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Employment Law in Germany

Germany is a federal republic made up of 16 states (Länder). Employment legislation is primarily a federal matter, though the laws of individual states are important in several areas, such as educational leave and public holidays.

The Basic Law (Grundgesetz), or constitution, sets out a number of principles relevant to employment law, such as non-discrimination and equality, and freedom of association and collective bargaining. In some areas of law, legislation is consolidated into a single code, and several of these are relevant to employment — notably the Civil Code (Bürgerliches Gesetzbuch, BGB), which governs employment contracts, and the Social Security Code (Sozialgesetzbuch), which deals with matters including sickness benefits. However, employment legislation itself is not codified in this way but takes the form of numerous individual statutes (often influenced by EU law). The case law of the specialist labour courts plays a significant role in interpreting employment legislation.

Pay and conditions for a majority of German employees are set directly or indirectly by collective agreements, which are signed mainly at industry level. In some areas, employment legislation allows collective agreements to deviate from statutory provisions. Other important sources of law are “works agreements” signed at establishment level by employers and works councils, and individual employment contracts. In employments covered by a collective agreement, individual employers and employees cannot agree terms and conditions that are less advantageous to employees than those stipulated in the collective agreement, unless the collective agreement permits this.

This topic refers to employment law in the private sector only.

Temporary COVID-19 Crisis Measures (as at 20 May 2020)

During the COVID-19 pandemic, the German Government has taken a number of temporary measures affecting employment law. The main instrument to prevent crisis-related job losses has been expanded use of an existing state-subsidised short-time working scheme, while employees prevented from working for reasons such as quarantine or needing to look after children whose schools are closed have been entitled to partially paid leave (also publicly subsidised). Until the end of June 2020, the Government has relaxed, for specified essential industries, normal rules on maximum working hours, minimum rest periods and work on Sundays and public holidays (see Working Time, Rest and Holidays). Employers are required to observe special COVID-19 health and safety standards for the duration of the crisis.

Employment Law in Germany: Quick Facts
  • In recruitment and selection, the employer is permitted to ask only for information that is relevant to the candidate’s suitability for the job, and must observe legal rules on non-discrimination. Recruitment and Selection

  • In establishments with over 20 employees, the works council must give its consent to all recruitment. Recruitment and Selection

  • The maximum permissible probationary period is generally six months. Recruitment and Selection

  • Employment contracts (except fixed-term ones) need not be in writing but employers must provide employees with a written statement of the essential conditions of the employment relationship. Employment Contracts

  • Unless they have an “objective justification”, the maximum duration of fixed-term contracts is generally two years. Employment Contracts

  • In certain cases, an employer may dismiss an employee and offer them re-employment on the basis of a contract with different terms. Employment Contracts

  • Wages must be calculated and paid in euros, at the end of the pay period. Employers must provide detailed payslips and observe rules on deductions from pay. There is a National Minimum Wage. Pay and Benefits

  • Employees must not generally work for more than eight hours per day, though this may be increased to 10 hours if an eight-hour average is maintained over a reference period (generally six months). Working Time, Rest and Holidays

  • Employees must have minimum rest breaks and daily and weekly rest periods (usually Sundays), and are entitled to four weeks’ paid annual leave. Working Time, Rest and Holidays

  • Working parents are entitled to maternity leave and parental leave. Employees can also benefit from other types of leave and time off to provide care and deal with family and personal matters. Parenthood and Work-life Balance

  • Discrimination in employment is prohibited on grounds of sex, race or ethnic origin, religion or belief, disability, age and sexual orientation, though differences in treatment are permitted in some circumstances. Women and men must receive equal pay for the same work or work of equal value. Equality and Discrimination

  • Employees must take the necessary measures, including preventive measures, to protect employees from sexual and other forms of harassment. Equality and Discrimination

  • Most employees have their pay and conditions set directly or indirectly by collective agreements. Workers have a right to join trade unions, and unions have a right to strike in certain circumstances. Industrial Relations and Collective Rights

  • A works council must be set up to represent employees in all establishments with at least five employees. The council’s consent is required for decisions on a number of issues, and it has extensive information and consultation rights. Industrial Relations and Collective Rights

  • Employers have numerous detailed obligations in the health and safety field. Occupational Health and Safety

  • In establishments with more than 10 employees, it is unfair for the employer to dismiss with notice employees who have at least six months’ service, except for certain reasons relating to the employee’s person or conduct, or operational reasons. Dismissal without notice is permitted for compelling reasons. Termination of Employment

  • The employer must consult the works council before dismissing any employee. Particular requirements apply to collective dismissals. Termination of Employment

  • Statutory notice periods apply to termination by the employer or employee. Termination of Employment

  • When there is a business transfer, employees’ employment contracts are automatically transferred to the new employer. Other Key Issues