Germany is Europe's largest economy and its largest talent market, with strong worker protections and a social-insurance system split roughly in half between employer and employee. All-in employer cost runs around 1.2x the gross salary, and dismissal is closely regulated once someone is past probation. Here is what to know before your first German hire.
Employment is governed by a mix of federal statutes (the Civil Code, the Protection Against Dismissal Act, the Federal Leave Act) and, in many sectors, collective agreements. Contracts are typically in German, working time is capped at 8 hours a day under the Working Time Act, and social-insurance registration is mandatory. Hiring through an EOR means that registration, payroll, and compliance sit with us.
Germany funds social insurance through contributions split roughly evenly between employer and employee, on earnings up to annual contribution ceilings. The employer share lands at about 21% on top of gross salary.
Pension and unemployment contributions apply up to one earnings ceiling, health and long-term care up to a lower one. Above those thresholds the percentages stop accruing, so very high salaries carry a smaller effective burden.
Employees pay wage tax (Lohnsteuer) on a progressive scale from 0% up to 45%*, plus a solidarity surcharge for higher earners and optional church tax of 8-9%. Withholding is the employer's job, which under EOR means ours.
*All figures are estimates from public sources (2025-26), pending ops verification - same basis as the EOR cost calculator. Not tax or legal advice.
Compliant German employment contract, payroll, social insurance, and statutory benefits, handled. One invoice, flat $399 per month.