Germany remains one of the most attractive countries for finding and hiring talent for our US clients as it has one of the strongest economies in the world and its central spot in West-Europe. Every country in Europe is different when it comes to hiring employees. Things to keep in mind are for example the culture and the labor laws. In this article, you will find a brief summary on hiring in Germany. Topics that will be covered include employment contracts, compensation for a sales representative and payroll in Germany.
Employment in Germany
“Employment at will” is not an option in Germany, as it is not an option in Europe in general. German notice periods can be long (up to 6 months in management positions), this is an important aspect to keep in mind when hiring someone in Germany. In general, employment law in Germany is quite employer friendly.
What employment contracts are common in Germany? In Germany, you can offer your employee a fixed term or unlimited employment contract. A fixed term contract has a specific end date on which the service from your employee will end. More information about the legal specifics on fixed-term contracts in the EU can be found here. When creating a contract for one of your German employees, we always advise to have the contract drafted in German in order to avoid any legal risks coming from its eventual misinterpretation.
What benefits are common in Germany? The mandatory minimum days of vacation in Germany is 20 (based on a five-day working week), but our is experience that everyone expects at least 25. Another important item for German employees is their car. In most jobs, when it is relevant, the employee receives a lease car or a contribution from the employer so they can cover the costs of getting a car themselves.
Salary and compensation in Germany
What is a suitable salary and compensation for a sales representative in Germany? In Germany, just like in most countries, salaries differ based on years of experience and the responsibilities that come with the job. In the table below you can find a small comparison on the average salaries of a sales representative in Germany, the Netherlands and Italy. To learn more about the costs of hiring in Europe, please read our blog here.
Annual Salary Range
|€29,000 - €56,000||€25,000 - €49,000||€23,000 - €45,000|
|Average Annual Salary||€39,399||€33,426||€30,746|
|Average Income Tax||29,5%||38,10%||32%|
Payroll in Germany
Both employers and employees need to make regular contributions to the social security system mainly with regards to pension, statutory health insurance, unemployment benefit and long-term care insurance. The percentage of contributions is split equally between the employer and the employee. In total, the employer's share of social insurance contributions amounts to approximately 21% of the employee's gross wage. The highest contribution is for pension with 18.6% from the gross salary in total, followed by the health insurance contribution with 14,6%. For tax purposes, it is mandatory that the employee is registered within their local German tax office.
Please note that the German Tax Authorities will not accept direct payments from a foreign bank account. All other additional expenses need to be processed through monthly payroll too (car allowance, reimbursement for meals and travel etc.) and you also need to make sure the right taxes are paid.
Perhaps the first things that pops to mind are the cliché German characteristics like directness, arrogance or lots of red tape. But, this is not our experience at all. In fact, Germany’s business world is far more appealing than that. Don’t worry if some German business people seem slightly aloof, correct and rather blunt at the same time. Hierarchy, directness, and a certain measure of separation between work and private life are essential values in German business culture.
Germans generally have very good work ethic and a professional attitude. They are often very thorough, detail-oriented, and keen on producing good results and value good education and diplomas. Another German quality is formality. The German word ‘pünktlich’ summarizes this very well and means something like precise/on time/punctual.
Other words that fit the German culture are fairness and loyalty. They will be honest about, for example, a job offer and usually mean exactly what they say. This can come across as perhaps rude or blunt, but is not meant that way at all. All in all, you can rely on the German tendency to be interested in long-term relationships. Once they have made a commitment, they will try to develop a mutually beneficial relationship based on trust.
EuroDev, established in 1996 with offices in The Netherlands, has a single, defined purpose to help mid-sized North American companies expand their business in Europe. We have created a proven, successful business development model and since our founding, have partnered with over 300 companies to help them define and meet their European business goals. Services provided include Sales Outsourcing, HR Outsourcing and Digital Marketing.