Employing in Germany.

Minimum wage

The statutory minimum wage is EUR 13.90 gross an hour from 1 January 2026, rising to EUR 14.60 on 1 January 2027; under-18s without completed vocational training and apprentices are excluded.

EUR 13.90 · from 1 January 2026per hour, gross, single national rate for all eligible employees (no youth or regional rates)

• One national hourly rate; no age bands
• Excluded: young people under 18 without a completed vocational training; pay of apprentices (Auszubildende) and volunteers is not governed by the Minimum Wage Act
• Interns count as employees, except mandatory internships, orientation or study-accompanying internships of up to three months, and entry-qualification or pre-vocational schemes
• Employees who were long-term unemployed immediately before the job: minimum wage does not apply in the first six months
• Minimum wage is due at the latest on the last bank working day of the month after the month in which the work was done
• Mini-job earnings ceiling: EUR 603 a month in 2026, EUR 633 in 2027

Changes on 1 January 2027: EUR 14.60 gross an hour. Published Source: Fünfte Verordnung zur Anpassung der Höhe des Mindestlohns (Fünfte Mindestlohnanpassungsverordnung - MiLoV5)

Employer social security contributions

Employers pay about 21% of gross pay: 9.3% pension, 1.3% unemployment, 7.3% health plus half the fund's additional rate, and 1.8% care, capped at EUR 8,450 and EUR 5,812.50 a month, plus levies.

About 21.15% of gross pay plus levies; caps EUR 8,450 a month (pension, unemployment) and EUR 5,812.50 (health, care) · from 1 January 2026employer share, % of gross pay up to the contribution ceilings, 2026 (health part uses the 2.9% average additional contribution)

• Pension insurance: 18.6%, employer 9.3%; ceiling EUR 8,450 a month (EUR 101,400 a year), uniform across Germany
• Unemployment insurance: 2.6%, employer 1.3%; ceiling equal to the pension ceiling
• Health insurance: general rate 14.6%, employer 7.3%, plus half of the fund-specific additional contribution (average 2.9% in 2026, i.e. 1.45% for the employer on average); ceiling EUR 5,812.50 a month (EUR 69,750 a year)
• Long-term care insurance: 3.6%, employer 1.8% (1.3% in Saxony); the 0.6% childless surcharge is paid by the employee alone; ceiling as for health
• Employer only: statutory accident insurance, assessed by the competent Berufsgenossenschaft (accident insurer) by notice
• Employer only: U1 levy (sick-pay reimbursement scheme, employers with up to 30 employees) and U2 levy (maternity), rates set by each health insurance fund
• Employer only: U3 insolvency levy 0.15% of pay subject to pension contributions

Our sum of the published rates: pension 9.3%, unemployment 1.3%, health 7.3%, half of the 2.9% average additional health contribution (1.45%) and care 1.8% make 21.15%; the additional health rate varies by fund, and accident insurance and the U1, U2 and U3 levies come on top.

Changes on 1 January 2027: Contribution ceilings of EUR 8,850 a month for pension and unemployment insurance and EUR 6,375 a month for health insurance, adopted by the federal cabinet and awaiting the consent of the Bundesrat. The average additional health contribution stays at 2.9%. Proposed Source: Beitragsbemessungsgrenzen 2027 sollen steigen

Payroll tax withholding and filing

The employer withholds wage tax and files a wage tax return with its local tax office electronically via ELSTER by the 10th day after each month; quarterly or annual filing applies to small amounts.

Employer withholds; return and payment by the 10th after each month (quarterly or yearly if small), to the Betriebsstättenfinanzamt via ELSTERLohnsteuer-Anmeldung (wage tax return), electronic

• Return period: calendar month if wage tax for the previous year exceeded EUR 5,000; quarter if over EUR 1,080 up to EUR 5,000; calendar year if EUR 1,080 or less
• Return and payment both due by the 10th day after the end of the period
• Authority: the Betriebsstättenfinanzamt, the tax office for the establishment where payroll is computed; portal ELSTER (https://www.elster.de)
• Late payment surcharge 1% per started month of the rounded arrears (ELSTER guidance)
• Social security (separate): contribution statement to each health insurance fund two working days before the due date; contributions due on the third-last bank working day of the month in which the work is done

Salary payments a year and holiday allowance

German law sets no 13th-month salary or Christmas bonus; such special payments arise only from a collective agreement, works agreement, the employment contract or repeated unreserved payment.

