Hiring Employees in Germany in 2025 — Key Legal and Payroll Aspects for Foreign Employers

Germany remains an attractive location for international companies expanding their operations or hiring remote employees. However, German labor law and payroll regulations are complex and require thorough preparation. Especially in 2025, some new regulations affect the hiring process.

In this article, we provide a concise overview of the key aspects foreign employers need to consider when hiring employees in Germany.

1. Employment Contracts — Formal and Mandatory Requirements

Since August 2022, stricter requirements apply to German employment contracts, which also remain fully applicable in 2025.

Mandatory content includes:

  • Full details of both parties (including company address and employee’s private address)
  • Start date and duration of employment (for fixed-term contracts)
  • Job description and workplace
  • Remuneration details (base salary, variable compensation, bonuses, benefits, and payment dates)
  • Working time, holidays, and notice periods
  • References to applicable collective agreements (if any)

All essential terms must be in writing (wet ink signature is still required) and handed to the employee no later than on the first working day.

2. Registration and Onboarding Obligations

Before the employee starts, the employer must:

  • Register the employee for social security (Sozialversicherungsmeldung) via the German payroll system
  • Apply for a tax identification number (if not yet available)
  • Ensure health insurance registration is completed
  • Submit information to accident insurance (Berufsgenossenschaft)

For foreign companies without a German branch, it is necessary to establish a registered payroll number with the German authorities.

3. Social Security Contributions and Payroll in 2025

In Germany, social security is mandatory and covers:

  • Pension Insurance
  • Unemployment Insurance
  • Health Insurance
  • Long-Term Care Insurance

Both the employer and employee share the contributions, which are withheld and remitted monthly via the payroll system.

2025 Update:

The social security contribution ceilings (Beitragsbemessungsgrenzen) were increased as of January 1, 2025. This affects the calculation base for contributions and the total labor cost.

4. Minimum Wage and Working Hours in 2025

The statutory minimum wage in 2025 amounts to €12.82 per hour (adjusted as of January 1, 2025). This applies to all employees unless higher amounts are defined by a collective agreement.

The standard working week in Germany is usually 35 to 40 hours. Overtime regulations depend on individual contracts or collective agreements. Documentation of working hours is mandatory for most employees, especially since the implementation of the new Working Time Recording Law in 2024.

5. Remote Work and Home Office Rules

Remote work and home office are now common practice in Germany. However, specific attention must be paid to:

  • Work location clauses in employment contracts
  • Health and safety compliance (even when working from home)
  • Data protection rules
  • Tax and social security implications if the employee is working cross-border

6. Typical Mistakes Foreign Employers Should Avoid

  • Using non-compliant employment contracts (e.g., missing mandatory information)
  • Ignoring German social security registration requirements
  • Not observing notice periods or statutory working time regulations
  • Underestimating the complexity of payroll and wage tax in Germany

It is highly recommended to consult professionals familiar with German labor and payroll law to ensure full compliance.

Expert Support from WW+KN and Baker Tilly

At WW+KN, a Baker Tilly Company, we regularly assist international clients with employment, payroll, and social security matters in Germany. In addition, we collaborate with specialized labor law attorneys from Baker Tilly who can provide legal advice tailored to your specific situation.

Important Note

This article provides general information only and does not constitute legal advice. Please consult an expert for individual assessment of your specific case.

If you have any questions regarding payroll, employment law, or HR compliance in Germany, please feel free to contact us.

We are WW+KN, a Baker Tilly Company.

You can reach us at info@payrollgermany.de.

 

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