Payroll in Germany

Thinking about hiring in Germany? To stay compliant and keep things running smoothly, you’ll need to understand the local rules around HR, payroll, social security, and taxes. Discover the key information laid out for you below.

HR and labor laws in Germany

When you’re hiring in Germany, it’s crucial to understand local labor laws. From contracts and working hours to leave entitlements and dismissal procedures, here’s what you should know about specific laws in Germany.

Employment contracts

Must be in writing and include the basic terms and conditions of employment.

Probation period

Can last up to six months.

Notice periods

Depend on the length of employment, typically four weeks.

Payroll management

Paying your team right means following the local payroll laws and protecting your business from fines or legal issues. Here are the payroll essentials in Germany:

Minimum wage in Germany

The statutory minimum wage is regularly adjusted. Check the latest rates at the Federal Ministry of Labor and Social Affairs (Bundesministerium für Arbeit und Soziales).

Payroll tax

Withheld from the employee’s salary based on their individual tax rate.

Social security in Germany

The social security system in Germany acts as a safety net for your employees, offering protection in key moments throughout their careers and lives. It’s designed to provide financial support during live events like illness, maternity, unemployment or retirement. Discover how the social security system works in Germany:

Contributions

Both the employer and employee share the cost of social insurance contributions.

Social insurance

Includes pension insurance, unemployment insurance, health insurance, long-term care insurance, and accident insurance.

Workplace protections

Creating a fair and safe workplace matters. These laws help protect your employees in Germany:

Parental leave

Parents are entitled to parental leave and may receive Elterngeld (parental allowance).

Vacation days

Employees are entitled to a legal minimum of 20 vacation days per year based on a five-day workweek.

Tax regulations in Germany

Taxes can be tricky. Understanding how the system works in Germany, helps you avoid surprises and stay compliant. Here are some tax basics to keep in mind:

Income tax

Germany uses a progressive tax system with multiple income brackets.

Value-added tax (VAT)

The standard value-added tax rate is 19%, with a reduced rate of 7% for certain goods and services.

Paybix helps you managing your payroll in Germany

Running global payroll takes local knowhow. With Paybix, you’ll get expert support, tailored to each country your business in situated in. Thanks to our unified and digital platform, you gather clear insight in labor costs and cross-country payroll. You benefit from a 30% more efficient payroll process, including global reporting and core HR data management. Hassle-free, user-friendly and easy integrated with local payroll providers.

To ensurefull compliance with the latest regulations, Paybix consults with local legal partners and payroll providers. Get in touch with our experts. We provide you with accurate and up-to-date information.

Ready to optimize your payroll processes? Contact us. Book your free and personalised demo. Discover our data-driven solutions for your business success.

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