German Employment Law

On this page you will find an introduction to the German individual labor law, which deals with the relationship between employer and employee. In contrast, there is the collective labor law, which governs the relationship between trade unions and works councils with employers and employers' associations.

Our company, InStaff & Jobs GmbH, offers temporary employees in all of Germany. Based on our experience in labor law we wrote this article for workers and employers. Furthermore we also provide sample of employment contracts.

Employed or self-employed?

An employee provides his manpower at a prededefined time and place in return for payment. In opposition to this is a self-employed person / Freelancer, whose work is characterized by entrepreneurial risk, free choice of activities, working time and place of work.

Many activites have characteristics of an employee as well as a freelancer. For such cases, numerous court rulings in the German labor law have made a decision, for example: hostesses at exhibitions and events are employees and sales consultants with entrepreneurial risk are self-employed.

If an employed person will be settled on a self-employed status, it is a quasi-self employment. To avoid uncertainty about the status of occupation, you can check this with a status determination procedures at Deutsche Rentenversicherung.

Employment contract as the beginning of the employment relationship

Once you agreed with a person, who is bound by instructions and provides his manpower against payment, an employment contract is concluded.

An employment contract is not tied to any shape and can be used in writing or text form as well as formless or be made orally. Should an employment contract be concluded orally, the employer is obliged to write down the contents of the employment contract within 4 weeks and hand over the contract to the employee.

German labor law has many regulations on the content of an employment contract. If these guidelines aren't fullfiled, parts of the contract aren't valid, but the emplyoment contract in general remains. The validity or invalidity of clauses in the employment contract requires an examination of each individual case. For example, the paragraph "overtime work is paid entirely with the monthly wages" would be only valid for acitivites of a higher order and a gross income above approximately 5.000 € per month.

To save costs in the preparation of an employment contract, you can use standard employment contracts. But if specific clauses are required, a specialist lawyer for labor law should be charged.

Different German working contracts

In an regular working contract the employer ("Arbeitgeber" or "AG") as well as the employee ("Arbeitnehmer" or "AN") pay each about 20 % of the gross salary as a social insurance payment. By choosing a different kind of working contract, both parties may lower the social insurance payments.

Contract	Social insurance	Explanation / Constraints
Regular contract	~20 % AG ~20 % AN	Regular full-time or part-time position where the employee earns more than 800 € per month.
Saisonal	~0 % AG 0 % AN	Maximum of 70 days per year for saisonal jobs. Employee needs to have another regular profession (e.g. being a student of having full-time working contract).
Mini-Job	~28 % AG ~4 % AN (optional)	Monthly wage is at most 538 € per month. Wages from multiple Mini-Jobs will be accounted together.*
Mid-Job	20 % AG 9 - 20 % AN	Monthly wage is between 538,01 € and 2.000 € per month. Wages from multiple Mini-Jobs & Mid-Jobs will be accounted together.*
Working Student	~11 % AG ~9,5 % AN	Only for full-time students. Can only work at most 20 hours / week during the semester.
Mandatory internship	0 % AG 0 % AN	Internship must be part of and required by the study relugations of th eintern.
Voluntary internship	depends	There is no special contract for voluntary internships. Depending on the monthly wage they are either handled as a Mini-Job, Mid-job or a regular contract. If the internship is outside the semester, it could also be better to declare him as a working student.

*If for example an employee has two mini-job contracts with two different employees and earns 300 Euros per month at each job, he will NOT be considered a Mini-Jobber, but a Mid-Jobber. Social insurance payments for both contracts will be handled like each would be a Mid-Job. If the employee already has another full-time or half-time job, there will be no social insurance payments for his first mini-job.

Minimum wage law and the exceptions

Since the first of January 2015 there is a minimum wage of 8.50 € per hour in Germany. Until the end of 2017 is a transitional period, during this period sector minimum wages have their validity, even if they are below the 8.50 €.

In addition, the following groups of people are not covered by minimum wage law:

• long-term unemployed
• employees under age 18
• mandatory internship
• voluntary internship, less than 3 month

For the compliance of the minimum wage is the employer responsible and is subject to the documentation requirements. If an employee earns less than 2.598 € per month, the employer is obliged to document the weekly working time to prove that the minimum wage has been paid.