Employer of Record (EOR) in Germany - Everything You Need to Know.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party service provider that legally employs workers on behalf of another company. While your business directs the employee’s day-to-day work, the EOR is the official, legal employer in the eyes of German authorities.

The EOR takes on all employment responsibilities — drafting contracts, running payroll, handling taxes, managing benefits, and ensuring compliance with German labor laws.

This setup allows companies to hire in Germany quickly, compliantly, and without the need to establish a local legal entity.

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What worknow EOR does in Germany

Employment Contracts

worknow drafts German-language employment contracts that fully comply with the German Civil Code (BGB) and, where applicable, collective bargaining agreements. All contracts include the mandatory provisions on notice periods, working hours, vacation entitlements and salary structure and are designed to be fully enforceable before German labor courts.

As a Germany-based employer of record, worknow ensures that contracts reflect current legal requirements and market practice.

Payroll & Taxation

worknow runs payroll exclusively in Germany and in euros, including all legally required deductions. We calculate and remit employer and employee contributions to health, pension, unemployment and long-term care insurance and handle all filings with German tax offices and social security authorities.
This allows foreign companies to employ staff in Germany without having to navigate the complexity of German payroll and tax law themselves.

Benefits Administration

worknow administers all statutory employee benefits in Germany, including health insurance, accident insurance and pension contributions. In addition, we advise on common market-standard benefits such as meal vouchers, mobility budgets or company pension schemes to ensure competitive and compliant employment packages.
All benefits are structured in line with German legal and tax requirements.

Compliance & Risk Management

As employer of record, worknow acts as the legal employer in Germany and ensures full compliance with local authorities, audits and reporting obligations. We maintain legally compliant working-time documentation in accordance with the German Working Hours Act (Arbeitszeitgesetz) and manage terminations strictly in line with the German Dismissal Protection Act (Kündigungsschutzgesetz).

Our Germany-only focus provides a high level of legal certainty and risk mitigation for foreign employers.

HR & Employee Support

worknow serves as the local HR contact for employees in Germany and supports them with payroll questions, sick leave, parental leave and all statutory entitlements. Employees benefit from a clear point of contact and personal support, while client companies gain confidence that their German workforce is properly managed under local law.

Why Germany is Especially Complex

Germany is an attractive market, but it also has one of the most regulated employment systems worldwide. A few key challenges include:

Strict Labour Laws

Detailed rules for working hours, vacation, overtime, and termination.

Strong Employee Rights

Notice periods, protections against unfair dismissal, mandatory co-determination

Staff Leasing Regulations

Many industries have binding wage agreements and conditions.

Collective Agreements

Specific licensing requirements apply when employees are assigned through third parties.

How much does employment in Germany cost, and how much is an EOR?

Hiring in Germany involves more than just paying a gross salary. Employers are required to contribute to statutory social insurance, health, pension, and unemployment schemes — typically adding around 24 % on top of gross pay.

Monthly gross salary (EUR)

EOR fee is shown separately and not included in the employer cost totals.

Employer Cost (Monthly)

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Gross salary + employer contributions (excludes EOR fee)

ER Contribution (Monthly)

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Sum of employer-side contributions

EOR Fee (Monthly)

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Displayed separately (not included above)

Employer Cost Report

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Monthly ER Contribution	Amount

Employer cost structure in Germany

Based on a Gross Salary = 100%

Pension insurance (9.3 %) – statutory retirement fund
Health insurance (8.9 %) – statutory health insurance
Long-term care insurance (1.8 %) – nursing and care contribution
Unemployment insurance (1.3 %) – unemployment protection
U1 (2.5 %) – reimbursement (partial) for longtime sickness
U2 (0.34 %) – reimbursement for maternity and parental leave
U3 (0.15 %) – insolvency levy

Employers in Germany pay about 24 % on top of gross salary in mandatory contributions.

These contributions ensure strong social protection but make employment administration complex — worknow handles payroll, benefits, and compliance for you, so you know exactly what employment in Germany really costs.

worknow fees

Our Employer of Record service provides full employment, payroll, and compliance coverage in Germany.
We handle all statutory obligations — from contracts and payslips to social security, benefits, and tax filings — so you can focus on your business.
Our EOR Service Fee is standard at 599 Euro plus 199 Euro for On- and 199 Euro for Offboarding.
We provide a clear, all-inclusive monthly fee that covers everything required for compliant employment in Germany.

The monthly service fee covers all employment administration, payroll, statutory filings, benefits coordination, and local compliance.
Fees only apply while the employee is actively employed under worknow’s EOR arrangement.
Payments for gross salaries and employment costs are due by the 15th of each month, with salary disbursement on the third-last German banking day.
A deposit equal to one month’s gross salary per employee is required before onboarding and will be offset against the final payroll upon termination.

