Employment contracts in Germany: What you need to know

When you finally get the job offer you've been waiting for, it's a big deal. However, despite all the euphoria, it is important not to forget to read the employment contract thoroughly and of course to understand it before signing it. 

Germany has a very strict legal framework for employment contracts. These laws are also applicable if no specific terms have been agreed upon in the employment contract itself or if the terms agreed upon do not comply with the legal framework. 

Things that should not be missing in your employment contract

• Full name and address of you and your future employer

• Your starting date and the end date of your employment contract (in the case of a temporary employment)

• The length of probationary period 

• A description of your tasks and responsibilities

• Definition of your workplace and working hours

• Your salary and any benefits that you agreed upon

• Your leave entitlement (monthly or yearly) - if nothing is noted here, you have your statutory vacation entitlement in any case

• Where applicable, references to applicable tariff standards or other agreements

10 things you should know before signing an employment contract in Germany

Probationary period

In Germany, employment contracts usually include a probationary period of 6 months. During the probationary period, the employment contract can be terminated with two weeks' notice by both parties and without the need to provide any kind of explanation.

Temporary employment

A temporary employment contract contains a specific end date and usually ends automatically. This means that neither you nor the employer must terminate it in order to end the contract. Of course, a continuation of the employment with a follow-up contract is still possible. 

Working hours and compensation of extra work

The usual weekly working time in a full-time position is a 5-day week with 40 hours, sometimes even less. A maximum of 8 hours of work per day is permitted by law in Germany. Of course, these times are not always adhered to and special regulations apply to some occupational groups (e.g. doctors, managers). Many employment contracts in Germany contain a general clause stating that overtime and extra work are fully compensated with the salary, although this is not legally valid. In practice, actual compliance with these regulations and real working hours vary greatly depending on the work environment and the size of the company.

Your salary

The salary in an employment contract is usually stated as gross salary. This means that the employee's share of income tax and social security contributions is automatically deducted from this amount before the payment is made. Salaries are usually paid out monthly in the middle or at the end of the month.  

Make sure that your employment contract not only includes the agreed starting salary, but also any agreed increase after the end of the probationary period. Same goes for variable salary components or other benefits such as ESOPs, mobility allowances and relocation packages.

Learn more about salary negotiation here and on our YouTube channel.

Leave entitlement

With a 5-day week, you are legally entitled to at least 20 days of paid vacation per year. However, many employers also grant more leave days. Your salary will continue to be paid during your time off. If your employment contract started at a later point in the year, you can calculate one twelfth of your annual leave for each month of employment.

Absence due to illness

If you cannot come to work because you’re ill, you’re obliged to inform your employer as soon as possible. Most employers will require a medical certificate by a doctor attesting your inability to work latest from day three of your absence. In most of the cases, you can get 100% of your salary from your employer for up to 6 weeks. After the 6-week sick leave, you will get benefits from your German health insurance.

Notice period for employees

If not stated otherwise in your employment contract, you can generally terminate your employment after the end of the probationary period with only four weeks' notice to the fifteenth or end of a month - regardless of how long you have been employed there. Many employment contracts also stipulate longer notice periods, e.g. three months. This is also permitted by law. But watch out: Different periods of notice apply during the probationary period. In both cases, you must give notice in writing. 

Notice period for employers

Employers must adhere to different notice periods than employees and can only terminate employee contracts for specific reasons. The longer you work for a company, the longer the notice period. Beware: These regulations only apply if you have already been working for an employer for more than 6 months. Some persons also enjoy special protection against dismissal, e.g. pregnant women, employees on parental leave, severely disabled persons or members of the works council. 

Contract changes

Did you renegotiate your salary or do you have other changes coming up, such as a promotion, a change in working hours, or a change in your work location? No worries, if both the employee and the employer agree to the changes, the employment contract can still be changed at any point of time. It is best to record these changes in writing with reference to the current employment contract. 

Sources: 

https://www.staufenbiel.de/magazin/arbeitsrecht/kuendigung/kuendingungsschutz.html 

https://www.finanztip.de/arbeitszeitgesetz/ 

https://www.lexoffice.de/lohn/wissen/lohnfortzahlung/ 

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Important note: Our HalloGermany articles are written with utmost care to explain careers and paperwork in Germany. However, please note that the content presented here does neither constitute nor replace any form of legal advice. We highly recommend consulting a lawyer for any legal concerns you may have.