In an increasingly global world, more and more companies are looking for qualified workers abroad. The German market offers opportunities for employers to find talent to add value to their teams. Mastering employee benefits in Germany can make it easier to attract and retain top talent.
However, because each country has unique legislation, you must make sure to offer benefits that are both compliant with German law and appealing to the German worker. It’s easy to make mistakes understanding the nuances of mandatory and expected benefits in each country where you operate. The risks and penalties involved with non-compliance in Germany can be crippling for your business.
In this article, we’ll cover German statutory benefits to which every employee is entitled. We’ll also cover additional perks and benefits you can offer to help attract German talent.
Understanding statutory and supplementary German benefits will help you maximize your chances of attracting the best Germany has to offer without risking penalties for non-compliance.
Table of contents
Who is entitled to employee benefits in Germany?
Statutory employee benefits
Leave entitlements
Common benefits to attract top talent
Soft benefits for remote workers
How to set up and manage German employee benefits
Who is entitled to employee benefits in Germany?
All full-time German employees are entitled to benefits. Employees working four days per week, 30 hours per week, or more are considered full-time. Most benefits kick in after four weeks of continuous employment.
German employment laws guarantee an array of benefits to employees. If you want to attract top talent in Germany, you need to build an employee-centric company culture with a benefits package that supports the wellbeing of your employees.
Independent contractors and self-employed workers are not considered employees under German law. However, the distinction between an employee and an independent contractor can be complicated. Consult Remote’s Guide to Hiring in Germany for more detailed information.
Germany grants generous benefits to its workers in comparison to many other countries. Here’s a list of table stakes: the benefits that you are mandated by law to offer.
Leave entitlements
German employees are entitled to at least 20 paid days off per year, based on a five-day work week, or 24 days off based on a six-day work week. On top of that, full-time workers get additional paid public holidays each year.
These holidays include:
New Year’s Day
Good Friday
Easter Monday
Labor Monday
Ascension Day
Whit-Monday
German Unity Day
Christmas Day
St. Stephen’s Day
There are also some additional regional holidays. See Remote’s Germany Country Explorer page for more details on exact dates and additional regional holidays.
Sick leave
Time off for illness is always an important benefit, but Covid-19 placed increased importance on sick leave in Germany.
Employees in Germany are entitled to six weeks of sick time at 100% of their salary. The employee must submit a doctor’s note to the employer for any absence longer than three days. If they return to work before the six week period ends but then get sick again because of the same ailment, the six-week clock continues.
Employees may be entitled to more than one six-week period per year if the leave covers separate illnesses or other specific circumstances. This is dealt with on a case-by-case basis.
Minimum wage
The minimum wage in Germany is €1614 per month, or €19,368 annually.
Overtime
Shifts are typically eight hours but should not be longer than 10 hours. The maximum workweek is 48 hours. The workweek is Monday through Saturday. Germany law typically makes it difficult for employers to ask employees to work Sundays. However, companies may usually ask workers to work Sundays provided the workers get at least 15 Sundays off per year.
There is no statutory mandate on overtime compensation. If employees work occasional overtime or on Sundays, many companies compensate them with subsequent time off.
Maternity leave and parental benefits
Parental benefits in Germany are broad.
Employees who give birth are entitled to six weeks’ paid leave before their due date and eight weeks after the birth of the child or children. With premature or multiple births, the paid leave after the birth is extended to 12 weeks.
Additionally, employees who give birth cannot be fired during the six weeks prior to their due date and up to four months after the birth.
All parents are also entitled to up to 24 months of leave within three years of the birth. The government covers the expenses for parental leave. Employees cannot be terminated during parental leave.
Benefits and protections also apply to surrogacy, adoption, and miscarriage. Germany law does offer parental benefits for LGBT families.
Caregiver benefits
German worker benefits include unpaid time off to care for close relatives. “Close relatives” are broadly defined under German law. Statutory provisions include both short-term emergency care and long-term situations. Employees cannot be terminated while using caregiver benefits.
Employees can take up to 10 days for emergency short-term care. The employee must provide notice without unreasonable delay.
Employees can also take full or partial leave for up to six months under certain circumstances to care for a close relative.
Pension plans and insurance
Public pension plans
All employees must participate in Germany’s public pension plan. Employers must contribute half of the pension rate. The pension rate is currently 18.7% of the salary. However, this rate is expected to increase to around 20% in 2025.
Health insurance
All employees must carry health insurance. The cost is 14.6% of the employees salary up to €58,050 annually. Employers must contribute half of the premium, or 7.3%. Employees earning less than €64,350 annually must be on the public health plan.
