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Germany 2022
Day Date Holiday Notes
Saturday Jan-1 New Year's Day
Friday Apr-15 Good Friday
Monday Apr-18 Easter Monday
Sunday May-1 Labor Day
Thursday May-26 Feast of the Ascension of Jesus Christ
Monday Jun-6 Pentecost Monday
Monday Oct-3 Germany Unity Day
Sunday Dec-25 First Day of Christmastide
Monday Dec-26 Second Day of Christmastide
Countrypedia

Germany
Payroll and Benefits Guide

Last updated: Dec 29, 2021
Currency
Euro (EUR)
Payroll Frequency
Monthly
Employer Taxes
20.645%

Papaya Offers Complete Payroll, PEO and Contractor Management Services For Germany

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Overview

Capital
Berlin
Currency
Euro (EUR)
Date Format
dd/mm/yyyy
Fiscal Year
1 January- 31 December

COVID-19

Additional statutory health insurance increases to 1.3%.

Contributions

Employer

Employer Payroll Contributions

7.90% 

Health insurance (KV)

0.60%

TK-specific supplementary contribution rate

9.30%

Pension Insurance (RV)

1.20%

Unemployment Insurance (AV)  

1.525%

Long-term care insurance (PV) **

0.12%

Insolvency Charge * (effective once the employee reaches 23 years of age and is increased to 1.775% for employees with no children)

20.645% Total Employment Cost

Employee

Employee Payroll Contributions

7.90% 

Health insurance (KV)

0.6%

TK-specific supplementary contribution rate

9.30%

Pension Insurance (RV)

1.20%

Unemployment Insurance (AV)  

1.525%

Long-term care insurance (PV) **

0% to 9%

Church Tax (when registering in Germany, declaration of region is requested, should this be Protestant, Catholic or Jewish there is a liability to pay the church tax, which the tax office collects on behalf of religious organizations in Germany. It is currently 8% in Bavaria and Baden-Württemberg and 9% in all other federal states. If there is no declared religion, there is no church tax to pay).

22.05% - 31.05% Total Employee Cost

Employee Income Tax

Single Persons Tax rate
0.00%

Up to 9,984 EUR

14.00%

9,985 EUR to 58,596 EUR

42.00%

58,597 EUR to 277,825 EUR

45.00%

277,826 EUR and over

Employee Payroll Contributions

Married Persons Tax rate
0.00%

up to 19,968 EUR

14.00%

from 19,968 EUR to 115,836 EUR

42.00%

from 115,836 EUR to 549,226 EUR

45.00%

more than 549,226 EUR

** in Saxony: 1.025 %

Employee

Employee Income Tax

Married Persons Tax rate
0.00%

up to 19,488 EUR

14.00%

from 19,488 EUR to 115,836 EUR

42.00%

from 115,836 EUR to 549,224 EUR

42.00%

more than 549,224 EUR

Payroll

Payroll Cycle

In Germany the payroll frequency is monthly and paid typically on or around 25th of the month.

13th Salary

13th-month salary payments are customary in Germany and are paid on the December pay date.

Working Hours

General

The standard working week in Germany can be no longer than 48 hours per week, 8 hours per day.

This can be extended to 10 hours per day if, within six months or 24 weeks, the overall average working time does not exceed eight hours per day.

Overtime

Overtime work must conform to the maximum working hours stipulated within the employee contract/collective agreement etc.

There are two common types of overtime; Mehrarbeit, which refers to working time that exceeds the maximum limit of 48 hours per week (8 hours per day across a 6-day working week), as set out in the Working Hours Act. This may be extended up to 10 hours per day if the employee’s total working hours average at 8 hours per day over six months.

The second, Überstunden, which is defined as any hours worked on top of one’s contractually agreed hours, is legally permissible and must normally be compensated.

Working Week

Monday–Saturday

Leave

Paid Time Off

The statutory minimum entitlement of annual leave is 24 working days per year set by the Bundesurlaubsgesetz – the Federal Holidays Act.   Many Collective agreements increase this entitlement to 30 working days, and employees that work in dangerous or high-risk environments are often entitled to additional leave.

