Employer of Record Services in Germany
If you are concerned about local expertise when expanding your business in Germany, an Employer of Record is the best option that can take away your worries. Infotree Global as one of the Best Employer of Record assists you to quickly recruit and onboard employees in a new country and that too, without having the risk of setting up an office.
If business expansion is on your mind, it is better to understand how Germany Employer of Record services can help you fulfill your international employment needs. Let’s learn more about the hiring, employment, payroll, and benefits requirements for workers in Germany.
Hiring in Germany: All That You Need to Know
Before conducting your business operations in Germany, you need to learn about federal laws and industrial practices. The Civil Code describes the employment relationship whereas the Works Constitution Act determines cooperation between both parties. German Work councils have a vital impact on the labor relations where collective bargaining is preferred over terms of work.
Since employment is highly regulated, it is essential to draft compliant employment contracts. Even if you are considering to hire in a particular city like Frankfurt, it is recommended to have a backup of Employer of record Frankfurt. A top Employer of Record ensures that every contract fulfills the specified requirements. With the help of an EOR, you are guided about the cultural norms and best hiring practices to deal with the ever-changing employment regulations.
Key Areas to Consider
Before you plan to kick start a local office, it is important to be aware of the key areas within the country’s employment laws. The challenges can be overcome by using a locally sourced payroll providing company which can take care of local laws and rules for both employers and employees.
Table of Contents
• Immigration and Work Permits in Germany
• Have your Own Company
• Setting up Payroll in Germany
• Payroll and Tax
• Work Permits
• Employee Entitlements
• Setting up a Company in Germany
• Germany Employment Compliance
• How to Onboard Employees
• Benefits of Germany Hiring Outsourcing
• Why Infotree Global Solutions?
Immigration and Work Permits
Germany, being a land of possibilities has many renowned corporates and companies. As a result, it allows many non-Germans to work and settle there. The Germany Employment Visa enables qualified foreigners to work in the country for 2 years with an option to extend visa if needed.
Those who are willing to work in Germany for any of these reasons can apply for a long-stay visa.
• Employment Visa – It is for those with a job offer in hand.
• Self-Employment- This type of visa is preferred by freelancers or for those willing to start their businesses in Germany.
• Jobseeker- If you wish to find a job while being there in the country.
• Working as an AU Pair- Suitable for young adults willing to find out more about the German culture and language.
• Working Holiday Visa- This visa is for people of different countries that have signed a working holiday visa agreement with the country.
Seeking professional support of the best Employer of Record Germany helps you get through the Visa process smoothly. Citizens of different countries are eligible for applying for their residence permit for work after being in Germany without having a visa.
• EEA/EU member states the United States of America
• New Zealand
• The Republic of Korea
All foreigners can apply for an Employment Visa if they abide by the rules to work in Germany. As per the ‘Act on the Residence’, the eligible categories for this visa include highly qualified professionals. For example, foreigners like researchers with specific technical knowledge or teaching individuals or scientific personnel in prominent positions. Besides, it includes intra-corporate transferees like managers and specialists. However, if there is a lack of skilled workers in the job you have or you are a person with a job offer in hand then you are also eligible with an education equivalent to a German degree.
Have your Own Company
According to the states, Germany ranks at 114th position in ease of starting a new business. However, it can take six months to properly get started there but with Employer of Record services, you can expect it sooner than you think. There are a number of financial filling to be done that include various important details. You need to acknowledge that what type of business you are willing to start, two sets of tax registration and getting a certificate of registration.
Besides, you should make yourself aware of the cultural norms of different cities. For example, if you plan to operate the business in Frankfurt, Berlin or Munich or any other city, you need to consult with your Employer of Record. Hence, an Employer of Record is strongly recommended to deal with the many formalities you may not even aware of. An EOR company not only does all these tasks for you but also enables your easy access to the international market. So, it is better to take their assistance in finding the right candidate and get him on board within weeks and start your business operations in Germany.
Setting Up Payroll in Germany
To set up payroll in Germany, you need to have the right information on currency, employee payout, and benefits as per government laws. Euro is the currency here and contacting a top Employer of Record Germany helps you set up payroll in the right way. While setting up payroll, you need documentation for new employees having various details and certificates. It includes New Employees’ ID or passport, residence permit or visa (whichever applicable), tax ID number & tax bracket, social security number, certification of membership of a health insurance fund, Marriage certificate, divorce ruling where applicable, and Bank details (IBAN & BIC code). Germany follows robust data protection regulations. It is important for employers to be aware that whilst their personal data can be gathered for employment and especially when it is used for background checks.
Payroll and Tax
Calculating the payroll and tax properly in Germany is vital. As per employment laws, German workers are allowed to work up to 48 hours per week and the average workweek is from 36 to 40 hours. Ten-hour days are allowed in case working hours do not exceed eight hours over 24 weeks. When it comes to overtime, it is not legally defined and it is totally up to employers. Individual employment agreements may include or leave overtime requirements. So, employers are free to enforce or set employees free from working for extra hours depending upon the domain of their jobs.
