German employees are required to pay taxes on their income and surcharges on their income taxes.
| Taxable income for single taxpayers (EUR) | Progressive Tax Rate (%) |
|---|---|
| Up to 12,083 | - |
| 12,084–17,429 | 14–23.97*** |
| 17,430–68,429 | 23.97–42*** |
| 68,430–277,825 | 42 |
| Over 277,825 | 45 |
***The actual rate for income in these brackets are determined based on the formula published by the German tax authority here.
The German government levies a solidarity surcharge tax of up to 5.5%, which shall be imposed as a percentage on all individual income taxes.
In general, no solidarity surcharge is levied under the following conditions:
| Single individuals filing separately | Have an income tax burden of EUR 19,950 or less |
|---|---|
| Married individuals filing jointly | Have an income tax burden of EUR 39,900 or less |
Furthermore, the solidarity tax cannot exceed 11.9% of the difference between the income tax and the exemption threshold.
Members of officially recognized churches pay church tax as a surcharge on their income tax. The rates are either 8% (in Bavaria and Baden-Württemberg) or 9% (in other states).
There is no local taxes on employment income in Germany.
Contributions made for Health Insurance and Long-Term Care Insurance are calculated based on annual income of up to EUR 66,150, while those made for Pension Insurance and Unemployment Insurance are calculated based on annual income of up to EUR 96,600.
Employee's contributions for Long-Term Care Insurance are determined by the number of children they have, since it affects the surcharges or discounts applicable to the employee, as follows:
| Family Situation | ER | EE | ER (Saxony) | EE (Saxony) |
|---|---|---|---|---|
| No children | 1.8% | 2.4% | 1.3% | 2.9% |
| 1 child | 1.8% | 1.8% | 1.3% | 2.3% |
| 2 children under 25 years old | 1.8% | 1.55% | 1.3% | 2.05% |
| 3 children under 25 years old | 1.8% | 1.3% | 1.3% | 1.8% |
| 4 children under 25 years old | 1.8% | 1.05% | 1.3% | 1.55% |
| 5 or more children under 25 years old | 1.8% | 0.8% | 1.3% | 1.3% |
| All children are at least 25 years old | 1.8% | 1.8% | 1.3% | 2.3% |
Note: Health Insurance and Long-Term Care Insurance is optional for individuals earning at least EUR 73,800 annually, and they will be able to opt for private health insurance instead.
| Contribution Rates | Notes | |
|---|---|---|
| Health Insurance | 7.3% | |
| Supplementary Health Insurance | 0.92%–2.2% | The actual rate varies according to the chosen health insurance. |
| Long-Term Care Insurance | 1.8% | The contribution rate is lower at 1.3% in Saxony. |
| Pension Insurance | 9.3% | |
| Unemployment Insurance | 1.3% | |
| U1 Levy (Sick Leave) | 1%–4.9% |
This only applies to participating employers with no more than 30 employees. The actual rate varies according to the chosen health insurance. |
| U2 Levy (Maternity Leave) | 0.2%–0.59% | The actual rate varies according to the chosen health insurance. |
| Insolvency Insurance | 0.15% | |
| Work Accident Scheme | Varies | The actual rate varies according to the industrial sector and the accident risk. |
| Contribution Rates | Notes | |
|---|---|---|
| Health Insurance | 7.3% | |
| Supplementary Health Insurance | 0.92%–2.2% | The actual rate varies according to the chosen health insurance. |
| Long-Term Care Insurance | 0.8%–2.4% |
The actual rate varies according to the surcharge or discounts applicable to the employee. Moreover, the contribution rate is higher at 1.3%–2.9% in the state of Saxony. |
| Pension Insurance | 9.3% | |
| Unemployment Insurance | 1.3% |
The payroll cycle in Germany generally shall not exceed a month, and employees shall be paid on the agreed upon date fixed in their contracts.
Effective January 1, 2025, the minimum wage in Germany is set at EUR 12.82 per hour.
While there are no statutory bonuses in Germany, employers can offer any form of compensatory incentives to their employees. Furthermore, certain bonuses may become mandatory if covered under a collective bargaining agreement or an individual agreement.
Some common bonuses include 13th month bonus and profit-sharing arrangements (for employees at or above the executive level).
