Employment & Labor Law in Germany – Know Your Employee Rights

In this guide, we’ll talk about your rights as an employee, based on the employment & labor law in Germany. This includes your holiday entitlement, sick leave/ family leave benefits, and more. You will also learn about different types of work contracts, what to do if you face termination, and how to get support if you have a conflict with your employer. Join us on this journey to understand and assert your rights as an employee in Germany!

Overview of employment & labor law in Germany

Employment & labor law in Germany is not just one big rule but a bunch of different rules that tell us what’s okay and not okay at work. It’s like a guidebook for both employers and employees.

Here are some main employment & labor laws in Germany:

Civil Code (BGB) – This code covers basic regulations for employment contracts.

Collective Agreement Act (TVG) – This act contains regulations on the conclusion and effect of collective agreements.

Commercial Code (HGB) – This code mainly contains corporate legal regulations. 

Continued Remuneration Act (EntgFG) – This act regulates the continued payment of salary on public holidays and in case of illness.

Federal Vacation Act (BUrlG) – This act regulates the employee’s entitlement to vacation leave.

Minimum Wage Act (MiLoG) – This act ensures that every employee in Germany is entitled to receive the legally prescribed minimum wage. 

Occupational Health and Safety Act (ArbSchG) – This act aims to ensure and improve the safety and health protection of employees through occupational safety measures.

Part-time and Fixed-term Work Act (TzBfG) – This act contains regulations on part-time employment relationships and fixed-term employment contracts.

Trade Regulation Act (GewO) – This act relates to the employer’s right to issue instructions, salary statements, and work certificates.

These employment & labor laws make many rules about what employees and employers can and cannot do in Germany. The most important thing is to make sure employees are treated fairly and stopped from being taken advantage of.

Employment contract in Germany

When starting a job in Germany, you will need to have a written employment contract. This contract includes the basics like your personal info, start date, what you’ll be doing, how much you’ll earn, working hours, vacation time, and the notice period.

Now, about those contracts – there are two main types: open-ended and fixed-term. The open-ended ones don’t have a set end date, while the fixed-term contracts are for a specific period, maybe for a project or to cover someone on leave. Just a heads up, though – fixed-term contracts can’t stretch beyond two years.

Remember, the working scene in Germany is governed by employment & labor laws, your contract, and any group agreements that might be in place. If your employer wants to make changes, there are limits to what they can do, and they’ll likely need to have a good reason.

What is the minimum wage in Germany?

In Germany, there is a statutory minimum wage of €12.41 in 2024 and €12.82 in 2025. The minimum wage ensures that workers receive fair compensation. It is subject to review and adjustments every two years by the government. 

Employers must provide a detailed pay slip indicating gross wages, tax deductions, and any other relevant deductions. Additionally, employees in Germany may receive voluntary or contractual bonus payments alongside the minimum wage. 

Read also: Salary in Germany: Are you getting paid enough?

Working hours for employees in Germany

In Germany, there are rules about how long employees can work. Usually, full-time employees work 36-40 hours per week, but they can work up to 48 hours (or 60 hours in some cases). 

If you work 6-9 hours a day, you’re entitled to a 30-minute break. If you work over 9 hours a day, you should have a 45-minute break. Night work is limited to 8 hours. Rest periods and additional regulations apply to night work.

And there must be at least 11 hours between shifts. “Part-time working hours” is up to 30 hours a week. Self-employed individuals have no restrictions on their work hours.

On-call work can be classified as working time, while standby work (not at the workplace) may not. Workdays are generally Monday to Friday, with Saturday as a regular workday in some industries. Working on Sundays or holidays is generally not allowed. But there are some exceptions, like in transportation.

Your personal time after work belongs to you, and your employer can’t contact you unless you’re on stand-by duty. Stand-by duty means being reachable but not physically at work.

Overtime isn’t strictly regulated by employment & labor law in Germany. It depends on your employment contract. There’s no mandatory overtime pay, but some companies pay or provide extra time off. 