Unemployment insurance
All employees must have unemployment insurance. Employers must contribute half of the premium, which is 1.3% of the salary.
Other employer responsibilities
Employers must also provide accident insurance (0.51% of salary) and nursing care Insurance (1.7% of salary).
Common benefits in Germany to attract top candidates
The mandatory benefits listed in the previous section are non-negotiable minimums. But if you want to attract top German candidates, you can’t afford to settle for minimum statutory benefits.
The German market is competitive, and offering attractive benefits to top-level candidates will help differentiate you from other potential employers.
Competitive salaries
Top candidates don’t want minimum pay. The average gross pay in German is €70,754. As in most countries, there is wide variation across job titles and industries. Factors such as experience and education figure heavily into salary determination.
Research your field to determine competitive salaries. There is an expectation in Germany that salaries will increase for employees as they become more experienced and spend more years with your company.
Although German statutory requirements give employees generous paid time off, most companies go above and beyond the basics. It’s very common for companies to provide more than the minimum. Many companies offer up to six weeks of paid time off per year to entice and retain employees.
Yes, you can offer stock options or equity grants to your global team as part of your total compensation package. This is a great low-cost benefit that can help you attract and retain top talent and foster a sense of belonging and shared vision among your employees.
Remote's tax and legal experts can help you navigate international stock options so you do it the right way from the start.
Private pensions and supplemental retirement insurance
The pension system in Germany is a pay-as-you-go system. This means the funds workers deposit pay for people drawing on pensions right now. That also means that workers may see decreases in benefits in the future.
This model can cause stress and uncertainty for the people currently contributing. So, private and supplemental pensions are a very attractive benefit for German workers. They offer security the public pension does not.
Consider setting up a company pension or a retirement savings program for your workers to help them successfully plan for retirement.
Private and supplemental health insurance
You may offer private or supplemental insurance to employees earning more than €64,350 per year. The German public plan does offer a high level of care, but private insurance gives people access to more providers and other perks.
Basic dental care is included in the public health plan. However, you can offer supplemental dental insurance for your workers on the public plan. Supplemental insurance will give broader coverage across the board.
For workers who have private insurance, you can offer dental care as part of that coverage instead of a supplemental policy.
Soft benefits for remote workers
What if you don’t have unlimited money to throw at candidates? Can you still compete for top talent in a global environment? The answer is yes. There are many soft benefits that appeal to remote workers and don’t have sizable up-front costs to your company.
A traditional 9-to-5 schedule isn’t right for everybody. Where possible, allow your remote team to structure their workweek on their own terms. This gives employees the flexibility to manage family schedules and meals in the ways that work best for them. If your worker is a night owl, for instance, they can work late into the evening if they prefer.
Wellness benefits
Good health is top of mind for many these days. As an employer, you can offer benefits to attract talent and keep your team healthy.
Gym memberships have been a traditional wellness benefit. However, lockdowns across the globe have seen an increase in at-home benefits like fitness equipment and virtual group classes. An at-home spin bike combined with a virtual class membership could give your remote workers a great way to stay in shape and stay connected.
Food and drinks
In a traditional office, many companies supply food and beverages for their employees. Remote workers may see a rise in their grocery bill once they start working from home. Consider replacing the employee lunch room with at-home equivalents for your remote German workers.
For food, you could support healthy eating habits with subscription meal boxes. Alternatively, “take” your team out to lunch with reimbursements for local takeaway meals.
Home office
Your remote workforce is already saving you a lot of overhead on office space. Make sure they have what they need. Not only does this contribute to employee satisfaction and high productivity, but it can also help you attract top talent.
You could start with the basics like office supplies, or you could go bigger. Some attractive remote-first benefits include the phones, tablets, laptops, monitors, and ergonomic office furniture.
To avoid government taxation on these benefits, it’s best to provide equipment to German employees directly or to fund through an expense reimbursement system.
How to set up and manage German benefits
When you’re working with a geographically diverse workforce, you have a lot of details to manage. But no smart business owner wants to waste time sweating the details. You need an efficient but reliable way to manage your German benefits.
A global employment solution like Remote can help. With Remote, you can offer a host of great benefits for your German employees legally and easily.
The easy way to minimize risk and stay compliant
Germany’s employment law is not codified in a single law. Instead, statutory requirements are scattered throughout many different laws and ordinances. This can make it difficult to remain in compliance as a foreign employer. The difficulties are compounded if you employ team members from more than one other country.
Contact Remote today to learn more about our payroll, benefits, taxes, and compliance solutions for your employees in Germany.
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