Employment relationships can be terminated by mutual agreement, on the expiry of a fixed-term contract or by observing the regulations surrounding notice period.
Employees who have been continuously employed for at least 6 months in companies with more than 10 employees are protected from arbitrary dismissal under the Dismissal Protection Act (DPA). Employees covered by the DPA can only be dismissed for reasons related to the person, their conduct or urgent business needs.
| Dismissals due to misconduct | Dismissals for reasons related to the employee |
|---|---|
| Any willful breach of contract, persistent insubordination, verbal or physical abuse of employers and colleagues, being convicted of a criminal offence against the employer or the customer, among others | Any disabilities preventing the performance of work or any reasons preventing the further performance of work, e.g., losing the relevant license |
| Employers shall generally give their employees a written warning and take the necessary steps within 2 weeks of becoming aware of the circumstances | Poor performance is not a valid reason for dismissal under the DPA |
Employers can also dismiss their employees if they can prove that it is necessary for compelling business reasons, provided that the selection of individuals to be dismissed is done solely based on qualifications, social standing and other non-discriminatory criteria.
The statutory notice period for dismissing an employee varies according to the employee's length of service, as follows:
| Length of service | Notice period |
|---|---|
| Up to 2 years | 4 weeks, taking effect from either the 15th or the last day of the month |
| 2–4 years | a month, taking effect from the last day of the month |
| 5–7 years | 2 months, taking effect from the last day of the month |
| 8–9 years | 3 months, taking effect from the last day of the month |
| 10–11 years | 4 months, taking effect from the last day of the month |
| 12–14 years | 5 months, taking effect from the last day of the month |
| 15–19 years | 6 months, taking effect from the last day of the month |
| Over 19 years | 7 months, taking effect from the last day of the month |
Employees who resign should observe a 4-week notice period, rounded up to the 15th or last day of the month.
In any case, the employment can be terminated for cause with immediate effect by either party without observing a notice period if there is a severe breach of obligations.
There are no statutory severance pay requirements in Germany. However, it is common practice to grant severance in the event of termination through a separation agreement to avoid potential labor disputes.
Probationary period usually lasts between 3–6 months, though this is not required if not agreed upon in the employment contract.
If the employment relationship is terminated before the end of the probation period, the terminating party shall observe a notice period of at least 2 weeks. This notice period shall take effect immediately after notice of termination has been given.
Regular working hours in Germany is subject to a daily maximum of 8 hours per day, which can be extended to 10 hours without incurring overtime if the average daily working time over 6 months does not exceed 8 hours per day.
A regular full working week is also subject to the following weekly maximum:
| Employees working 5-day work week | Employees working 6-day work week |
|---|---|
| 40 hours per week | 48 hours per week |
Employees are entitled to at least 30 minutes of unpaid break for days when they work for 6–9 hours, and at least 45 minutes of unpaid break for longer hours of work. This break period can be split into several parts, the duration of which shall be at least 15 minutes each.
Overtime is not regulated by law and is subject to individual or collective agreements. However, employees shall not work over 60 hours per week, averaging out to 48 hours per week over a 6-month period, inclusive of standard and overtime hours.
Employees shall be granted at least 11 hours of rest in between work days and, except for those in the service industry, employees are generally prohibited from working Sundays. Regardless, those required to work Sundays shall be compensated with equal time off within 2 weeks.
Public holidays in Germany are not federally regulated, with individual states offering different public holidays. There are 9 days of public holidays that apply nationwide in 2025.
| Holiday | Date | State |
|---|---|---|
| New Year's Day | January 1 | Nationwide |
| Holy Three Kings | January 6 | BW, BY and ST |
| International Women's Day | March 8 | BE and MV |
| Good Friday | April 18 | Nationwide |
| Easter Sunday | April 20 | BB |
| Easter Monday | April 21 | Nationwide |
| Labor Day | May 1 | Nationwide |
| Ascension of Christ | May 29 | Nationwide |
| Pentecost Sunday | June 8 | BB |
| Whit Monday | June 9 | Nationwide |
| Corpus Christi | June 19 | BW, BY, HE, NW, RP and SL, and in some parts of SN and TH |
| Augsburg Peace Festival | August 8 | Only in the city of Augsburg |
| Assumption Day | August 15 | SL and in some parts of BY |
| World Children's Day | September 20 | TH |
| Day of German Unity | October 3 | Nationwide |
| Reformation Day | October 31 | BB, HB, HH, MV, NI, SH, SN, ST and TH |
| All Saints' Day | November 1 | BW, BY, NW, RP and SL |
| Repentance Day | November 19 | SN |
| Christmas Day | December 25 | Nationwide |
| Boxing Day | December 26 | Nationwide |
Except for those in the service industry, working on public holidays are largely prohibited. Those required to work on public holidays should be compensated with equal time off within 8 weeks.
