Labour law in Germany

Germany stands out as a beacon of employee well-being and protection, setting a positive example with its robust employment laws. In contrast to many other countries, German employment laws prioritize social, income, and labor protection, placing a significant emphasis on safeguarding the rights of workers.

This dedication to fairness and security can mean that companies and employers assume a higher level of financial and operational responsibility compared to what may be customary in their home country. By embracing these protective measures, businesses in Germany contribute to a work environment that values the welfare and rights of employees, fostering a positive and inclusive atmosphere for all.

Do you want to understand more about German labour law before expanding your business to Germany? The most important labour laws and regulations impacting working conditions and social security are summarized below.

Want to have more information on German labour law? We gathered all information about labour conditions, social security, contract types, probation/notice periods, and terminations for you. Download our Relevant Workings on German Labour Law.

Labour Conditions

Minimum wage

From 2023, the minimum hourly wage in Germany will be EUR 12. Additionally, employees working on a working permit visa (EU-Blue Card for regular professions) can only work on a labour leasing contract if they have a minimum salary of EUR 58.400,00 gross p.a. in 2023.

Sick leave

In the German system, if an employee is ill and unable to work, the employer must keep paying the salary. The employee is required to provide the employer with the

respective sick notes given by a doctor. After the 6th week of absence over a period of 6 months due to the exact same illness, the employer is no longer required to pay the salary. In this case the employee will receive financial support from the health insurance.

Paid annual leave

An employee is eligible to receive a minimum of 4 weeks of annual leave which equals to 20 days for a full-time employee with a 5-day working week. However, most employees in Germany would be granted 28 – 32 days of leave.

It is also important to note that untaken leave is void by the 31st of December. If the employee is unable to take annual leave due to business related reasons this deadline can be postponed to the 31st of March, the following year. Prolonged deadlines apply to employees on long-term sick leave and parental leave.

Also, when the employment relationship comes to an end and outstanding leave cannot be granted before, untaken leave must be paid out.

Working hours & Resting times

A full-time employee that is not on an executive level can work 8 hours a day on 6 days a week. With overtime, the daily hours can be increased to a maximum of 10. However, throughout a period of 6 months, the average daily working hours must be 8 hours.

Employees must be given at least 11 hours of resting time between two working days. When working more than 6 hours but less than 9 hours, the

employee must at least take a 30 minutes break or 45 minutes when working more than 9 hours. These can be divided into multiple 15 minutes breaks.

Health Insurance

Health insurance cover is mandatory in Germany. The choice of statutory public or private health insurance depends firstly on salary and secondly on personal preference of employee.

Both, public and private providers, are very comprehensive and cover all necessary medical treatments. Private providers generally offer better additional services (e.g. private room in hospitals). Nonetheless, many Germans stay publicly insured even when they can afford the private insurance.

Pension

Employees working in Germany will be automatically enrolled into the Statutory Pension Insurance as soon as they start working. The benefits not only include pension per se but also survivor and disability benefits. On the employee’s request, the employer must offer a supplementary pension scheme in the form of deferred compensation. Unless provided for in CBAs that apply, the employer is not obliged to offer other additional pension schemes. However, the establishment of supplementary pension schemes by the employer is common in practice and it depends on the structure of the scheme whether the pension amount is linked to the employee’s salary or to the contributions and investment return.

Unemployment Insurance

After having worked for at least 12 months in Germany, the employee is entitled to receive unemployment benefits to the amount of 60-70% of the previous average income from

the Federal Employment Agency for 6 months. The duration of payments can be longer depending on the length of service.

Nursing Care

This insurance will provide monetary compensation or subsidize the use of professional nursing services depending on the degree of care dependency.