Working on a holiday in Germany

I remember when I worked in Germany, there were times that we had to work on a public holiday. For example, on an Easter day.

There was a lot of paperwork involved in the team. Everyone needs to put down their working hour on that day and it needs to be approved by the work council in the company. Our company gave us a vacation day back if we chose to work on the holiday. 

One time, I decided to work on the holiday and my request was rejected. Later on, I learned that I was not allowed to work on that holiday because I was pregnant!

That was how strict the employment & labor law was in Germany. Back in my hometown Hong Kong, we were asked to work days and nights and on all the weekends. Nobody ever cares, not to mention the record-keeping/ compensation/ approval from the work council…

That’s why I always think that Germany is like a heaven for employees 😊

Vacation days for workers in Germany

In Germany, there’s this thing called the Federal Vacation Act (“Bundesurlaubsgesetz”). It says everyone who works should get some days off each year.

The employment & labor law says you should get at least 20 paid days off for a regular Monday-to-Friday job in Germany. Some bosses are extra generous, offering 25-30 days.

When I worked in Germany, I got 34 days a year. Yes, 34 days!

This is on top of all the public holidays (about 10 days per year depending on the region). And actually, everyone I know in Germany gets about 30 days on average. So, having almost 30 days a year of vacation is pretty common. It is hard to imagine this if you are coming from Asia or from the USA.

One thing to note is that you need to work at least six months before you are eligible for the full annual vacation days. And bosses usually can’t say no to your vacation unless they have a really good reason. 

Sick leave in Germany

In Germany, if an employee gets sick or injured, they can receive sick pay for up to 6 weeks. This covers 100% of their average income, provided they have worked with the employer for a minimum of 4 weeks. 

After 6 weeks, employees may be entitled to a sickness allowance of 70% of their regular pay for a maximum of 78 weeks. Employees must notify their employers immediately and provide a medical certificate within three days. 

If your kid is sick and you have a public health insurance policy, you can also get sick days from work. Starting in 2024, it will be 15 days per year per kid. During this time, you can apply for an allowance (Kinderkrankengeld). This would be 90% of your net salary in general.

This is one of the greatest things about working in Germany – the support employees get when they’re sick. After I moved to the U.S., I was surprised to learn that there was no sick leave at all in the US (at least not in my job). 

I mean, not just no day off for taking care of a sick kid. But no sick leave even when I am sick myself! 

In the US, if I’m not feeling well, I have to use my precious vacation days. There’s no extra paid sick leave, and that’s a bit tough. It seems like many people end up going to work even when they’re sick because of this, and that doesn’t sound too healthy to me.

As I said again, Germany is like heaven for employees.

Read also: Sick Leave In Germany – Everything you need to know

Maternity and parental leave in Germany

In Germany, if you’re expecting or planning a family, there are some solid protections. The Maternity Protection Act (Mutterschutzgesetz) ensures expecting moms can’t be discriminated against, and there are a bunch of leave options.

For moms-to-be, you get six weeks off before giving birth and eight weeks after, with full pay. You can extend this if needed, and during this time, your employer can’t let you go. 

So, if you are pregnant, your job is protected. If the company wants to downsize, you will likely not become the target, especially if the company wants to avoid any legal trouble.

It is important to have legal insurance in Germany though. In case your company does want to fire you while you are pregnant, this insurance policy can ensure that your right is protected.

For more details, check this out: Legal Insurance Germany – Comprehensive English Guide (+ 3 Best Offers)

Besides, if you are pregnant, your employer needs to ensure that you are not doing any heavy lifting or risky tasks during pregnancy. The employment & labor law in Germany is pretty strict on this.

Parental leave is for both parents

After the little one arrives, moms and dads usually can take up to three years of parental leave. During this period, your job is safe, but it’s unpaid. However, there’s a parental allowance you can apply for through the government to help out.

Back then I took one year of parental leave for my first kid and three years for my second kid. In the first year, I got about 60% of my normal salary as a parental allowance (with a maximum of 1,800 EUR monthly). That is part of the reason why most people in Germany will take at least a year of parental leave.

