Germany: Orrick's 101 – Employment Law In Germany – Employers' Essentials (2019 Edition)

Every player interested or already active in the German market needs to have a working knowledge of the key principles of German employment law which offers a good level of protection to employees. This is especially true for multinationals not fully familiar with the concepts of co-determination and dismissal protection, both key elements of German employment law and widespread in the EU. This 101 gives a high level overview of key practical issues employers face.

REMUNERATION – Salary can generally be freely negotiated between employer and employee except collective bargaining agreements do apply. The Minimum Wage Act (Mindestlohngesetz – MiLoG) currently provides for a statutory minimum wage of € 9.19 gross/hour increasing to € 9.35 in January 2020. It is generally binding for all employment relationships and for all employers no matter what size and sector. Only very few exceptions apply to certain employee groups (e.g. students, interns).

PAID TIME OFF – According to the Federal Vacation Act (Bundesurlaubsgesetz – BUrlG), every employee is entitled to an annual minimum of four weeks paid vacation, based on a 5-day work week (Monday to Friday), resulting in 20 days of paid vacation. In practice, however, employment contracts and collective bargaining agreements provide for a higher number of vacation days. Vacation of 25 to 30 workdays per year can be considered standard in Germany. A full vacation claim is acquired only once the employment relationship has existed for six months. Employees must take their annual vacation during the calendar year and employers must generally grant employees vacation unless there are conflicting business reasons.

WORKING TIME – Working time is regulated by several legal sources such as the Working Time Act (Arbeitszeitgesetz – ArbZG). Working time may generally not exceed eight hours per work day. Working time may be extended to up to ten hours per day without a special reason being necessary if it does not exceed eight hours per day on the average within six months or 24 weeks. Working time must be interrupted after more than six hours by a previously determined rest break (Ruhepause) of at least 30 min (45 min in case of more than nine hours work) which may be split into periods of 15 min. At the end of a work day, there must be an uninterrupted rest period (Ruhezeit) of eleven hours. Work days are days from Monday until Saturday. Work on Sundays and public holidays is generally prohibited. There is, however, an extensive statutory catalogue of exceptions (e.g., transportation, tourism, hospitals, restaurants).

HOLIDAY AND SICK PAY – In accordance with the Continuation of Remuneration Act (Entgeltfortzahlungsgesetz – EFZG), for hours not worked due to a statutory holiday, the employer must pay the remuneration the employee would have received on that day. Furthermore, should an employee be prevented from working due to sickness, the employee does not lose the claim to remuneration for a period of up to six weeks. A claim to continued remuneration in case of sickness only takes effect once the employee has been employed for four consecutive weeks.

MATERNITY PROTECTION – The Maternity Protection Act (Mutterschutzgesetz – MuSchG) protects pregnant women and mothers against work-related health hazards and termination of employment. During pregnancy and until four months after childbirth any termination of employment by the employer is principally considered invalid. Employees are prohibited from working six weeks prior to childbirth and eight weeks after childbirth.

PARENTAL LEAVE – Under the Federal Parental Allowance and Parental Leave Act (Bundeselterngeld-und Elternzeitgesetz – BEEG), both female and male employees are entitled to take parental leave up to three years while up to 24 months may be taken after the child's third birthday at the employee's request. The employer is not entitled to reject the employee's claim for parental leave, however, is not obligated to pay the employee's salary during parental leave. Employees may be entitled to parental benefits (Elterngeld). These benefits will be borne by the state alone. Employees on or who have applied for parental leave enjoy special dismissal protection. Termination of their employment is only possible for good cause and with the prior consent of a state authority.

NOTICE PERIOD – Termination of employment usually requires the employer to comply with a notice period. Only in rare circumstances, for example expense fraud or other gross misconduct, is the employer entitled to dismiss the employee with immediate effect for good cause. Employer and employee may generally freely agree on the notice period, however, there are statutory minimum notice periods that need to be observed. The German Civil Code (Bürgerliches Gesetzbuch – BGB) provides for minimum notice periods for a dismissal by the employer, depending on the duration of service. The statutory minimum notice period for a termination by the employer during the first two years of service is four weeks to the 15th or the end of a calendar month. Maximum statutory notice period is seven months to the end of a calendar month after 20 years of service. Longer notice periods can be agreed on in employment contracts or collective agreements. However, the notice period for termination by the employee may not exceed the one for termination by the employer. In many cases employment contracts just refer to the statutory minimum notice periods. During the notice period the salary and all contractual and statutory benefits must be paid.

PROBATIONARY PERIOD – Most employment contracts provide for a probationary period which may not exceed six months. During the probationary period, both parties may terminate employment by giving two weeks' notice if the contract does not provide for a longer notice period.

