Crucial Labor Laws in Germany to Know When Hiring Abroad

One of the more daunting hurdles to overcome when hiring abroad is familiarizing yourself with the laws, customs, and language of your target country. If you're looking to hire in Germany, you should know some of the basics when it comes to its labor practices. German labor law values employee protections, making it an ideal place to work in terms of benefits, holidays, and more. Companies, both domestic and abroad, must adhere to these laws when hiring talent.

They say ignorance of the law is not a defense; and truer words have hardly been spoken.

Don't let the long names intimidate you. After all, we got the longest one out of the way earlier. Most of these laws provide basic employee protections, but with key stipulations and conditions attached to them. Let's review some of the most significant labor laws in Germany you should be aware of while seeking talent abroad.

General Equal Treatment Act - Allgemeines Gleichbehandlungsgesetz

Germany's General Equal Treatment Act is an extension of human rights protection laws in the European Union that prevents employers from discriminating against employees. According to the German Federal Anti-Discrimination Agency, the reasoning is simple, "not everyone in Germany has the same opportunities. Hence, the General Equal Treatment Act’s objective is to prevent and eliminate discrimination. The protection offered by the Act extends to unequal treatment on a number of grounds, known as 'multiple discrimination.'"

This includes:

Race
Ethnicity
Sex
Religion/belief
Age
Sexual orientation
Disability
Pregnancy and motherhood

Maternity Protection Act - Mutterschutzgesetz

In Germany, maternity leave lasts a minimum of six weeks before (unless the mother explicitly states they are willing to shorten it) and at least eight weeks after birth on full pay. The crucial part of this is that in the 8 weeks post-birth, the mother is absolutely forbidden to work, while there is more leniency in the weeks leading up to the birth.

Companies are not allowed to terminate an employee in the duration of their pregnancy and for up to 4 months post-birth, except in extreme circumstances. The employee, however, is still free to quit during this time.

In addition there is parental leave of up to 24 months (taken by one parent) or 28 weeks (if the parents split it).

Part-Time & Fixed-Term Work Act - Teilzeit- und Befristungsgesetz (TzBfG)

This law establishes ground rules and clearly defines part-time and contract employees to protect them from discrimination when compared to full-time workers. Fixed-term contracts are very popular among companies in Germany because since the contract has an expiration date, the employee is not entitled to severance compensation. Additionally, fixed-term contracts allow a company to test out employees before offering them full-time employment.

The TzBfG also states that employers must allow employees to reduce their working hours and work part-time permanently under certain conditions. These include:

The employee must have been employed at the company for at least six months
The company employs more than 15 people
There is a three-month notice of the change from the employee, in writing

Only in very particular circumstances can the employer refuse to comply. In addition, companies that have more than 45 employees are compelled to allow part-time employees to increase their working hours to full-time upon request.

Employee Leasing Act - Arbeitnehmerüberlassungsgesetz

Employee leasing, in a nutshell, is very similar to third-party staffing agencies. It allows companies to take on talent but without hiring them directly or making them an official employee. The agency is always responsible for tax deductions, social contributions, etc. because the worker is technically employed by the agency and being leased out to the company for temporary work.

Federal Act on Holidays (Vacation) - Bundesurlaubsgesetz

This law outlines the amount of paid time off (PTO) that each type of employee is entitled to. According to the law, all German workers are entitled to an annual minimum of 20 PTO days if they work a standard, five-day week (Monday-Friday). However, keep in mind that this is the minimum legal requirement. In practice, employers often offer more vacation days to attract higher quality talent. Keeping this in mind, 25-30 PTO days may be considered standard.

Employees are only able to acquire their vacation days after being consistently employed with the company for six months. If an employee is terminated before this six-month period, they are entitled to the equivalent of one month of vacation time, per month of their employment duration. If they are terminated after this six-month grace period, they are entitled to the full annual PTO.

Businesses are also compelled to grant all PTO requests unless there are other valid business reasons to deny them. For instance, an employee is not allowed to take their annual vacation, change jobs, then take another annual vacation within the same year.

Minimum Wage - Mindestlohngesetz

As of October 1, 2022, the German minimum wage is 12 Euro per hour, pre-tax. This is the federal minimum wage, meaning it applies to all German workers. However, there are exceptions for traineeships, internships that last up to three months, volunteers, vocational training, and more.

Hours of Work Act - Arbeitszeitgesetz

They say you should work smarter, not harder. Well, in Germany, people tend to do both, which is why they have a shorter-than-average work week at 34.2 hours worked per week.

The Arbeitszeitgesetz dictates that the average workday is around eight hours, with no work allowed on Sundays. With expressed governmental approval, some employees may be permitted to work 10 hours in a day, although the average day may not exceed eight hours over the course of six months.

While many people work Monday-Friday, Germany actually defines a standard work week as Monday-Saturday. Working a six-day work week, employees may not work for more than 48 hours per week. Additionally, there are legally protected breaks. Workers cannot work for more than six hours at a time without a 30-minute break, or two 15-minute breaks.

Federal Holidays in Germany

German workers are also entitled to time off during federal holidays. While these are subject to change at any given time, and are dependent on regional differences, here is a quick list of common federal holidays:

New Year's Day (Neujahr)
Good Friday (Karfreitag)
Easter Monday (Ostermontag)
Labour Day (Maifeiertag)
Ascension Day (Christi Himmelfahrt)
Whit Monday (Pfingstmontag)
National Holiday (Tag der Deutschen Einheit)
Christmas Eve (Heiliger Abend)
Christmas Day (1. Weihnachtstag)
Boxing Day (2. Weihnachtstag)
New Year's Eve (Silvester)

Protection Against Dismissal Act - Kündigungsschutzgesetz

The circumstances around terminating employees in Germany tend to be quite strict and termination in general is a big deal.

The Kündigungsschutzgesetz protects employees from being terminated if they have been with the company for over six months. Beyond that milestone, companies can only terminate an employee if: