Germany is a country that offers a lot of flexibility in terms of employment contracts, as long as all legal provisions regarding wages, probationary periods and other rights provided by law are respected; otherwise, in Germany, one is free to agree on all other aspects in the employment contract.
Types of employment contracts in Germany
Oral employment contract
In Germany, it is possible to conclude an oral employment contract and start working in a company, but it is obligatory to record at least the following elements in writing within one month of starting work:
- Name and address of the employee
- Name and address of the employer
- Date of the beginning of the work
- Duration of the employment contract
- Place of work
- Tasks to be performed
- Salary
- Notice to be given in case of termination of employment
Written employment contract
In any case, a written contract is a guarantee for both the employee and the employer and must contain the following elements:
- Name and address of the employee
- Name and address of the employer
- Date of beginning and end of work (if temporary)
- Duration of the probationary period
- Duration of the employment contract
- Place of work
- Tasks to be performed and job description
- Salary received, overtime pay and its calculation method
- Number of working hours per week
- Duration of paid leave
- Notice period of the employment relationship
- A general reference to the applicable collective bargaining agreement
Permanent employment contract
Most employment contracts in Germany are contracts of this type. The permanent contract is a contract for an indefinite period between the employee and the company. When terminating employment, the employer and the employee must observe a notice period, which may be extended depending on the employee’s seniority, on the provisions of the collective agreement or even on any other agreement reached between the employee and the employer and recorded in the contract.
Fixed-term employment contract
A fixed-term employment contract is a temporary contract in which the employee works for the company for a specified period of time and which may be renewed up to three times for a maximum of two years. If the employer presents valid reasons, this two-year period may be exceeded.
The term of a fixed-term contract should be determined based on objective conditions, such as a specific date for termination of the contract or performance of a specific task for a specific event.
In principle, a fixed-term contract can only be used in the following cases:
- a temporary need related to a specific type of work
- facilitates the employee’s entry into professional life
- replaces an employee who is ill.
Temporary employment agencies
Temporary employment agencies work the same way in Germany as in the rest of Europe: the employee is hired by a temporary employment agency, which places him or her with a company for a temporary job of varying duration. The employee is therefore paid by the temporary employment agency and not by the company for which he works. This type of contract cannot last longer than 12 months and must be signed by the three parties involved: Temporary employment agency, employer and employee.
The list of German temporary employment agencies can be found on this website
The vast majority of German contracts are concluded in writing and contain the above points. In any case, the employee and the employer may agree on special clauses that are in addition to the above provisions.
Terms of the employment contract in Germany
Probationary period
Except in a collective agreement, the parties may agree on a probationary period not exceeding six months. During this period, the employee may be terminated with only two weeks’ notice. In most German employment contracts, the parties agree on a probationary period of 3 to 6 months.
Workday
Issues of working hours are regulated by special laws. The daily working time is 8 hours, except on Sundays and holidays, which are not working days. Thus, the maximum working time set by law is 48 hours per week, but collective agreements usually reduce it to 35 to 40 hours.
Paid vacations
The minimum statutory period of paid leave is 24 days per year, excluding Sundays and holidays. Collective agreements may provide for additional paid vacation days.
Wages
The actual salary may be agreed between colleagues, but it may not be lower than the minimum salary specified in the relevant collective agreement. The current statutory minimum wage is 12.41per hour.
It may also be permissible to agree on a variable, performance-related component in the case of fixed compensation. However, it is prohibited to agree on an exclusively performance-related remuneration, and the employment contract must always contain at least one fixed part.
Notice period
If the employer or the employee wishes to terminate the employment contract, the ordinary notice period shall be 4 weeks, without prejudice to collective bargaining agreements or other contractual agreements, and shall increase depending on the employee’s seniority and may be up to 7 months for employees with more than 20 years of service.