Employees with at least 6 months of service are entitled to the following paid annual leave:
| Annual leave | |
|---|---|
| 5-day workweek | 20 working days |
| 6-day workweek | 24 working days |
Employees with less than 6 months of service shall have their annual leave entitlements prorated according to their time worked.
Annual leave may only be carried over to the next calendar year if there are urgent operational reasons or urgent personal reasons justifying it. In such cases, the leave must be taken within the first quarter of the following calendar year.
Employees with at least 4 weeks of service are entitled to up to 6 weeks of fully paid sick leave, payable by their employer.
Employees who fall sick before completing 4 weeks of service shall not be entitled to sick pay from their employer. Similarly, if the same sickness persists for more than 6 weeks, the employer is released from their obligation to pay continued remuneration. In these cases, the employee may request for sickness allowances from their respective health insurances.
As a rule, sick leave allowance is only paid upon a doctor's confirmation of illness and only for as long as the doctor's note is valid.
Note: Employers continuing wage payments to their employees on sick leave can seek partial reimbursements from the relevant health insurance if they have no more than 30 employees.
Female employees are entitled to at least 6 weeks of pre-natal leave and 8 weeks of post-natal leave. Post-natal leave can be extended to up to 12 weeks in the event of premature and multiple births, and when the child is declared disabled within 8 weeks of birth.
Maternity allowance shall be paid by the employee's health insurance based on their last salary, up to a maximum of EUR 13 per day. However, if the employee is not party to the public health insurance, they can receive up to EUR 210 as a one-time payment from the Federal Office for Social Security. The difference between the allowance and the employee's full salary shall be covered by the employer.
Employers continuing the payments for their employees on maternity leave can claim for reimbursements from the relevant health insurance.
Employed fathers can usually only take time off on the day of childbirth, in addition to any parental leave they are entitled to. However, effective 2024, employees will be entitled to paid paternity leave for 2 weeks following childbirth.
Employees are entitled to take unpaid parental leave for up to 3 years per child, which can be taken all at once or in up to 3 separate segments. In general, this leave should be taken before the child's 3rd birthday. However, if any time remains, up to 24 months of leave can be taken until the child's 8th birthday.
Employees shall notify their employers of their intended leave 7 weeks in advance for leave taken before child's 3rd birthday and 13 weeks in advance for leave taken after child's 3rd birthday.
Each parent can divide their entire parental leave entitlement into 3 periods, provided that the employer retain the right to refuse the 3rd part of the requested leave for urgent operational reasons if it takes place between the child's 3rd birthday and their 8th year of life. Distribution over additional periods or more than 3 periods is possible with the employer's consent.
Note: Parents shall be allowed to work part-time for up to 32 hours per week during their parental leave period. In such cases, it is not the individual week that matters, but the monthly average.
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Caregiver Leave*** | Unpaid | Up to 6 months (or 3 months if providing end-of-life care) | Can be taken on a full-time or part-time leave basis by employees working in establishments with at least 15 employees to care for a loved one. |
| Family Caregiver Leave*** | Unpaid | Up to 24 months | Can only be taken on a part-time leave basis by employees working in establishments with at least 25 employees. Employees can reduce their working time to 15 hours per week on a yearly average. |
| Short-Term Inability To Work | Unpaid | Up to 10 working days | All employees are entitled to this leave to organize suitable care for a loved one. |
As in the case of parental leave, the employee's position and social insurance benefits are protected while they are on their Caregiver and Family Caregiver Leave. Loss of income can be compensated for by means of a interest-free care loan. In any case, Caregiver Leave and Family Caregiver Leave must not exceed 24 months in total.
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