Employer of Record in Germany - Hire without a local entity

Before the first hire, an employer needs an 8-digit Betriebsnummer from the Bundesagentur für Arbeit. It also registers with the Berufsgenossenschaft (accident insurer), the Finanzamt (tax office) and the employee's Krankenkasse, which collects all social contributions. We handle the registrations and the filings: the DEÜV social insurance report at first payroll, the monthly Beitragsnachweis and the Lohnsteuer-Anmeldung.

For maternity, the Krankenkasse pays Mutterschaftsgeld of up to €13 a day. The employer tops it up to average net pay and gets 100% back through the U2 levy. Elterngeld is paid by the state: 67% of prior net pay, between €300 and €1,800 a month. We handle those claims.

German employment law in practice

German employment law sits in several acts, among them the BGB, the Kündigungsschutzgesetz (KSchG) and the Nachweisgesetz. These are the points international employers most often miss:

• The essential contract terms must be documented by the first working day. Fines go up to €2,000. Since 1 January 2025, text form is enough.
• Notices and termination agreements need a wet-ink signature. An email does not count.
• After 6 months in an establishment with more than 10 employees, a dismissal must be socially justified. The employee has 3 weeks to sue.
• Where a works council exists, it must be heard before every dismissal. Without that hearing, the dismissal is void.
• Fixed-term contracts without an objective reason run 2 years at most, with up to 3 extensions. The fixed-term clause must be in writing, or the contract becomes permanent.

What a GmbH or branch does not solve

Some companies set up a GmbH or a branch. A GmbH needs €25,000 in share capital, at least €12,500 of it paid in before registration, and typically 4 to 8 weeks. A branch is taxed as a German permanent establishment, and even one employee working for you in Germany can create one. Either way, you take on the Betriebsnummer, accident insurance, Krankenkasse reporting and wage tax withholding yourself. With our Employer of Record, we're the employer, so you need none of it. If you later want your own entity, we scope the setup with you and run it afterwards.

What a hire in Germany costs

Senior software engineer on €70,000 a year:

• Employer social contributions (about 21.7%): €15,192
• Accident insurance (about 1.08% on average, varies by sector): around €756
• Fronted EOR fee: [Fronted fee] per employee per month. See pricing.
• Total before our fee: around €85,950, plus any bonus or extra benefits. The exact figure shifts by a few hundred euros with the employee's health fund.

Payroll and contracts are the easy part. What catches companies out is how much of German employment is decided by process. Dismissals need a signed letter and, in most firms, a social justification. Staff can elect a works council once an establishment has 5 employees. And there is no single national personal number, so the tax ID, social insurance number and health insurer all have to be collected one by one.

Getting it right from the start is far easier than fixing it later.