Get in touch for a transparent quote based on your specific needs.

Paid time off and holidays in Germany

worknow ensures fair, transparent and fully compliant employment conditions in Germany, based on applicable German labor law and statutory requirements.

Employees benefit from strong employment protections, clearly regulated working conditions and paid leave.

Annual vacation is defined in line with German law and is commonly extended contractually depending on the role, seniority and overall employment setup.

Germany observes 9 to 13 public holidays, depending on the federal state in which the employee is based. For example, Bavaria and Baden-Württemberg have more public holidays than Berlin or Hamburg.

In case of illness, employees in Germany continue to receive their full salary for up to six weeks, as required by German law.
Statutory reimbursement mechanisms apply, ensuring predictable employer costs.

Overall, German labor law provides a high level of employee protection. worknow ensures that all employment conditions are implemented correctly and in full compliance from day one.

Ok, I am convinced! What are the next steps?

Step 1: Tell us who you want to hire

You send us a short message outlining your hiring plan in Germany. We need to know who you want to hire, for which role, the intended start date and the planned salary.

Based on this information, we quickly assess feasibility and confirm that the setup works under German labor law.

Step 2: Receive a clear offer

You receive a transparent offer with fixed pricing. The standard monthly fee is EUR 599 per employee, plus one-time onboarding and offboarding fees.

There are no hidden costs and no percentage-based pricing. Once you confirm, we take over the setup.

Step 3: We handle contracts and compliance

worknow prepares all required contracts and statutory documents under German law.

You don’t need to deal with German legal requirements, authorities or compliance details — we manage this end to end and guide you personally through the process.

Step 4: Smooth onboarding of your employee

We coordinate the onboarding, collect all required employee data, run the mandatory safety instruction and set up payroll.
Everything is prepared so the employee can start on time and fully compliant.

Step 5: Your employee starts working

Your employee starts work as planned — legally employed in Germany through worknow.
We run payroll, handle taxes and social security and act as the local HR contact, while you stay in control of day-to-day work and performance.

Ongoing Support

Throughout the entire employment, you have a dedicated contact at worknow. We support you and your employee with payroll questions, changes and compliance, so you can focus on growing your business.

Deep Dive FAQs

What Can Go Wrong with the Wrong EOR

Germany is not forgiving when it comes to mistakes in employment compliance. Choosing an inexperienced or careless EOR can result in severe consequences:

Unlicensed labor leasing

In Germany, hiring through the wrong structure without proper licenses (Arbeitnehmerüberlassungserlaubnis) can be illegal. Violations can lead to fines of up to €500,000.

payroll errors

Late or incorrect salary payments destroy employee trust and may violate German law.

Illegal Contracts

If contracts do not meet German legal standards, they can be challenged in court, leaving you exposed.

Misclassification

Treating someone as a contractor when they are an employee can result in back payments of wages, taxes, and social security contributions — plus penalties.

Social security non-compliance

Failing to make mandatory contributions results in liability for both employer and employee shares, with penalties and interest.

Termination mistakes

If dismissals are not executed strictly according to German labor law, employees can sue — and German courts often side with employees.

Important: Even if the EOR makes the mistake, your company may still be held responsible as the economic employer.

Real-World Example

A U.S. SaaS company hires a sales manager in Munich via a low-cost, global EOR. The EOR issues an English-only contract without the required German clauses on notice periods and vacation entitlements. After a dispute, the employee takes the case to a German labor court.

The court rules the contract invalid in key aspects, awarding the employee additional pay and benefits. Authorities also fine the company for incorrect social security filings. The result: tens of thousands of euros in unexpected costs, reputational damage, and disruption to operations.

This situation could have been avoided with an EOR experienced in German labor law.

Conclusion

Germany is one of the most attractive markets in Europe — but also one of the most complex for foreign employers. An Employer of Record is the safest, fastest, and most efficient way to hire employees in Germany without establishing a local entity.

However, choosing the wrong EOR can be disastrous: fines, lawsuits, reputational damage, and even bans on operating in Germany are possible.

That is why it is essential to partner with a specialized EOR with proven German expertise — one that understands local laws, speaks the language, and has the proper licenses.

With the right EOR, you gain:

✔︎ Peace of mind through full compliance.
✔︎ Access to top German talent within days.
✔︎ A long-term, scalable hiring solution.
✔︎ Expand into Germany with confidence — knowing that every legal, administrative, and HR detail is in expert hands.

worknow GmbH
Schlüterstraße 37
D-10629 Berlin

+49 (0) 30 887 212 02 
info@w-now.de 

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What is an Employer of Record (EOR)?

What worknow EOR does in Germany