by the temporary employment agency, as no contractual relationship exists between the user company and the employee. The user company pays a certain fee to the temporary employment agency as set out in the service contract.

The duration and the conditions of termination of the leased employee in the user company are stipulated in the service contract. Generally, leased employees may be engaged by the same company for a period of no longer than 18 months. Exceeding this maximum duration may result in a permanent employment relationship between the temporary employee and the user company.

The general working conditions - such as weekly working hours and wages - are usually determined in collective agreements between unions and the respective employers associations of the temporary employment industry. These collective agreements may, to some extent, alter the "equal treatment" policy between a company's leased and permanent employees.

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