Employer of Record (EOR) in Germany
Employer of Record (EOR) in Germany enables companies to hire skilled professionals without setting up a local entity. Germany has a workforce of over 45 million, making it Europe’s largest labor market. The country is a global leader in engineering, automotive, technology, finance, and healthcare. Employment regulations are detailed and heavily worker-focused, covering collective agreements, probation rules, and social benefits. Partnering with an EOR in Germany allows companies to manage payroll, contracts, taxation, and compliance efficiently while reducing administrative risk. This provides a faster, compliant path to tap into Germany’s highly educated workforce.
About Germany
Germany is the largest economy in Europe and the fourth largest in the world. Known for its industrial strength, technological innovation, and global competitiveness, Germany attracts multinational companies and startups alike. Major cities such as Berlin, Munich, and Frankfurt are hubs for technology, finance, and manufacturing.
The country is home to a highly skilled, well-educated workforce with strong expertise in engineering, software development, and healthcare. Employees enjoy strong labor protections under German law, which includes collective bargaining agreements, mandatory social contributions, and extensive leave policies. While this creates a secure environment for employees, it adds complexity for foreign businesses trying to expand into the German market.
Employment contracts in Germany must comply with strict legal standards. Employers are obligated to contribute to social security, pensions, healthcare, and accident insurance. Termination rules are highly regulated, requiring valid justification and adherence to notice periods. For businesses seeking to establish operations or hire talent in Germany, an Employer of Record (EOR) provides a cost-effective and compliant solution to manage payroll, HR administration, and statutory requirements.
Employment Terms and Regulations
Types of Contracts
Permanent Contracts (Unbefristeter Arbeitsvertrag):
Standard full-time contracts with full benefits
Fixed-Term Contracts (Befristeter Arbeitsvertrag):
Limited-duration contracts, often project-based
Part-Time Contracts (Teilzeitvertrag):
Reduced working hours, proportional benefits
Temporary/Agency Contracts:
Limited use, governed by strict labor laws
Working Hours
Standard: 40 hours per week, capped at 48 by law
Overtime: Regulated by contracts or collective agreements
Minimum Wage
€12.41 per hour (2025)
Probation Period
Up to 6 months, during which termination rules are more flexible
Taxation and Contributions
Income tax:
Progressive, 14%–45%
Employee contributions:
~20% of salary (pension, health, unemployment, long-term care)
Employer contributions:
~20% of salary for same programs
EOR manages accurate tax deductions and filings
Types of Leave
Annual Leave:
Minimum 20 working days (based on 5-day week), many employers offer 25–30
Sick Leave:
6 weeks paid by employer, then health insurance continues coverage
Maternity Leave:
14 weeks (6 before and 8 after birth)
Paternity Leave:
No separate scheme, but parental leave up to 3 years is available
Public Holidays:
10–13, depending on federal state
Employee Benefits
- Mandatory health insurance and pension
- Paid vacation and sick leave
- Unemployment benefits and family allowances
- Optional: company car, meal vouchers, private pension top-ups, training allowances
Termination Process
- Termination requires written notice and valid justification
- Notice period: 4 weeks minimum, increasing with tenure (up to 7 months)
- Protection against dismissal applies after 6 months of employment for companies with more than 10 employees
- Severance not mandatory unless agreed or in case of redundancy agreements
Employer Taxes
Employer contributions: ~20% of gross salary
Pension Insurance: 9.3%
Health Insurance: ~7.3% (plus additional contributions)
Unemployment Insurance: 1.2%
Long-Term Care Insurance: 1.525%
Accident Insurance: Industry-based rates
EMPLOYER TAXES
~20% to 22% (Estimated)
FAQ's
How STM Manages Employment in India
Establishing an entity in every hiring location can be cost-prohibitive. STM simplifies the process by employing and paying your Indian talent on your behalf. We handle the intricate HR procedures and employment contracts in compliance with local laws. You can conveniently approve invoices through our platform. By partnering with an Employer of Record (EOR), you can efficiently and compliantly hire top talent globally.
Payment Processes for Indian Employees
We streamline payroll management for your Indian workforce. Employee hours, leaves, holidays, bonuses, and commissions are meticulously calculated. STM invoices you around the 15th of each month in your preferred currency, including US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD). This ensures your Indian employees receive their salaries promptly in Indian Rupees (INR). Simplify further by consolidating your global team’s salaries into a single payment.
Full-time Employees vs. Global Contractors
Contractors engage with multiple companies and are self-employed, while full-time employees focus solely on their employer and receive additional benefits like health insurance, equity, and time off. While hiring international contractors can be cost-effective, it comes with misclassification risks. Partnering with an EOR for contractor onboarding and payments ensures compliant and timely compensation.
Reliable Employee Support
Our platform offers accessible support for employees and employers with inquiries about benefits, visas, and global employment in India. Utilize the chat function to connect with our expert team. Additionally, every STM client is assigned a dedicated account manager, serving as the primary contact for global HR assistance.