Public Holidays

German holidays differ based on the state. However, there are 9 national holidays that all states follow.

Sick Days

Eligible employees (those who have been employed for four weeks before starting sick leave) are entitled to sick pay of 100.00% of the regular income for up to six weeks (Entgeltfortzahlung bei Krankheit oder Kur).  After six weeks, the health insurance fund (Krankengeld) pays between 70.00% and 90.00% of the regular salary, based on the insured employee’s fund level, for up to 78 weeks in three years for incapacity caused by the same illness, calculated from the first day of sickness.

The employee must inform the employer of their incapacity for work and the anticipated duration of the incapacity as soon as possible. If an illness lasts longer than three days, an employee must submit a doctor’s certificate no later than the following working day.

Maternity Leave

A pregnant employee is entitled to 14 weeks of paid maternity leave (Mutterschutzgesetz – MuSchG), which can increase to 18 weeks with complicated/multiple births.

Maternity leave consists of two periods; Prenatal leave, which requires the employee to take a minimum of 6 weeks before the expected due date, and Postnatal leave, which requires an employee to take the remaining eight weeks of leave which starts from the date of the birth of the child.

The public health insurance fund pays the maternity payment. The payment is equivalent to the average sum of the net wages for the three months before the pregnancy paid by the employee’s public health insurance (or the state in the case of private health insured employees, maximum 210 EUR) and the employer.  The public health insurance pays the maternity benefit (Mutterschaftsgeld) only up to a maximum of 13 EUR a day. If the daily net wage of the last three months is higher, the employer must pay a grant (Zuschuss Zum Mutterschaftsgeld) for the difference.

Paternity Leave

Paternity leave falls under the parental leave.

Parental Leave

New parents are legally entitled to unpaid parental leave (Elternzeit) and must request the leave in writing at least seven weeks before the start date.

Parental leave is 36 months (including the eight weeks of postnatal leave) and can be shared between the parents. However, the parents must take at least 12 months of parental leave within the first three years; the remainder, with permission from the employer, can be used at any point between the child’s second and seventh birthday. Parents can also choose to work part-time up to 30 hours per week with prior permission from the employer during parental leave.

Other Leave

Depending on the collective agreement, employees may be allowed additional leave types once approved between the employer and employee, including Family care time (Pflegezeitgesetz). Family Care time entitles an employee to up to 10 days unpaid leave to assist a seriously ill family member or family emergency.

Termination

Termination Process

The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. After the first six months of employment, employees are protected by the German Termination Protection Act.

Notice Period

In general, notice periods in Germany are four weeks but are stipulated within the employment contract/collective agreement and are linked to the employee’s length of service as below:

less than 2 years’ service                          1 month notice

Between 2 & 5 years                                  2 months’ notice

Between 5 & 8 years                                   3 months’ notice

Between 8 & 10 years                                 4 months’ notice

Between 10 & 12 years                               5 months’ notice

Between 12 & 15 years                               6 months’ notice

More than 15 years                                     7 months’ notice

Severance Pay

Severance pay is only applicable when an employer terminates an employment agreement without notice; in this case, the severance pay would be for the same amount the employee would earn if given notice.

Should the reason for termination be caused by company operational changes, the employer must give severance payment, generally being two weeks regular salary payment for each year of service.

Probation Period

Probation or Trial periods are generally set within the collective agreements. However, a common practice in Germany is up to 6 months.

VISA

VISA

A long-term (national) German visa type D is required to work in Germany as it allows a foreigner to stay in the country for more than three months. In 2020 the German legislation changed in respect of the required minimum level of skills of the applicant; this is now diploma level, together with being competent with the use of the German language.

The different types of Visas are as follows:

  • EU Blue Card allows an employee to work in all European countries. To be granted an EU Blue Card, the applicant must have graduated from a university, have an employment contract with the employing company, and a lower salary threshold than 39,600 EUR (for IT specialists, mathematicians, and representatives of the engineering field) and 50,800 EUR for other applicants.
  • Permanent residence for valuable personnel. The condition applies to scientists known for their work, researchers, professors.
  • Permission for highly qualified specialists. Obtaining a work visa to Germany is possible if you have the appropriate skills and a salary of 86,400 EUR annually.
  • General employment. The most demanded type of German work permit. There are no strict requirements for education and specialty. Also, the profession must be in demand at the time of the request. To apply for a visa, you must confirm your qualifications and have an employment contract on hand.
  • For job search. As an option – obtaining a work visa to Germany for future employment. If approved, a person can stay in the country for six months, after which it is necessary to re-register or obtain a residence permit.

