Employee Benefits in Germany

Anke Corbin

Employee Benefits in Germany

The information on this page was current at the time it was published. Regulations, trends, statistics, and other information are constantly changing. While we strive to update our Knowledge Base, we strongly suggest you use these pages as a general guide and be sure to verify any regulations, statistics, guidelines, or other information that are important to your efforts.

Employee Benefits in Germany

What are the Employee Benefits in Germany?

Employee benefits are a key component of attracting and retaining top talent in Germany. German employees generally enjoy a comprehensive package of benefits that goes beyond just base salary. Understanding these benefits is essential for designing competitive compensation packages for your workforce. Here’s a closer look at some of the most common employee benefits in Germany:

Social Security: German employees and employers contribute to a comprehensive social security system, which provides benefits like healthcare, unemployment insurance, and pension benefits.

This system ensures a strong social safety net for employees and contributes to a sense of security and well-being. It also alleviates some of the financial burdens that employees might face in other countries, such as the high cost of health insurance.
Paid Time Off: In addition to the minimum legal requirements for paid vacation and sick leave, many employers offer additional paid time off for various reasons. This could include personal days, educational leave, or sabbaticals. This generous paid time off allows employees to maintain a healthy work-life balance and attend to personal matters without sacrificing income.
Company Car: Providing company cars as a benefit is a common practice in Germany, particularly for higher-level positions or employees who travel frequently for work. Company cars can be a valuable perk for employees, offering them more convenience and flexibility in their daily commutes and professional travel.
Health Insurance: While statutory health insurance is mandatory in Germany, some employers may offer supplemental private health insurance that covers additional services or benefits. This can provide employees with greater choice and flexibility in their healthcare options and potentially give them access to faster treatment or more specialized care.
Pension Plans: Some employers may offer company pension plans that supplement the statutory public pension scheme. These private pension plans can help employees save more effectively for retirement and achieve a higher standard of living in their golden years.
Minimum Wage: Germany only recently passed its first statutory minimum wage. As of October 2022, the national minimum wage is €12. People under 18 years of age and apprentices are permanently exempted from the national minimum wage regulations.
Furthermore, the national minimum wage does not apply to people doing a compulsory or voluntary internship of up to three months as part of their education, studies, or training. However, a person doing a voluntary internship longer than 3 months is entitled to minimum wage.
Long-term unemployed people, who have been registered with the Federal Employment Agency or a Job Center for more than one year, are only entitled to receive the national minimum wage after 6 months on the job. A national minimum wage commission will meet every two years to discuss any adjustments to the minimum wage.
Bonuses: It is common in various industries in Germany to reward employees with a bonus. Bonuses can be paid on a non-contractual or contractual basis or based on a collective bargaining agreement or Works Agreement. In general, when devising a bonus scheme, you are free to decide on the type and extent of bonuses, as long as bonuses are given in a non-discriminatory manner.

In Germany, normal bonuses types include:

Contractual or discretionary bonuses;
Performance related bonuses based on individual, team, division, company, or group results;
Loyalty bonuses; and
Profit sharing bonuses.

Hours of Work in Germany : The protection of working time in Germany is governed by the Working Time Act (Arbeitszeitgesetz (ArbZG)), the German Maternity Protection Act, and the German Young workers Protection Act. Daily working hours may not exceed eight hours.

This maximum can be extended to up to ten hours, if you provide your employee time off in such a way that his average work day (Monday through Saturday) is no more than eight hours over a 24-week period. The employer must agree to compensate the employee for the overtime hours through time off in lieu comp time.

Generally, with specific exceptions, working on Sundays and public holidays is prohibited. Furthermore, there are special rules for certain groups of employees, such as minors (under 18) and pregnant employees. Collective bargaining agreements include exemptions to these mandatory work day maximums.

Holiday and Vacation in Germany: Under the German Federal Holiday Act (Bundesurlaubsgesetz), employees who work six days per week are entitled to a minimum of 24 days of paid vacation (holiday). That minimum is reduced proportionately based on an employee’s work week.

Full holiday entitlement is attained after six months of employment. However, employees are entitled to accrue vacation days proportionally even before the six months are completed. For example, an employee who has worked for four months would be entitled to one-third of their annual leave.

In Germany it is common for employees working a five-day work week to receive 25-30 paid vacation days. Your employees are also entitled to paid public holidays, which cannot be counted against their minimum vacation days. There are nine federal public holidays and many states have their own public holidays.

Rest Breaks in Germany: After work, you must provide your employees with an uninterrupted rest period of at least 11 hours. If your employees’ work day is more than 6 hours, but less than 9 hours, you must give your employees a 30 minute break. For work days longer than 9 hours, you must give your employees at least 45 minutes break.

Sick Pay and Leave in Germany: The German Maternity Protection Act (Mutterschutzgesetz) and the German Act on Parental Benefits and Parental Leave (Bundeselterngeld- und Elternzeitgesetz) protect pregnant women and parents.

Females employees must not work:

For six weeks prior to delivery, unless they are willing to do so; and
For eight weeks, or in the case of a premature birth or multiple childbirth, 12 weeks after delivery.

During maternity leave, your employees are entitled to their gross salary. Dismissal during this time and up to four months after delivery is restricted and subject to the competent agency’s approval.At the end of the parental leave period, employees are entitled to return to their former, or an equivalent, position.

Unless other arrangements have been agreed to through a collective bargain agreement or an internal company policy, a male employee is only entitled to one paid day off for the birth of his child.

Both parents are entitled to 3 years of parental leave per child. Parents can claim this leave for each child, even if the time period overlaps. A 12-month period may be transferred to another time period between the child’s third birthday until they turn eight. This applies to adoptive and foster parents. Parents are not entitled to employer paid remuneration during this leave period.

The basic parental allowance during the first 14 months of the child’s life is 65% to 100% depending on the net income before the birth. The lower the income, the higher the percentage. It is a maximum of 1,800 Euro per month. Fathers and mothers can receive it for a maximum of 14 months in total and can freely divide the period among themselves. One parent can claim a minimum of 2 and a maximum of 12 months.

Employees are also entitled to short-term paid leave when care is unexpectedly needed for dependants or close family members. Employees can claim leave to care for a sick child if either:

The child is under the age of 12 or disabled; or
A medical certificate confirms the need for care and the employee is the only person able to provide the care.

This leave cannot exceed ten days (single parents are entitled to 20 days) per year, per child. Employees are entitled to unpaid long-term care leave for up to six months to take care of close relatives (this includes children (foster, adopted, grand), parents, parents-in-law, spouses and partners in registered partnerships).

Employee Incentives Programs in Germany

Staying informed about employee incentive programs in Germany empowers you to:

Boost Employee Engagement and Performance: Well-designed incentive programs can motivate and engage your workforce, leading to increased productivity, performance, and a sense of ownership. By recognizing and rewarding valuable contributions, incentive programs can create a culture of appreciation that encourages employees to go the extra mile. Additionally, aligning incentive programs with specific company goals can incentivize employees to actively contribute to the achievement of those goals, fostering a sense of shared purpose and collective responsibility for the company’s success.

Retain Top Performers: Competitive incentive programs can help you retain valuable employees by demonstrating your appreciation for their talent and contributions. Recognizing and rewarding top performers can improve employee satisfaction and reduce the risk of them seeking opportunities elsewhere. Additionally, incentive programs can help you attract high-caliber candidates in the job market by showcasing your commitment to investing in your workforce and rewarding excellence.

Examples of employee incentive programs in Germany can be:

Performance-based Bonuses: Rewarding employees for exceeding targets or achieving specific goals.
Profit-sharing Programs: Sharing a portion of the company’s profits with employees can foster a sense of ownership and engagement.
Stock Options: Granting employees stock options can incentivize them to think long-term and contribute to the company’s growth.

In Germany, it is well-known that attracting and retaining top talent is crucial for business success. Offering a competitive benefits package and implementing effective incentive programs can significantly contribute to achieving this goal, fostering a positive work environment, and driving business growth.

References

Not ready to commit to full international expansion yet?

Start with Globig Essentials – our free membership designed to help you learn, plan, and take confident first steps.

Join 15,000+ global-minded founders and teams accessing

Country Overviews So You Know Where To Start

How-To Videos & Podcast Insights From Experts

Bi-Monthly Global Business Newsletter Curated For Growth

Expert Webinars To Learn More

Unlock practical guidance, real-world strategies, and tools you can use immediately – it’s free forever, no credit card required.