No statutory 13th monthspecial payments only by collective agreement, works agreement, contract or repeated unreserved payment

• Without such a basis the employer decides freely whether to pay a bonus and how much
• No statutory number of salary payments a year
• The minimum wage is due at the latest on the last bank working day of the month after the month worked

Paid annual leave

Employees are entitled to at least 24 working days of paid leave a year, counted on a six-day week, which equals four weeks or 20 days on a five-day week.

24 working days (six-day week), equal to four weeksminimum paid leave per calendar year; 20 days on a five-day week

• Working days (Werktage) are all calendar days other than Sundays and public holidays
• Full entitlement after six months of employment; before that one-twelfth for each full month
• Severely disabled employees: five extra working days
• Average leave under collective agreements is about six weeks (BMAS)

Sick pay

The employer continues full pay for up to six weeks of sickness once the job has lasted four weeks; the health insurance fund then pays sickness benefit of 70% of capped gross pay.

Employer, 100% for up to 6 weeks; then health fund sickness benefit (70% of capped gross)continued pay from the employer, then Krankengeld from the statutory health insurance fund

• Employer pays the regular pay for normal working hours (overtime pay excluded) for up to six weeks per illness
• Entitlement starts after four weeks of uninterrupted employment
• Same illness again: a new six-week period only after six months free of that illness or twelve months from the first incapacity
• Krankengeld: 70% of regular pay up to the health contribution ceiling, at most 90% of net pay; up to 78 weeks within three years for the same illness; it rests while the employer pays
• Employers with up to 30 employees get 80% of continued pay and employer contributions back through the U1 scheme
• The 2026 health reform keeps the 70% rate and 78-week duration and adds partial incapacity (BMG)

Running payroll without a local entity

A foreign employer without a German entity needs a Betriebsnummer from the Federal Employment Agency, accident insurer registration and a German representative; it withholds wage tax only if it is a domestic employer.

Possible without an entity: Betriebsnummer (Federal Employment Agency), accident insurer registration and a representative in Germany; wage tax only if a domestic employersocial security registration; wage tax withholding depends on domestic-employer status

• Wage tax: only a domestic employer (residence, habitual abode, management, seat, permanent establishment or permanent representative in Germany) or a foreign hirer-out of workers must withhold (EStG § 38(1))
• Betriebsnummer: needed for social security reporting, also by employers based abroad; applied for electronically at the Betriebsnummern-Service of the Bundesagentur für Arbeit (SGB IV § 18i)
• Since 1 January 2024 the Betriebsnummer application needs the Unternehmensnummer issued by the competent accident insurer
• Employer without a seat in Germany must appoint an authorised representative with a seat in Germany to keep payroll records (SGB IV § 28f(1b)); accident insurers also require a representative and registration (DGUV)
• Alternative: by agreement under Article 21(2) of Regulation (EC) 987/2009 the employee can take over the contribution duties; the Betriebsnummer then covers only that employee

Pension

Employees are compulsorily insured in the statutory pension scheme at 18.6%, split equally; there is no mandatory workplace pension, but employees may demand deferred compensation with a 15% employer subsidy.

Statutory pension insurance 18.6% (employer 9.3%); no mandatory workplace scheme · from 1 January 2026state scheme via contributions; right to deferred compensation with 15% employer subsidy

• Statutory pension insurance covers all employees paid for work; contributions shared half and half
• Employees may require up to 4% of the pension contribution ceiling (EUR 4,056 a year in 2026) to be converted into a company pension
• Employer must add 15% of the converted pay to a pension fund, Pensionskasse or direct insurance where it saves social security contributions
• Automatic enrolment with an opt-out is possible only under a collective agreement or, where pay is not set by collective agreement, a works agreement with at least a 20% employer subsidy

Probation and notice

Probation may last up to six months with two weeks' notice; afterwards notice is four weeks to the 15th or month-end, rising for employer dismissals from one to seven months with service.

Probation up to 6 months with 2 weeks' notice; then 4 weeks to the 15th or month-end, employer notice rising to 7 months with servicestatutory notice (BGB § 622); collective agreements may differ

• Basic notice for either side: four weeks to the 15th or to the end of a calendar month
• Employer notice after 2 years' service: 1 month; 5 years: 2; 8 years: 3; 10 years: 4; 12 years: 5; 15 years: 6; 20 years: 7 months, each to the end of a month
• Collective agreements may set different periods; the employee's notice may not be longer than the employer's
• Protection against unfair dismissal applies after more than six months' service in the same business (KSchG § 1)