UK to Germany: A Legal Guide to Hiring & Employment Compliance

Wage Structure: 

Similar to the UK, the statutory minimum wage in Germany is updated regularly and must be complied with. More importantly depending on the industry, a collective agreement may set industry specific wage requirements so it’s important to know about/check whether this applies to your business. 

Social Security Contributions, Retirement and Pension: 

Employers and employees in Germany must contribute to health insurance, pension, unemployment insurance, and long-term care, adding up to 20%+ on top of gross salary. Hiring in Germany comes with built-in cost considerations.

The statutory retirement age is 67 and early termination on age grounds is generally not permitted. 

Bonuses and Benefits: 

Like in the UK, there can be agreed benefits such as company cars, meal vouchers or others, which are generally taxable. 

Variable pay, including any bonuses and commissions, must be clearly defined in the contract – or it could become a contractual entitlement by default.

German employees are legally entitled to several benefits. Beyond that, certain benefits are commonly expected and culturally important. 

Working Time: 

Working hours must clearly be stated in the contract. Overtime must generally be compensated through additional pay or time off. Sundays and public holiday work is strictly regulated and only allowed in essential industries. As in the UK, employees have a legal right to request part time work and refusals must be objectively justified.

Remote Work: 

Unlike in the UK, there is no statutory right to request flexible working but works councils and employees can negotiate binding agreements that can provide for this. Cross-border remote work must be carefully assessed, as employees may become subject to foreign tax laws.

Annual Leave: 

German employees expect generous vacation (20 days is the legal minimum, 25-30 days is not unusual). 

Sick Leave:

In Germany, sick pay for the first 6 weeks is fully covered by the employer. Afterwards it’s covered by the health insurance through social security. 

Parental Leave: 

Parental leave is also strongly protected. It includes 3 years of (unpaid) job protection. 

Equal Treatment: 

German employment law includes comprehensive anti-discrimination protections (AGG). Like in the UK, discrimination based on race, gender, age, disability, religion, sexual orientation, or belief is strictly prohibited and claims can be filed even during recruitment.
Employers must also ensure a harassment-free workplace. Failing to investigate or intervene can lead to legal liability and reputational damage. Compared to the UK, the German system places greater formal obligations on employers to justify any unequal treatment with objective, legally valid reasons and to document decisions carefully (especially in hiring, promotions and dismissals).

Germany applies EU GDPR strictly, especially when it comes to employee monitoring and automated decision-making. You need clear internal documentation on how you store, use, and transfer employee data. Monitoring (e.g., email or device usage) requires legal justification and sometimes consent. Hiring tools using AI or algorithms must be reviewed to ensure they do not introduce bias or discrimination. 

Dismissal Protection: 

Germany’s dismissal protections kick in once your local workforce exceeds 10 employees. Even before that, terminations are strictly governed. 

Dismissal requires justification based on social selection, performance or conduct and may also require a pre-warning (Abmahnung) or works council involvement. For specially protected groups like pregnant employees, disabled workers or works council members, the threshold is even higher.  

Unlike the UK, where unfair dismissal protection starts after 2 years, in Germany, employees are protected after the initial probation period (max. 6 months). Notice periods range from 4 weeks to 7 months depending on tenure and can be even longer with executives. During the probation period, notice is only 2 weeks. 

Form requirements: 

Employment contracts must clearly outline all essential terms. Employers are legally required (Nachweisgesetz) to issue a written summary of key employment terms like salary, working hours, place of work, job description, duration of probationary period, notice period, – and update these if anything changes. 

Contracts can be signed digitally but termination agreements require a wet-ink signature to be enforceable. 
And don’t forget: on exit, German employees have a statutory right to a written reference which must be accurate and fair in content. 

Even in small German operations, collective rights are stronger than in the UK: Starting at 5 employees, staff can elect a works council. And if they do, expect co-determination rights on working hours, tech changes, hiring/firing policies and mandatory consultation.

Trade Unions in Germany also have structural influence. They shape the legal framework of employment through sector-wide collective agreements (Tarifverträge). Unions can define mandatory conditions on salaries and bonuses, leave entitlements, termination rules and working hours. These agreements may apply automatically and can override individual employment contracts.

If you acquire a German entity, all employment contracts and all German employment rights transfer automatically.

This covers individual agreements and you cannot unilaterally change salary, tenure, benefits or pension commitments. Collective agreements also remain binding and the German work councils retain strong co-determination rights. 

Fixed Term Limitations: 

Fixed Term Contracts are heavily restricted: They can’t exceed 2 years (without justification) and can only be extended 3x. Like in the UK, indefinite contracts are the default.

Freelancer and Gig Work: 

Freelancers can be useful but be careful if you plan to use them in Germany: misclassifying workers as self-employed (Scheinselbstständigkeit) can be costly. German law looks at control, exclusivity and integration into your business to determine true employment status.

If a contractor is treated as an employee, you may owe back social security contributions, employment benefits and fines and penalties for misclassification.

Temporary Agency Work: 

Temporary Agency workers can’t be engaged permanently. Assignments are typically capped at 18 months and after 9 months equal pay applies. High fines apply for non-compliance.

Secondary Employment: 

German law allows the employer to prohibit competing side jobs but employers generally can’t prevent unrelated secondary employment outside working hours. However, employees must disclose and obtain approval for secondary employment if it could interfere with their primary job.