 

VAT

General

The standard VAT rate in Germany is 19.00%.

 

 

For details regarding hiring in Germany without a local registered entity see our German PEO service

Version History

February 28, 2022
The national minimum wage increased to 9.82 EUR on 1 Jan. 2022 and will increase to 10.45 EUR on 1 July 2022.
Payroll contributions and personal income tax rates have been updated.
December 29, 2021
Minimum wage rises to €9.82
July 1, 2021
Minimum wage increases to 9.60 EUR per hour
January 1, 2021
Additional statutory health insurance increases to 1.3%.
Stay up to date on payroll & employment law changes

Questions & Answers

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Robyn W.
Robyn W.
1 year ago

Is it mandatory to provide employees with private health insurance?

Klaus Lutz
Klaus Lutz
1 year ago

What are the rules on vacation carry over? 

Emily Kuhnert
Admin
1 year ago
Reply to  Klaus Lutz

Leave in Germany is supposed to be continuous unless the leave would interfere with the employer’s urgent operations.
In this case, leave can be split up, with one vacation being at least 12 consecutive days. In general, leave must be taken within the same calendar year that it is accrued, however, if operations of the company or personal reasons of the employee prevent the leave being taken, leave can be carried over to the next year but must be used within the first 3 months.

Leon
Leon
1 year ago

If my employee and I agree to terminate an employment contract early, it is necessary to put the termination date in writing?

Admin
1 year ago
Reply to  Leon

A contract can be ended early if both parties agree. However, it is highly recommended that you draw up a new contract with the agreed terms signed by both parties so that there are no grounds for legal action later in case the employee misunderstood the full ramifications.

Valentin Guadarrama
Valentin Guadarrama
1 year ago

What is the so called “Direct insurance” in Germany?

Melisa
Melisa
4 months ago
Reply to  Erez Greenberg

Does an employer need to have a legal entity in order to take over an employee’s insurance
scheme?

Melisa
Melisa
4 months ago
Reply to  Erez Greenberg

Hi Erez – A private health insurance and private pension scheme. I would assume yes an entity needs to be established but couldn’t find anything online to confirm that.

Hernan Chiosso
Hernan Chiosso
1 year ago

Are there any restrictions regarding the duration of third party employment through a PEO? I heard somewhere that one could only use a PEO for a maximum of 18 months

Hernan Chiosso
Hernan Chiosso
1 year ago
Reply to  Erez Greenberg

Thanks, and what happens if you change the PEO after 18 months? Is that a possibility? Or would the company need to establish business in Germany?

Alja Cokan
Alja Cokan
10 months ago
Reply to  Erez Greenberg

Which other countries have the (18-month) duration limit for the PEO?

Emily Kuhnert
Admin
10 months ago
Reply to  Alja Cokan

Hi Alja, thank you for your question. Croatia has a 3-year limit, however, the contract may be renewed for an additional 3 years so long as the worker’s job title and scope of work is significantly different.

Daniela Mercado
Daniela Mercado
8 months ago

Hi– is there a cap on the employer contributions when an employee reaches a certain income?

Abigail Aldouri
Abigail Aldouri
6 months ago

Hi how is part time holiday allowance managed? If someone is working 32 hours per week across 5 days. Would the allowance be the same as a full time worker (31 days) as they will be working 5 days, or does it need to be pro-rated on an hourly rate? Also do we need to pro-rata the bank holidays also?

Aarav Singh
Aarav Singh
5 months ago

Is there a limit how long a employee in Germany can be hire for

Tessa J.
Tessa J.
3 months ago

What are Germany’s final pay (voluntary and involuntary) & PILON laws?

Michael
Michael
17 days ago

HI is there any additional payment if an employee works on Holidays / Sundays ?

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