With a large talent pool and a strong economy, Germany is a top option for global hiring. But, like in most states, hiring across boundaries is a challenging task.
Given the technical hitches involved in establishing a legal entity, most expanding and hiring businesses look for employer of record Germany services to help solve the issue.
An employer of record service provider offers a perfect alternative to establishing a lawful entity in Germany in order to hire top talent from the country.
The local employment laws in Germany are complex and can be challenging to navigate without professional support. While experts recommend the employer of record model to overcome international employment challenges, Germany’s employer of record legislation has certain restrictions that may present unique hindrances for your business.
In this article, you’ll find the best ways to hire top talent in Germany through employer of record (EOR). It’ll also help you learn how EOR works, things to know about hiring in Germany, employee benefits and paid leaves and how you can pick the best EOR, among others. Keep reading to find out more.
Employer of Record in Germany
The EOR model is extensively used across the world, including Germany, where it is popularly known as labour leasing. Similar to traditional EORs, labour leasing firms employ top global talent on behalf of companies operating outside the country. Also, they commonly handle payroll, onboarding, employee benefits, time off management and off-boarding.
But, unlike most other European countries and jurisdictions, Germany’s employer of record equivalent comes with a period limitation of eighteen months per employee. That means, after eighteen months, a foreign company can no longer retain a certain team member via the labour leasing firm. Instead, the company must let the individuals go or hire them directly via its local business structure.
An EOR service allows businesses to access the workforce opportunities that the German market offers within a few days while it takes care of all paperwork for hiring top talent compliantly. EOR services offer a global entity network to businesses considering expansion. An EOR becomes your global workers’ employer of record, which means that it takes full responsibility for your employees’ payroll, tax contributions, and compliance with German laws and labour contracts.
The service provider completes agreements between businesses and employees. It becomes the lawful employer of your new labour force while your business remains in full control of its workers’ day-to-day activities, working relationships, responsibilities and work ethics.
How Does EOR Work in Germany
An employer of record will lawfully hire your chosen workers while you remain responsible for other responsibilities. The best EOR operates in more than 100 countries, allowing it to gain expert knowledge of local regulations and laws and recruitment trends and customs. By working closely with an employer of record, your business will gain access to this expert knowledge.
An EOR service provider will hire, onboard and manage new workers. Here are the main responsibilities:
- Hire top-notch talent complaint with labour regulations and laws in the country
- Offer the required visa or work permits
- Responsible for HR, payrolls, taxes, deductions and employment agreements
- Keep workers and your business updated on law and regulation changes and help adapt to them lawfully
Things to Know About Hiring in Germany
Before hiring in Germany, you need to know some important things, including health insurance, overtime laws, and payroll. Here are more details about these vital things.
In Germany, health insurance is mandatory. It is usually provided via the public healthcare system but, under some circumstances, through private entities. Unlike some states, dental and vision are included in the standard policies, and employees can be reimbursed for extra coverage to defray the upgraded treatments cost.
In Germany, payroll is handled on a monthly basis. It’s the most common arrangement for workers based in the country, with paychecks primarily distributed between the 25th day and the 1st day of the following month. German workers get a 13th paycheck at the end of every year as a bonus; however, this isn’t mandatory. Other crucial details to keep in your mind include the following:
- Employment agreements must be written in German
- Employers contribute to private pension funds; however, this isn’t mandatory
- Public holidays vary from one region to another
Germany has strict overtime laws in place. Much like the usual work schedule in the US, German workers work eight hours per day and up to 40 hours a week. As an employer, you’re required to offer a minimum of eleven hours of rest for your workers between two working days.
Any employee who works more than the working hours agreed – typically 40 hours a week must be compensated for the extra time. However, overtime can be waived if a worker’s compensation exceeds a given threshold.
Which Remote Hiring Option is Ideal for a Foreign Business?
The three major ways foreign businesses hire top talent in Germany include working with labour leasing companies (employer of record service providers), registering as a foreign employer and establishing an entity. So which of these options is the best? Choosing one of these options will primarily depend on your business’s unique objectives and desired outcomes.
Most businesses just look for a talented pool of workers, and as a result, they don’t want to spend more time and money on administration. If this is your case, an employer of record is a perfect option for you. An EOR is responsible for creating lawful employment agreements, employing your talent of choice and setting up payrolls.
The EOR option is quick, cost-effective and easy, giving your business the freedom to focus on more important and higher ROI tasks. If you’re planning to expand your business to Germany, be sure to partner with a reliable and trusted employer of record service provider with an excellent and proven track record.
With the best service provider, you’re sure to tap into the new market and enjoy all the benefits that a talented team of workers offer, from innovative ideas to much-needed flexibility in terms of working hours.