There is a threshold for parents to be eligible to get the parental allowance. At the moment, you can get the allowance if the combined salary of you and your spouse is below 300,000 EUR. This threshold will fall to 200,000 EUR starting 1st April 2024. And it will further fall to 175,000 EUR starting 1st April 2025.

Remember that if you are returning to work after parental leave, you have the right to return to a job at the same level as before. Your employer cannot demote you or let you go after your parental leave.

Unpaid Leave in Germany

Employees in Germany have certain rights regarding unpaid leave for family care.

Urgent Care Leave

Employees can take up to 10 days of unpaid leave for urgent care needs of close relatives without prior notice to the employer.

Nursing Care Leave

For providing extended care to a close relative, unpaid nursing care leave of up to six months is possible. However, this requires notifying the employer at least 10 working days in advance.

So, my friend had this heartfelt moment working in Germany. Her mom got sick back in Hong Kong, and she was really upset.

Guess what? Her boss told her to go back to Hong Kong to be with her mom. She took three months of unpaid leave, with no worries about losing her job in Germany. And she was able to spend time with her mom in her last days. 

It’s this kind of thing that makes working in Germany pretty great, especially for expats who might need to be there for their families back home. 

How long is the probation period in Germany?

When people start a job in Germany, they often have a probationary period of about 6 months. During this time, the employer and employee can check if they’re a good match. If things don’t work out, the employer can end the job with just two weeks’ notice. 

For vocational training, the probation period is 1 to 3 months. Both parties need to agree in writing on how long this trial period will be before the job starts. 

Part-time employment in Germany

Can you switch from Full-Time to Part-Time work in Germany?

According to the Part-time & Fixed-Term Work Act (TzBfG), you can do that if you are six months in and your company has 15+ corkers. After working for six months, you can ask to go part-time.

The boss says no? He better have a legitimate reason.

No discrimination is allowed in Germany. Also for us ladies. However, before switching to part-time, you should consider the finances and pension impact. 

I knew someone who used to work full-time in her company. After she got her first child, she decided she wanted to go part-time. However, her company didn’t like offering part-time employment and the management said no to it whenever being asked. 

That’s why we should know our rights as an employee in Germany. My friend actually went so far as to hire a lawyer to fight for her rights.

Her company ended up offering her part-time employment (as she did have the right!). The management didn’t want to spread the word though to avoid too many people in the company asking for the same thing…

Can you switch from Part-Time to Full-Time work in Germany?

Yes if there are 45+ employees in your company. Another good thing is that part-timers who want to get a full-time job get priority.

Employees vs contractors in Germany

Workers in Germany can be categorized into two main types: dependent workers (employees) and independent workers (self-employed contractors like freelancers). 

Employees work under an employer’s direction, while independent workers take on business risks and perform services based on a service agreement.

The classification depends on factors like freedom in deciding how, when, and where to work, the use of personal staff, working for other clients, engagement terms, and equipment use.

In Germany, employees have certain benefits required by the employment & labor law. The mandatory benefits include retirement pensions, unemployment insurance, vacation time, public holidays, workers’ compensation, health insurance, paid sick leave, maternity leave, parental leave, and long-term/nursing care. 

Independent contractors in Germany, however, do not have these entitlements by the employment & labor law.

Some companies like to hire contractors instead

For example, when I worked in Germany, the company I worked for hired both regular employees and contractors. Even though both get more or less the same pay, contractors do not get profit sharing (which can be quite significant depending on the year).

This was quite demotivating for the contractors because they were basically doing the same job as the regular hires.

The reason that some companies do this is because hiring contractors is more flexible. As you already know, it is hard to fire employees in Germany. But that is not the case for contractors, because they are employed by the agency, not the company.

How about fixed-term contracts?

In Germany, a company can also hire employees on fixed-term contracts if there’s a valid reason, like a specific project. 

Similar to hiring contractors, a company may offer a permanent contract to contractors or to employees on fixed-term contracts later on. So this type of contract gives a chance to the employer to assess the work performance before offering a permanent position.

Hiring contractors in Germany

In Germany, there’s a law called the Employee Leasing Act (“Arbeitnehmerueberlassungsgesetz”), which lays out the rules for hiring temporary workers.

If a company or individual wants to lease out German employees as contractors, they need a special license called Arbeitnehmerüberlassung (AUG). 

Employee leasing is a bit like using a staffing agency. Companies can bring in talent without officially hiring them. The agency takes care of things like taxes and social contributions because technically, the worker is employed by the agency and leased out to the company for temporary work.

Misclassification: Employee vs contractor

Getting labeled the wrong way at work can lead to some serious problems – especially if your employer calls you an independent contractor when you’re actually an employee. 

In Germany, they don’t mess around with this stuff. They keep a close watch on companies to make sure everyone’s playing by the rules, and surprise audits can happen.

Why does it matter so much?

Well, if your boss mislabels you, it means the German government might miss out on crucial funds for things like social security. That’s the safety net for folks dealing with sickness, unemployment, disability, or retirement.

So, what if your job title is off?

Your employer could end up owing back taxes, covering social security contributions, and facing fines. Yeah, it’s pretty heavy. Employment & labor laws are strict in Germany. 

What is your employee right in Germany based on your years of service?

Employees in Germany gain certain rights based on their continuous employment period. 

Sick Pay Kick-In

So, after you’ve been with the company for four weeks, you’re eligible for sick pay. 

Six-Month Milestone

Once you hit the six-month mark, a bunch of goodies kicks in, like protection under the Dismissal Protection Act (because job security matters), full holiday entitlement (hello, vacation time!), and the chance to explore part-time work if that’s your thing.

Notice period

Oh, and as time goes on, the notice period also increases. For example, during your first 6 months of probation, the notice period will be 2 weeks. But it increases to 4 weeks afterward. The notice period may even be 3 months or more if you work longer. 

In the company I worked at in Germany, my notice period was 2 weeks during probation and 4 weeks afterward even after I worked there for a couple of years. So, check your employment contract if you are not sure!

Bonus Tip on Job Transfers

If the company you work for decides to pass you on to a new owner (like in a business transfer), no worries! Your years of service come with you – the new boss has to acknowledge them. 

Are employers in Germany liable for mistakes made by their employees?

Employers are responsible for the actions of their employees. If employees cause work-related damages, the employer is usually held accountable. Recovering damages from employees is possible, but it’s limited to specific situations.

Let’s say an employee in a tech company accidentally shares sensitive customer information with unauthorized parties due to a misaddressed email.

The employer could be held liable for the data breach, even though it was an employee’s mistake, as the company has a responsibility to safeguard customer data.

Another example: an employee overlooks a critical quality control step and it leads to a defect in a product.

The employer may be held liable for any injuries or damages caused by the faulty product. This is because the employer is responsible for ensuring the quality and safety of the products their employees produce.

What happens if you have a work accident?

If you get injured at work or while commuting, the costs are covered by statutory accident insurance. Your employer contributes to this insurance for you and your colleagues. 

If you have a work accident, you must see a specific doctor called “Durchgangsarzt”. A Durchgangsarzt is a doctor who specifically handles cases related to occupational accidents. This is often a surgeon or orthopedist. You should go there first for evaluation and treatment.

Besides, your employer must report the work accident to the employer’s liability insurance association (Berufsgenossenschaft) within three days excluding the day of the accident.

If you don’t see the right doctor or the accident isn’t reported on time, there could be issues with insurance later. Once reported, the employer’s liability insurance association takes care of treatment and related costs, especially if you can’t work for an extended period.

Data protection at work in Germany 

Non-disclosure agreements (NDAs)

In Germany, NDAs are like secret contracts. They’re valid if they’re fair and serve the public interest. They can’t hide criminal stuff. The employment & labor law in Germany protects whistleblowers from retaliation.

Monitoring at Work

Employers can check work-related stuff, like work emails. If private use is allowed, employers need a good reason to snoop, like if they suspect a crime.

Social Media Use

Employees need to be careful. Negative public statements about the employer can cause trouble. Employers might keep an eye on what employees say on social media, especially if it’s public. 

If negative statements harm the employer’s reputation or are considered damaging, the employer might take legal action. Make sure you have a legal insurance policy in Germany to protect yourself in Germany.

Employee Personal Info

German workers’ personal info is guarded by super strict rules. The GDPR (European Union General Data Protection Regulation) makes sure info is used correctly. Companies need clear permission, top-notch security, and transparency.

Workers can ask for details about their personal info. Employers have to share what they have. There are rules about how this info can be used and shared.

Can employers in Germany do background checks on job applicants?

Yes, but there are rules to follow. Background checks should respect the privacy of the applicant and be related to the job. Employers can check an applicant’s background but within limits. Questions about criminal records must be relevant to the job. For example, a bank can ask about financial crimes, but a nursery can’t.

Employers usually get information directly from applicants, except when it comes to professional social networks like XING or LinkedIn. 

Third parties can do background checks too, but they need to follow data protection rules, and it’s not very common in Germany.

Clean your social media

So, I suggest doing a search with your name on the internet before applying for jobs in Germany. Just to see what shows up. Set your Facebook profile to private and make sure your XING or LinkedIn account looks professional.

Interview questions

In job interviews or questionnaires, employers can ask questions, but they must be related to the job and not invade the candidate’s privacy too much.

Asking about previous jobs is generally fine, but questions about pregnancy, illness, religion, or union membership are usually not allowed. If someone asks an illegal question, the candidate can lie about it. 

Finding a job in Germany without speaking German

I landed a professional full-time job in Germany without speaking German back then. For more details, check this out: 

• Job interview in Germany: 6 tips to boost your chances of getting hired
• How to find English speaking jobs in Germany?

Discrimination protection in Germany

In Germany, the principle of equal treatment is a fundamental right, prohibiting discrimination based on factors such as sex, race, disability, and more. 

Here are some examples of discrimination:

• • A qualified female employee is consistently passed over for promotions in favor of less qualified male colleagues.
  • An employer implements a policy that requires employees to work on Saturdays, affecting those who observe a religious day of rest.
  • Employees consistently make offensive jokes about a coworker’s disability, creating a degrading atmosphere.

Employers also cannot take revenge on employees. For example, it is illegal if an employee files a complaint about gender-based harassment, and subsequently, the employer gives the employee less favorable work assignments in retaliation.

Because of the strict employment & labor law in Germany, you can feel safe to report instances of fraud within the company to the authorities, without fear of retaliation from the employer. 

And of course, sexual harassment is not allowed. If a supervisor makes unwelcome sexual advances towards a subordinate, this will be an example of sexual harassment.

Remember also that If you are a part-time employee, your employer cannot deny you training opportunities offered to full-time colleagues with similar qualifications.

What is a work council in Germany?

A Betriebsrat, or works council, is like a friendly advocate for all employees in a company. They’re the go-to people for things like job-related concerns, holidays, and work hours. These folks, elected by employees, do this extra role without pay but might get some time off for it.

To start one, you need at least five regular employees, and anyone can suggest forming it. The Betriebsrat has rights, like being kept in the loop by the boss about anything that affects us.

If there’s a disagreement, they can take legal action. Their job is to make sure employment & labor laws are followed, support equality, and keep things chill between us and our boss in Germany.

They’re the watchdogs for safety standards, propose ideas for the company’s benefit, and make sure everyone is treated fairly, no matter their age or where they’re from. The Betriebsrat also looks out for our work environment and supports green initiatives.

They attend meetings with the boss, keep our personal stuff and company secrets under wraps, and they have to keep learning to be the best advocates for us. If you’re curious or need help, you can reach out to the Betriebsrat experts for advice. 

What can the work council do for you?

Here are some examples:

Job-related Issues

If you have concerns about your job, such as your position, role, or tasks, the Betriebsrat can advocate for you and ensure that your interests are considered when decisions are made.

Work Hours and Conditions

If there are changes to your work hours, conditions, or workplace policies, the Betriebsrat can be involved in discussions with the employer to make sure it’s fair and beneficial for the employees.

Leave and Holidays

If you have questions about your leave entitlements or holidays, the Betriebsrat can provide information and work to ensure that the company follows the rules and regulations.

Equal Treatment

The Betriebsrat plays a role in promoting equality in the workplace, making sure that men and women are treated fairly in areas such as hiring, promotions, and training opportunities.

Handling of Layoffs or Terminations

If there are discussions about layoffs or terminations, the Betriebsrat can represent the employees, ensuring that the process is fair and that the affected employees receive proper support.

Safety and Environmental Concerns

The Betriebsrat is involved in promoting safety measures at the workplace. If you have concerns about safety or environmental issues, they can address these with the employer.

Professional Development

If you’re interested in professional development opportunities, the Betriebsrat can work with the employer to propose measures that benefit the employees, such as training programs.

Integration of Different Employee Groups

If there are challenges in the integration of different employee groups, such as foreign employees, the Betriebsrat can work to foster understanding and propose measures to create a more inclusive workplace.

Handling of Personal Information

The Betriebsrat ensures that personal information, such as details about employees, is handled confidentially and in compliance with privacy regulations.

Dealing with Conflicts

If there are conflicts or disputes in the workplace, the Betriebsrat can act as a mediator, helping to find resolutions that work for everyone.

Can you be fired in Germany?

Employers need to consider various aspects before terminating an employee in Germany.

Notice Periods

Notice period varies based on the employee’s tenure, ranging from four weeks to several months. There are two types of termination: ordinary termination (with notice) and extraordinary termination (without notice) for serious misconduct. 

Immediate termination is only possible with a valid reason under the German Civil Code. Otherwise, a minimum of one month’s notice is required after the probation period.

Unlike in the US, at-will employment doesn’t exist. Fixed-term agreements and notice periods must be specified in employment contracts.

I remember when we moved to the US, we had to terminate our German contract and sign a new US contract.

We were shocked to read our new US contract, where we can be fired almost any time. Employees in Germany have much better protection by the employment & labor law.

Protection Against Dismissals Act

This is an Act in Germany that applies to companies with more than five employees. It protects the employees from being fired easily. Employees are required to have six months of uninterrupted work to be eligible.

Some groups, like disabled workers, pregnant women, and works council members, have extra protection against dismissal.

Works Council Consultation

Employers are required to have a consultation with the works council before dismissal, with a specific timeframe for their response. Termination notices must be in writing for legal effectiveness.

As an employee, you can challenge the termination by filing a submission to a labor court within three weeks of notice receipt.

Understanding a Warning Letter (“Abmahnung”)

A warning letter is a notice from your employer, pointing out behaviors they find problematic in your contract. The letter should clearly describe the alleged misconduct, and it’s typically reserved for significant contract violations.

This warning letter needs to be provided to you in writing. You should ensure that the warning is accurately worded. Besides, the alleged misconduct needs to be a substantial breach of the employment contract, not a minor issue. 

If you think the warning is unfair, you can respond in writing (“Gegendarstellung”). This will be kept in your file for future reference.

Reasons for Termination

Acceptable reasons include the end of a fixed-term contract, unsolvable employee problems, or company reorganization.

When I worked in Germany, the termination of employees in my company was mostly due to company reorganization. Sometimes, the company decides to close down one business line and they will let the employees from that business line go. 

Can you be fired due to bad work performance?

I haven’t heard of cases that employees being fired due to bad performance. In fact, I heard that it is very difficult to fire someone purely because of bad performance.

The employee will have to go through an improvement plan, everything will have to be documented, and the company also needs to prove that the employee is performing bad (which is not always easy)

So, what can happen in a big company is that the managers try to move a bad employee out of their team to another department internally. This sounds funny but it involves less work for that manager than trying to fire that employee.

That’s what I always say – working in Germany as an employee is like being in paradise. You can kind of compare it to working for the government in Hong Kong in the past. It is difficult to be fired. Or as we call it – “iron rice bowl” in Chinese.

Reference letter in Germany

After your employment ends, you have the right to receive a job reference letter (Arbeitszeugnis) from your former employer. This reference letter is crucial for future job applications, but it might contain hidden messages that are hard to understand. 

To decode your reference letter, you can use the online service by Yourxpert to get a free online initial assessment from a lawyer. The initial assessment or recommendation is free of charge. If you decide to take further action, you will get a non-binding offer with the price and you can decide if you want to take the offer.

This may sound crazy that you need to decode your reference letter. But this is how it works in Germany. It’s recommended to have an expert review your letter.

What if you don’t agree with the reference letter?

If you believe the reference is unfair, you can ask your former employer to change it. If they refuse, you may consider legal action (make sure you have a legal insurance policy!), or you can seek advice from your work council. 

I have moved many times internally to different job positions in the same company in Germany. Whenever I changed a job position, I always requested a reference letter and then decoded it by using Yourxpert. Based on the feedback I got from the expert, I communicated back and forth with HR to amend my reference letter.

For more details on how I do it, check this out: Decoding your Reference Letter in Germany (Arbeitszeugnis)

Health insurance and social security contribution requirement

Health insurance

In Germany, having health insurance is a must for all employees, including those from abroad. There are two main types: statutory (public) health insurance and private health insurance.

Statutory is for those earning less than €69,300 per year (in 2024), while private is an option for higher earners. Both provide good medical coverage, but there are cost and coverage differences.

To learn more, check this out: Private vs Public Health Insurance: What is Better for Expats in Germany?

I personally used TK public insurance. If you must use public health insurance, TK is a good choice.

Read more here: TK Review – My Personal Experience With TK Health Insurance

Social security

Apart from health insurance, there’s the social security system, which includes pensions, unemployment benefits, and disability insurance. Employers and employees share contributions for these, ensuring a safety net for everyone. It’s like a support system for various life situations.

When I worked in Germany, my company contributed to different insurance such as life insurance, accident insurance, and disability insurance for the employees. However, the coverage was really low. That’s why I have also private policies for those insurances, which provide much better coverage at a low cost.

I would suggest you check what your employer in Germany is offering. And it is likely beneficial for you too to get private coverage. Check out my below guide for more information:

• Best Life insurance Germany – Top 4 Comparison
• Occupational Disability Insurance in Germany – 5 Best Offers

How about pensions in Germany?

How does pension work in Germany?

In Germany, the pension system works like this: 

When you work, a portion of your salary goes into the pension fund. This money is not saved for you. Instead, it’s used to pay the pensions of current retirees.

The current contribution rate is 18.6% of your gross salary, with half paid by your employer and half deducted from your paycheck. 

This is very different from the pension system I used to know. For example, in Hong Kong or in the US, we also contribute to our pension plan every month, which is deducted directly from our salary. But this pension contribution is our own money. This is not used to pay for the current retirees. 

It means that if I contribute more, or if the fund appreciates, I am going to have a higher pension amount when I retire. I am not relying on the future generation to pay into my pension.

Note that in Germany, you can also find pension plans like that. You can do so by contributing to private pension plans. 

How much pension can you get when you retire in Germany?

Your contributions build up a claim to your own future pension. The amount you receive depends on factors like how much you contributed and for how long. The pension is a monthly payment for life.

You can start receiving your pension at a certain age, which was raised to 67 years gradually. If you retire earlier, you may face deductions. But if you retire later, your pension will be higher.

Who must contribute to the German pension system?

Almost all employees are required to contribute to the pension system. However, self-employed individuals are usually exempt, except for certain professions.

If you’re not required to contribute, you can still choose to do so voluntarily. The amount and number of contributions are flexible within certain limits.

What is the challenge for the German pension system?

The German pension system faces challenges due to people living longer and a declining birth rate. This means fewer people are contributing to the system compared to those receiving pensions.

I remember that I had often conversion with my colleagues in Germany. They were worried about their pension in the future. Because of the aging population, we may not have enough people paying into OUR pension in the future.

Potentially, it means a rising retirement age (already up from 65 to 67 years old!) and a reduced pension amount.

The pension you receive in the future may not be enough to cover your living expenses, creating a “pension gap.” To fill this gap, people often consider private retirement plans, employer-sponsored pension schemes, and government-supported plans like Riester pensions.

It’s essential to plan for your retirement early and explore different options to ensure financial security during your later years.

Besides pensions, you can look for other ways to invest your money. For more details, check this out: Invest in Germany as a Foreigner – Best English Guide

How about tax in Germany?

If you’re a foreign national working in Germany, how much tax you pay depends on where you live. If you’ve made Germany your home for at least 183 days in a tax year, your income gets taxed here. 

Now, let’s talk rates.

In 2024, if you’re single and making less than EUR 11,604, you’re in the clear – no tax!

Beyond that, it’s a sliding scale, going from 14% to 45% based on your income. Employers do the math, taking the tax from your salary and passing it on to the tax office.

And don’t forget, both employers and employees contribute to the social security amount. If you want some extra help with your taxes in English, there are many tax return software in Germany to choose from. 

For more details, also check this out: Tax Return in Germany – Comprehensive English Guide

Can you have another job while you are still employed?

Having another job alongside your main one is called “Nebentätigkeit” in Germany. This can be a small job with another company or your own business while working elsewhere. Generally, your employer cannot stop you from having a second part-time job.

But you shouldn’t do your part-time job during your regular working hours, sick leave, or vacation. And of course, you can’t work for a competing company. Also, make sure you have enough breaks between both jobs.

If your employment contract requires you to report secondary employment, you must inform your boss. However, if there’s no such requirement in your contract, you don’t have to report your part-time job.

To give you an example, this blog is my side business. I started this while I was still employed. To be on the safe side, I did report my side business to my employer back then. I got an official document from the HR department, giving me the ok to have my side business.

For more info, check this out: Self-employed in Germany – A Comprehensive Guide

What is black labor (Schwarzarbeit)?

“Schwarzarbeit,” or doing stuff off the books, is when a business offers services without bothering with taxes or social security. Knowing when you’re just doing someone a favor and when it’s tax evasion is pretty important.

In Germany, if you’re freelancing or running a business, not keeping up with paperwork can land you in hot water. Fines are on the table, and if things get serious, the company might even face jail time.

Breaking the rules includes skipping out on social security and tax duties or forgetting to register your freelance hustle. Now, if you’re doing a neighbor a small favor occasionally, that’s cool. But if you’re turning it into a side gig to pay the bills, it’s time to get official.

So, to avoid trouble, make sure you’re not just taking cash under the table. 

How to get help?

Within your company

If you’re having problems with your employer and need help, you can try to ask your workers’ council to help if your company has one. The works council in Germany represents employees’ interests and makes sure employment & labor laws are followed.

Outside your company

If you need counseling outside of your company, you can go to the advice center from the Fair Integration for help. This advice center is aimed at refugees and migrants from third countries (outside the EU). You can check out their English website here.

Facing discrimination

If you face discrimination based on origin, nationality, sexual orientation, gender, or age, you can contact the Federal Anti-Discrimination Agency. They speak English and can offer help to you.

Remember, you can seek advice anonymously from these agencies, and your boss or colleagues won’t find out about your complaint if you prefer it that way. Don’t hesitate to reach out for the support you need.

Get a free initial assessment from a lawyer

In case legal action is needed, this website provides a free initial assessment by qualified lawyers on your situation. Simply write down your question. The initial assessment or recommendation is free of charge. If you decide to take further action, you will get a non-binding offer with the price and you can decide if you want to proceed or not.

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Disclaimer: This article is intended to provide you with a brief overview of the employment & labor law in Germany. This blog is not qualified to give you any legal advice according to German law. If you need more details and specific advice on your personal situation, we would highly recommend you consult a lawyer.

What do you think about the employment & labor law in Germany, compared to that of your home country? Are they similar or very different? Leave a comment below and share your experience!