🇩🇪 Hiring in Germany

💡 Everything you need to know to hire and manage employees in Germany through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 5-7 business days between submitting a new hire and their start date. Before day one, the employee completes a personnel questionnaire, signs the employment contract, and provides their health insurance details; Toku uses these to complete all statutory registrations and set up payroll.

Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.

Employer Costs

On top of each employee's gross salary, you pay the following employer contributions (2026 rates):

As a rule of thumb, total cost of employment is roughly 121-123% of gross salary. Note that the contribution ceilings mean the effective percentage falls for higher salaries. There is no statutory 13th month salary, though Christmas or vacation bonuses are common where a collective agreement provides them.

Employees pay a broadly matching share of social contributions (about 21-22%) plus progressive income tax, and church tax where applicable. These are withheld from gross salary, not added on top of your costs. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs one payroll per month in Germany, and employees receive a payslip each cycle showing gross pay, all deductions, and net pay. The statutory minimum wage is EUR 13.90 per hour as of 1 January 2026, rising to EUR 14.60 on 1 January 2027. There are no mandatory bonuses beyond what the employment contract or collective agreement provides.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, covering all terms required by the Evidence Act.
• Indefinite-term contracts are the default. Fixed-term contracts without objective justification are limited to two years (maximum three renewals), and the fixed-term clause must be agreed in writing before work begins.
• Probation is determined by the applicable collective agreement, commonly 6 months (also the statutory maximum). During probation, the notice period is 2 weeks.

Working Hours

The standard working day is 8 hours, extendable to 10 if the average stays at 8 over six months; typical contractual weeks run 37.5-40 hours, with a statutory maximum of 48. German law sets no automatic overtime premium: overtime compensation follows the contract or collective agreement, where supplements of 25-50% are typical. Employers must record working time, which Toku's setup accounts for.

Leave Entitlements

Leave should generally be used within the calendar year, with carryover into the first quarter of the next year when work or personal reasons prevented taking it. Parental allowance is state-funded, so extended parental leave adds no direct salary cost to you.

Public Holidays (2026)

Germany observes 9 nationwide public holidays in 2026. Individual federal states add between one and four more (Bavaria has the most at 13), so your employee's total depends on where they live.

Benefits: Required vs. Common Extras

Statutory (included in employer costs above): Germany's five-pillar social insurance system covers statutory pension, health insurance (medical, hospital, prescriptions, and dental), unemployment insurance, long-term care insurance, and employer-funded accident insurance.

Through Toku, German employees receive all statutory insurances plus a EUR 1,500 annual supplemental health budget. See Germany Benefits for details.

Common extras in the German market include occupational pension contributions (employees have a legal right to convert salary into one), supplementary dental or hospital insurance, the Deutschlandticket transport subsidy, meal subsidies, and childcare support. Toku can advise on the cost impact of any extras you want to offer.

Ending Employment

German law strongly protects employees against dismissal: after six months of service, terminations must be "socially justified" on personal, conduct, or operational grounds, and notices are only valid with a wet-ink signature, so involve Toku early, before any termination conversation happens. For the process, see How to Terminate an Employee or Contractor.

There is no statutory severance pay, but severance is very common in practice, typically benchmarked at 0.5 months' gross salary per year of service, especially in settlement agreements resolving dismissal disputes. Employees have only three weeks to file a dismissal protection claim, which makes clean process and documentation essential.

Hiring Someone from Overseas?

EU, EEA, and Swiss nationals can work in Germany without a permit. Other nationals need a residence permit with work authorization: the EU Blue Card is the main route for degree-holding professionals meeting a salary threshold, with additional pathways for recognized vocational qualifications and intra-company transfers. Processing typically takes 4 to 12 weeks, so talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.