DISMISSAL PROTECTION – Employees may qualify for dismissal protection under the Dismissal Protection Act (Kündigungsschutzgesetz – KSchG). The Act only applies to employees who have been employed for more than six months and if more than ten employees are employed in the German operation. Under the Act, termination by the employer will be legally effective only if "socially justified". Social justification means that there is one of three statutory grounds that supports the dismissal (i.e., that there is either a conduct-related, person-related or business reason for the termination). Special dismissal protection applies to some groups of employees such as pregnant women, works council members, employees on parental leave and severely disabled employees.

FIXED-TERM EMPLOYMENT – Employment can be entered into for an indefinite or a fixed-term subject to limitations of the Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz – TzBfG). In case of a valid fixed-term arrangement, the employment relationship automatically ends at the end of the defined term and can only be terminated earlier if provided for in the employment contract. As a rule, fixed-term employment requires a justification by a reasonable ground (e.g., substitute employment during leave, increased demands due to special projects). However, the Act provides for certain exceptions for new hires: Fixed-term employment of new hires is allowed without a justification being necessary for up to two years. For newly founded companies, the two-year period is extended to four years. Fixed-term arrangements require written form in order to be valid, i.e. wet ink signature by employer and employee. Otherwise, an employment relationship with indefinite term is being established.

PART-TIME EMPLOYMENT – The Part-Time and Fixed Term Employment Act (Teilzeit- und Befristungsgesetz - TzBfG) provides for an entitlement to permanently work part-time if (i) the employer regularly employs more than 15 employees, (ii) the employee has been employed with the company for more than six months and (iii) the claim was communicated to the employer in writing three months before the reduced working time begins. The employer has to follow such a request generally, unless business reasons conflict with working part time. Since January 1, 2019, in companies with 45 or more employees, part-time employees will have the additional option to work part-time only for a specified period of time and have a right to subsequently increase their working hours to full time, subject to certain thresholds and depending on the overall number of employees in the company.

TRADE UNIONS AND EMPLOYERS' ASSOCIATIONS – Trade unions (Gewerkschaften) are associations of employees who join together in an organized union in order to represent the interests of the employees against employers and employers' associations. In Germany, trade unions are industry-specific and focus on specific areas of the economy (e.g., for the metal industry the metal workers' union IG Metall). An employers' association is an association of different companies within a certain industry in order to ensure their interests are represented against the trade unions. The main task of trade unions and employers' associations is to negotiate and conclude collective bargaining agreements (Tarifverträge). For many industries it is common practice that wages and other employment conditions are governed by collective bargaining agreements, often setting industry standards beyond their actual scope of application.

WORKS COUNCILS – Works councils (Betriebsräte, i.e., employee-representatives elected by the employees) can be elected in operations with five or more employees if the employees request so. Members are elected for four years and need not be union members. The Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) provides works councils with information, participation and co-determination rights in relation to employers' decisions on personnel, social, and operational/ economic matters. There is no legal obligation to establish a works council for either the employer or the employees. Notably, the employer does not have to take any initiative to establish a works council or call for election. On the other hand, the employer may not prevent the election of a works council as this would constitute a criminal offence.

SOCIAL SECURITY – The vast majority of employees in Germany is subject to the mandatory statutory social insurance scheme consisting of statutory pension insurance (Rentenversicherung), unemployment insurance (Arbeitslosenversicherung), health insurance (Krankenversicherung), nursing insurance (Pflegeversicherung), and accident insurance (Unfallversicherung). According to the general provisions applicable to all social security insurances, the employer is obligated to register employees in a social insurance scheme with a competent institution of statutory health insurance. The employer must report the beginning and end of employment and must give annual status reports. Contributions to social security schemes, with the exception of accident insurance, are made by the employer and the employee in equal shares.

WAGE TAX – The employer is obligated to deduct the income tax from the employee's gross salary and to pay it to the tax authorities on behalf of the employee. Nevertheless, the employee is the legal debtor of the tax.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
18 Aug 2019, Speaking Engagement, Florida, United States

ILTACON is the premier legal technology conference for professionals undertaking initiatives in support of the practice of law.

28 Aug 2019, Webinar, San Francisco, United States

This CLE webinar will analyze the potential antitrust ramifications of joint ventures (JVs) and other collaborations between competitors and how to balance the pro-competitive efficiencies against the anti-competitive effects of a proposed JV.

1 Oct 2019, Other, Washington, DC, United States

Orrick is proud to host the AIPN for its final breakfast meeting of 2019 for a session titled “Helping the World Gasify”. As natural gas production and use is very unevenly distributed throughout the world, often gas produced in association with crude oil is sold below cost or flared.

Similar Articles
Relevancy Powered by MondaqAI
Heuking Kuehn Lueer Wojtek PartGmbB
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Heuking Kuehn Lueer Wojtek PartGmbB
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions