Employing in Germany
Payroll Services Germany
Improve your company’s efficiency with Payroll Outsourcing in Germany through PeoplePay Global. Our professional payroll team will ensure accurate Reports, Salary Processing and timely payments, whilst efficiently staying in line with German Tax Laws. All Social Security Contributions and Statutory Reporting will be handled with care, freeing you and your employees’ time to focus on company growth.
Reduce your administrative burdens by minimising errors with our reliable and secure payroll solutions, tailored to all operating companies across Germany.
German Payroll Services
Streamline your company management with professionally organised Payroll Outsourcing in Germany through PeoplePay Global. Our services are designed to support all aspects of your business payroll systems, by handling everything from Salary Calculations to Income Tax.
By outsourcing your Payroll, you can reduce administrative stress, ultimately minimising costly errors and ensuring that all employees are paid accurately and promptly. We will ensure that all mandatory Social Security Contributions are organised and processed thoroughly, even with payments such as Church Tax, to ensure your business can run smoothly.
Our payroll specialists will stay up to date with evolving labour laws, giving you the full confidence that your payroll will remain compliant even through changes. Furthermore, we will ensure that your data security is improved and your reports are transparent and accurate, to free internal teams to focus on strategic priorities.
Choose your reliable outsourced payroll partner in Germany with us today to save time and maintain full compliance. For more information, contact us to start your journey to easy payroll management.
In Germany, pay and taxation are structured with gross salary, mandatory social security contributions and progressive income tax.
The national minimum wage, as of 2026, is €13.90 gross per hour, with a minimum of 40 hours per week for full-time workers. Daily hours are usually 8 hours, with overtime often compensated with extra pay or time off, depending on the contract.
Employees in Germany will receive gross salaries, from which mandatory deductions will be made. Employers will also pay contributions on top of any gross salaries, for example:
- 20-22% of gross salary paid by employees
- Employers additionally add 21-22% of gross salary
Germany uses a progressive tax rate, plus a solidarity surcharge and church tax where applicable. Anything earned under €11,1604 will be in the tax-free bracket. The rest are taxed as follows:
- 14-24% on income up to €20,000
- 24-30% on income up to €34,000
- 30-42% on income up to €61,000
- 42% on income up to €277,825
- 45% on income above €277,826
In addition, there is a solidarity surcharge of 5.5% on income tax and 8-9% on church tax, where applicable.
In Germany, pension contributions are part of the country’s mandatory social security system, which covers retirement, disability and survivor benefits. Both employees and employers are required to contribute.
The German public pension system is largely pay-as-you-go (PAYG). This means that current workers’ contributions are actually funding the current retirees. The eventual pension that you will end up receiving depends on the years of contributions you have made, your income level during working years, and the contribution points you have accumulated. Supplementary private or occupational pensions are also available.
The employee’s contribution is deducted from their gross salary monthly, with the employer contributing the difference. Employees will typically pay 9.3%, with their employer matching that contribution for a total of 18.6% of their gross salary. Self-employed individuals may contribute voluntarily or through schemes, typically paying ~18.6%.
The typical retirement age in Germany is 67 for a full pension, with contributions creating pension points based on your income relative to the national average. The standard pension replaces roughly 45-50% of average lifetime earnings if contributions are fully funded.
In Germany, working hours are regulated by the Working Hours Act, which sets maximum limits, rest periods and rules for overtime.
During standard working hours, full-time employees typically work 40 hours per week, 8 hours per day. Employers and employees can agree to flexible schedules, within legal limits.
The maximum per day is 10 hours if the average over 6 months does not exceed 8 hours. The weekly maximum allowed hours is 48.
Overtime is usually compensated via extra pay of 25-50%, or compensatory time off.
In Germany, statutory leave and time off are regulated by the Federal Vacation Act. Employees have strong legal protections, with many collective agreements providing benefits beyond the minimum.
Annual leave has a minimum of 20 paid days per year, based on 5 working days a week. For anyone working 6 days a week, this will increase to at least 24 days. In practice, most full-time employees will receive 25-30 days of paid leave per year, depending on their contracts or collective agreements. Any unused leave must be used within the year; however, carrying over time is typically limited or not allowed.
Germany has 9-13 public holidays per year, depending on the federal state. If a public holiday falls on a normal working day, employees will get paid time off. If employees are required to work, for example, in healthcare or hospitality, they will receive compensatory rest or premium pay.
Germany has strong sick leave protections, providing 100% of your salary for the first 6 weeks of illness. After the 6 weeks, health insurers will pay ~70% of gross salary.
For maternity leave, you will receive 6 weeks of optional leave before birth, and 8 weeks of mandatory leave after birth. Employees are paid 100% of their net income, via the employer and their health insurance. Parental leave can be offered for up to 3 years per child, with full job protection during that time. Employees will receive ~65% of their prior net income and will be paid for 12-14 months.
In Germany, termination of employment is strictly regulated and strongly protective of employees. The Dismissal Protection Act and the Civil Code provide the main legal framework.
For an ordinary termination with notice, companies with more than 10 employees (and employees who have worked there for more than 6 months) must give a valid reason. These reasons may be:
- Personal: long-term illness, loss of required qualifications
- Conduct-related: repeated misconduct requires a prior written warning
- Operational: downsizing, restructuring, business closure
If a valid reason is not provided, then the termination will likely be invalidated.
For termination without notice, this applies only to serious misconduct, such as theft, fraud, violence, or breach of trust.
Minimum statutory notice periods are set in the Civil Code. Notice is typically effective at the end of the calendar month, with employees usually having a 4-week notice period. Some examples of these are:
- 4 weeks for less than 2 years of service
- 1 month for 2 years of service
- 2 months for 5 years of service
- 3 months for 8 years of service
- 4 months for 10 years of service
- 5 months for 12 years of service
- 6 months for 15 years of service
- 7 months for 20 years+ of service
German law does not automatically guarantee severance pay, but it will typically be provided. It is often negotiated or ordered by a labour court, equaling 0.5 months’ salary per year of service. For example, for 10 years of service x 0.5 month salary, you would receive 5 months’ pay.
Employees can challenge a termination at the Labour Court. They can file a claim within 3 weeks of receiving their termination notice, and, if successful, they will either be reinstated or receive severance pay.
If you need help regarding global HR, company management, benefits and compensation, and more, explore our payroll solutions.
