Employing in Germany

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Enter the German market without the requirement of opening a local entity.

Expanding into
Germany

Expanding into Germany – which is characterised by a highly-skilled and efficient international workforce, intricate employment and tax laws, and a first-class communications and transport infrastructure network linking the country to the rest of Europe and boasting the title of Europe’s No. 1 logistics market – can bring excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigid legal structures and laws. Ensuring compliance without sufficient knowledge of the country’s laws also adds stress to getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

The legwork and potential red tape can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework.

It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

Country EOR Guide - Bradford Jacobs

Download our Guide to Germany

Learn all about expanding into Germany and see what we can do to make your expansion easier.

Download our Guide to Germany

Learn all about expanding into Germany and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs

Hiring Staff
in Germany

Hiring Staff
in Germany

The Main Sectors of the German Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

This sector drives the nation’s reputation as in high-tech innovations, like robotics. The country has a strong engineering tradition and takes the lead in modern manufacturing solutions. The sector currently employs more than 6,400 people and generates approximately 498 billion euros per year.

The Germans lead in both production and sales in the European automotive industry. There is also considerable investment in this sector for both the qualifications of the workforce and improvements in infrastructure. In the case of aviation, it is on a constant rise, with projections of Germany producing approximately 35,000 new aircrafts within the next 20 years.

A competitive advantage for this sector is its combination of the available talent pool, the country’s powerful manufacturing base, and cost efficiency.

This industry in Germany also takes the lead in Europe in terms of sales within Europe and exports to other continents, with medical equipment and pharmaceutical good among the top exports.

The country benefits from a well-developed chemical research and development infrastructure, with the education system producing quality graduates that are ready to work and provides a fertile and ready market for investors.

In 2021, this sector is estimated to bring in an estimated revenue of the industry in 176.3 billion euros and currently employs over 450,000 people. The country also invests billions into research and development.

Germany is Europe’s largest consumer goods producer and market in terms of population and purchasing power. The country also has the vantage position to access both Western and Eastern European consumer markets. The leading consumer industries include food and beverage, textiles, garments, shoes, office supplies, computers, telecommunication equipment, furniture, tourism, and home improvements.

Food and beverages are the largest consumer industry in Germany, with textiles, garments, and shoes being the second largest. Germany also ranks fourth globally in the export of clothes and textile products. Germany’s tourism industry, which is based on both domestic and international tourism, also generates over 90 billion euros in revenue.

The continue growth of this industry is due to flexible retailers with both online and offline systems, as well as the increasing tech-savvy customers. Most retailers have a ROPO (Research Online and Purchase Offline) effect, which bodes well with local consumers.

Germany is a leader in the production of green energy and environmental technologies. The country has investments in offshore wind energy, solar panels, bioenergy, photovoltaics, energy grids, electric vehicles, charging infrastructure, and energy storage projects.

The country also provides incentives, infrastructure, and a good environment for photovoltaic investments and energy storage. The industry recorded 121.7 thousand jobs in 2019.

Germany has the fifth-largest electrical and electronic industry in the world, receiving a revenue of 162.1 billion euros in 2020. This industry develops a variety of products, such as home appliances, nanotechnology equipment, commercial lighting, automation systems, and luminaries (among other products).

This industry employs about 29% of all Research and Development employees in Germany and accounts for over 12,000 new patents annually.

For ICT, the country enjoys the largest market of its kind in Europe. Most ICT firms and startups are products of Mittelstands (family-owned, small to medium-sized companies). Young people are spearheading the ICT sector, offering solutions to save industries money as well as offer government solutions for service delivery.

The Main Sectors of the German Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

This sector drives the nation’s reputation as in high-tech innovations, like robotics. The country has a strong engineering tradition and takes the lead in modern manufacturing solutions. The sector currently employs more than 6,400 people and generates approximately 498 billion euros per year.

The Germans lead in both production and sales in the European automotive industry. There is also considerable investment in this sector for both the qualifications of the workforce and improvements in infrastructure. In the case of aviation, it is on a constant rise, with projections of Germany producing approximately 35,000 new aircrafts within the next 20 years.

A competitive advantage for this sector is its combination of the available talent pool, the country’s powerful manufacturing base, and cost efficiency.

This industry in Germany also takes the lead in Europe in terms of sales within Europe and exports to other continents, with medical equipment and pharmaceutical good among the top exports.

The country benefits from a well-developed chemical research and development infrastructure, with the education system producing quality graduates that are ready to work and provides a fertile and ready market for investors.

In 2021, this sector is estimated to bring in an estimated revenue of the industry in 176.3 billion euros and currently employs over 450,000 people. The country also invests billions into research and development.

Germany is Europe’s largest consumer goods producer and market in terms of population and purchasing power. The country also has the vantage position to access both Western and Eastern European consumer markets. The leading consumer industries include food and beverage, textiles, garments, shoes, office supplies, computers, telecommunication equipment, furniture, tourism, and home improvements.

Food and beverages are the largest consumer industry in Germany, with textiles, garments, and shoes being the second largest. Germany also ranks fourth globally in the export of clothes and textile products. Germany’s tourism industry, which is based on both domestic and international tourism, also generates over 90 billion euros in revenue.

The continue growth of this industry is due to flexible retailers with both online and offline systems, as well as the increasing tech-savvy customers. Most retailers have a ROPO (Research Online and Purchase Offline) effect, which bodes well with local consumers.

Germany is a leader in the production of green energy and environmental technologies. The country has investments in offshore wind energy, solar panels, bioenergy, photovoltaics, energy grids, electric vehicles, charging infrastructure, and energy storage projects.

The country also provides incentives, infrastructure, and a good environment for photovoltaic investments and energy storage. The industry recorded 121.7 thousand jobs in 2019.

Germany has the fifth-largest electrical and electronic industry in the world, receiving a revenue of 162.1 billion euros in 2020. This industry develops a variety of products, such as home appliances, nanotechnology equipment, commercial lighting, automation systems, and luminaries (among other products).

This industry employs about 29% of all Research and Development employees in Germany and accounts for over 12,000 new patents annually.

For ICT, the country enjoys the largest market of its kind in Europe. Most ICT firms and startups are products of Mittelstands (family-owned, small to medium-sized companies). Young people are spearheading the ICT sector, offering solutions to save industries money as well as offer government solutions for service delivery.

Commercial Laws in
Germany

In Germany, an employment contract is required by law to be concluded in writing, and this must be given to the employee no later than one month after the commencement of their employment. All employment contracts must contain the following:

  • Name and address of the employer and the employee
  • Information about the commencement date of employment
  • Anticipated duration of employment (for fixed-term contracts only)
  • The place of work
  • The nature of the activity involved
  • The composition and amount of the employee’s salary
  • The working hours
  • The duration of annual leave
  • The notice period
  • A reference to any collective bargaining agreements, works or services agreements that apply to the employment relationship (if there are any)

Also, to avoid any miscommunications or disputes, a version of this contract must be translated into German. Two types of contracts can be found in Germany:

Indefinite employment contract – It is the standard type of employment contract in Germany, and as a general rule, employment contracts are entered into for an unlimited period. Termination of this contract requires a notice period and a set of dismissal policies.

Fixed-term employment contract – Fixed-term contracts are possible as long as the employment term is agreed upon in writing before the employment relationship commences. Fixed-term relationships must be justified on objective grounds – such as a temporary increase in workload or substitution of an employee on parental leave. A fixed-term contract is limited to a maximum of two years and ends automatically without written notice at the end of its term.

Tax Authorities

  • The Federal Central Tax Office/BZSt (Bundeszentralamt für Steuern) – is a branch of the German Federal Ministry of Finance, which deals with national tax matters such as issuing Tax IDs and VAT numbers for entrepreneurs, supporting anti-fraud initiatives in each German state, and providing information for foreign investors.
  • The Tax Office (Finanzmat)– is the local authority that administers taxes on behalf of the municipality, federal state, and federal government. There are 650 tax offices across Germany, which are responsible for collecting several taxes for individuals and businesses, processing annual tax returns, and registering freelancers and new businesses.
  • The Online Tax Office (ELSTER) – is an online platform created by the BZSt for managing an individual’s or business’ tax affairs.

Labour Authorities

  • The Federal Employment Agency (Bundesagentur für Arbeit) – is the contact point for both people and employers on anything to do with German employment. The agency offers job and training placements, financial support such as unemployment and child benefits, and consultation and mediation services.
  • The Federal Ministry of Labour and Social Affairs (Bundesministerium fur Arbeit und Soziales) – identifies inter-ministerial solutions to labour and social issues and liaises with the relevant states and municipalities to implement the new measures. Its policy implementation depends on cooperation with the Committee on Labour and Social Affairs, the primary parliamentary decision-making body.

Commercial Laws in
Germany

In Germany, an employment contract is required by law to be concluded in writing, and this must be given to the employee no later than one month after the commencement of their employment. All employment contracts must contain the following:

  • Name and address of the employer and the employee
  • Information about the commencement date of employment
  • Anticipated duration of employment (for fixed-term contracts only)
  • The place of work
  • The nature of the activity involved
  • The composition and amount of the employee’s salary
  • The working hours
  • The duration of annual leave
  • The notice period
  • A reference to any collective bargaining agreements, works or services agreements that apply to the employment relationship (if there are any)

Also, to avoid any miscommunications or disputes, a version of this contract must be translated into German. Two types of contracts can be found in Germany:

Indefinite employment contract – It is the standard type of employment contract in Germany, and as a general rule, employment contracts are entered into for an unlimited period. Termination of this contract requires a notice period and a set of dismissal policies.

Fixed-term employment contract – Fixed-term contracts are possible as long as the employment term is agreed upon in writing before the employment relationship commences. Fixed-term relationships must be justified on objective grounds – such as a temporary increase in workload or substitution of an employee on parental leave. A fixed-term contract is limited to a maximum of two years and ends automatically without written notice at the end of its term.

Tax Authorities

  • The Federal Central Tax Office/BZSt (Bundeszentralamt für Steuern) – is a branch of the German Federal Ministry of Finance, which deals with national tax matters such as issuing Tax IDs and VAT numbers for entrepreneurs, supporting anti-fraud initiatives in each German state, and providing information for foreign investors.
  • The Tax Office (Finanzmat)– is the local authority that administers taxes on behalf of the municipality, federal state, and federal government. There are 650 tax offices across Germany, which are responsible for collecting several taxes for individuals and businesses, processing annual tax returns, and registering freelancers and new businesses.
  • The Online Tax Office (ELSTER) – is an online platform created by the BZSt for managing an individual’s or business’ tax affairs.

Labour Authorities

  • The Federal Employment Agency (Bundesagentur für Arbeit) – is the contact point for both people and employers on anything to do with German employment. The agency offers job and training placements, financial support such as unemployment and child benefits, and consultation and mediation services.
  • The Federal Ministry of Labour and Social Affairs (Bundesministerium fur Arbeit und Soziales) – identifies inter-ministerial solutions to labour and social issues and liaises with the relevant states and municipalities to implement the new measures. Its policy implementation depends on cooperation with the Committee on Labour and Social Affairs, the primary parliamentary decision-making body.

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