There are mainly two types of work permits, Blue Card Permits and another one is Skilled Worker Visas. Depending upon the services and type of permits, it may cost you Euro 2500 or as your Employer of Record suggests. It takes around 8 to 12 weeks to process the work permit depending on the applicant’s nationality. Germany Employer of Record services helps you find suitable work permits for your employees.
Non-EU citizens are required to apply in person for a German National Residence Permit at the German Embassy before they can enter Germany. Once they lodge the application for an appointment, it may take up to 6 weeks to receive the application by the local foreigners’ authority. They may entertain you with an entry visa which is valid for 3 months and enable you to enter or start work. The number of documents required for the work permits includes Passport copy, Copy of Diplomas, CV, Health insurance certificate, Job description, Local Employment contract, Residence address, and so on. One can switch from an Entry Visa to Work Permit with few conditions applied.
Germany’s minimum wage is mentioned as €9.35 per hour, which is considered as the fifth-highest in Europe. Probation periods are not required, however, these are allowed up to 6 months. However, as per German law, they should expire after that or not old more than nine months. Employees are entitled to have both contractual and discretionary bonuses. 13th-month pay is customary in Germany which is equal to an annual bonus.
If required, employers must give employees a written notice of termination having the employee’s signature, or their sponsoring company’s signature. Paying in lieu of notice period is on the employee’s will and company policy. Expectant mothers receive special protections and receive average pay and parental leave is legally provided. There is a provision of minimum paid leaves of 24 days that are given to employees.
Setting up a Company in Germany
When setting up a company, new business owners should consider a number of factors like the industry and type of business, the nationality of individuals, and existing trade policies. Companies entering Germany must determine how to go about it. Whether they should use their own available resources or hire an EOR to manage payroll and employment tasks. However, if a company is willing to set up an office quickly with a feasible cost, it is better to have Employer of Record service.
Due to the complexity of employment rules and labor laws, it becomes vital to have the local legal counsel to ensure total compliance with laws. An Employer of Record does the drafting or local contracts for international workers besides employing and managing their legal responsibilities. It does sponsor of your employees on the work permits and complies with local employment law to run their monthly payroll. Besides, it takes charge of employees’ withholding needs for pensions and benefits, documenting termination, probation leave requests.
Germany Employment Compliance
If you wish to start business operations in Germany, it is a legal requirement to have an employment contract. It should specify all the terms of employment such as remuneration, benefits, and termination if required. An offer letter and employment agreement should have a clear mention of the salary and compensation amounts in Euro than an international currency.
A general employment contract should contain the necessary information like name and address, date of commencement, term, trial period, location of work, Job description, remuneration, working hours, holiday, and others. Often, besides the employment contract, few special regulations may also apply known as collective bargaining agreements regulated by trade unions or employer associations. When a company signs a special contract with a Germany Employer of Record, they ensure that the contract should represent the interest of the employees.
How to Onboard Employees?
Drafting and validating employment contracts is the first vital step. Then you need to streamline the onboarding process for your German workers. As an employer, it becomes your responsibility to provide all the relevant information while approving the employment contract.
However, a company chosen by you as your Employer of Record Germany helps you undertake the HR responsibilities and takes charge of making the process easier. It works on your behalf and schedule a welcome call and discuss employment details and answer the queries. It also helps by drafting a customized employment contract in both German and English language.
Collecting tax and banking information from the workers is also a part of your responsibilities which your Employer of Record Company takes care of. Besides, it also provides a local point of contact with the worker to deal with any employment-related queries. With the help of an Employer of Record, the entire onboarding process can be easily completed a couple of weeks.
Benefits of Germany Hiring Outsourcing
When you plan to take your business global, taking the first step right is important else it may affect your strategic moves. By hiring an outsourcing company, you get a fully-compliant solution that fulfills the local licensing laws. Being compliant with Data Compliance laws, it follows the laws as governed. Besides, they protect their clients and their staff details.
Establishing a branch office is crucial and complex as German labor law has robust worker protections. These require a great understanding of local best practices which is way, Employer of Record services in Germany is important. They handle HR issues, calculate payroll and taxes in compliance with local laws to avoid legal hassles. All that is done without setting up a foreign branch that is in a seamless way.
Why Infotree Global Solutions?
Are you looking for an easy, legal, and tax compliant solution to hire in Germany? Let Infotree Global Solutions assist you to manage payroll and other legal formalities quickly. Serving as one of the best Germany Employer of Record, we ensure that you remain compliant with country laws and your staff gets paid on time.
At Infotree Global, we have a team of specialists in Payroll & HR-Outsourcing who manage the payroll process for your company like you would want to do. Shed off your international payroll stress and let us take charge of it. We are experts in providing a full payroll service for any size of business and a guide on employment law.
We enable you to hire an employee without you finding out about local labor laws, without registering a subsidiary, and without encountering legal hassles. With our Germany Employer of Record services, we put your worker on our locally compliant payroll in Germany and designate the employee to work exclusively for your company. Our platform eases off you with hiring employees overseas with the least time and expenses.
Besides, we take care of expense reports, tax issues, and other legal things while setting up the employees’ local benefits. It assures you stay relaxed instead of worrying about the administrative issues.
If you need a professional employer organization in Germany, look no further and contact us for hiring and payroll services.