START OF THE EMPLOYMENT RELATIONSHIP

• Who can work in Germany?

Citizens of the European Union are free to work in Germany without restrictions. The same applies to citizens from Iceland, Lichtenstein, Norway and Switzerland. All other nationalities are required to have a valid visa to enter Germany (some exceptions apply) and depending on the details of the visa, it may be possible to apply for a residence permit, which entitles to work.

Under certain circumstances, minors are allowed to work as well. The Act on Protection of Youth Employment governs the rules of working minors aged between 15 and 18. The governmental decree of permission of employment for children sets further rules for the ability to work for children from the age of 13. Parental consent is the indispensable requirement.

• What are the main sorts of labour contract that exist in Germany?

   o Labour contracts (full or part time)
   o So-called mini and midi job contracts
   o Freelance contracts 

Not governed by labour law are the services rendered by civil servants (“Beamte”) for whom special rules apply.

Labour law in Germany requires that labour contracts are drawn up in writing and must include the main obligations of the employment relationship. If the contract is not signed at the start of the employment, the terms must be summarised in a written document within the first month (see below for more information).

In most cases, the employer will use standard contract forms. The employee is then protected by the German Standard Terms Act, which sets out that unreasonable or surprising terms are not valid but the employee is still protected by statutory law. The contract can be in any language, it is advisable though to have it in German or bilingual as any employment litigation will be handled by a German court.

• What are the main features of each of them?

Under a full or part time labour contract (“Arbeitsvertrag”, “Dienstvertrag”) the employee renders his or her services to the employer under the terms of the labour contract. The employee becomes personally dependent on the employer who has the authority to give the employee instructions as to when and how the services shall be rendered. German labour law applies to the employment relationship.

A so-called mini job contract is an alternative form of labour contract for employees working only a very short time per month. The monthly maximum salary would be EUR 450 per month. So-called midi job contracts are available for employees earning between EUR 450.01 and 850 per month. Both contract forms are subject to advantageous social security and tax rules.

Under a freelance contract (”freie Mitarbeit”), the freelancer renders his or her services to a third party under the terms of a service contract. The freelancer is not personally dependant and the principal is not entitled to give instructions. Labour law does not apply to these forms of contracts.

• What information should employees be given in Germany?

According to the “Nachweisgesetz” at least the following information must be given to the employee in writing:
Address of the employer and the employee, date of start of employment, place of work, work description, salary, working hours, holiday entitlement, notice periods, applicable collective bargaining agreements and works council agreements. In case of a fixed-term employment contract, the end of the employment must also be documented. 

DURING THE EMPLOYMENT RELATIONSHIP:

• What are the main employment rights in Germany?

The main employment rights are

   o Equal treatment - special rules prohibiting discrimination in the employment    
      relationship based on specific characteristics such as age, race, gender,  
      religion or disability.

   o Minimum wage - EUR 8.84 an hour per 1 January 2017.

   o Sick pay

   o Holiday entitlement

   o Maternity leave and pay

   o Maternity and paternity leave (parents are entitled to a leave for a period of up
      to three years)

• What are the maximum permitted daily, weekly, monthly and annual  
   working hours?

   o Daily – usually 8 hours (an extension is possible to 10 hours if within 6  
      calendar months the average working time per day is not more than 8 hours.)

   o Weekly – usually 40 hours

• Is there any minimum number of hours required?

German law sets strict rules on part-time work and fixed-term employment contracts. In a company with more than 15 employees, the employee has the right to ask for reduced working hours after being employed for more than six months by requesting it three months in advance.

• What is the minimum holiday entitlement?

The minimum holiday entitlement is 20 working days per year based on a 5-day week of work or 24 working days in a 6-day workweek regardless of how many hours of work per day are required.

• Can a contract be modified while still valid and in force? If so, under which circumstances?

Yes, but only by mutual consent.

In some cases, the employer has the possibility to dismiss the employee giving him or her the option of altered conditions of employment (“Änderungskündigung”).

• Are any particular employment relationships subject to special   
   protection?

Yes. The following rules on special protection apply:

   o The data protection officer enjoys special protection from dismissal and 
      removal from office.

   o Disabled employees may only be terminated upon approval of the authority for
      the integration of disabled employees.

   o No termination of the employment of a pregnant woman during the pregnancy
      and until four months after birth.

o Special termination restrictions apply also for members of the works council.

• Are there any obligations to consult with a works council and/or to 
   undertake collective bargaining?

Yes, in case a works council is established within the company, it has the following rights of co-determination:

   o The works council must be heard before any hiring or termination of an
      employee.

   o Also for all company internal rules affecting the employees (such as code of 
      conduct, dress codes, smoking rules) the works council has a co-determination
      right.

   o That applies also for the introduction and application of telephone and IT 
      equipment and software or for company policies as to working hours or
      holidays.

   o Further, any salary matters, bonus structures or performance related benefits
      require the involvement of the works council.

   o Finally, for an organisational change, which affects the workplace the works
      council has a co-determination right. Such measures include total closure of
      business or major disadvantages for the employees.

END OF THE EMPLOYMENT RELATIONSHIP:

• When and how can an employer terminate an employment relationship?

   o Termination by mutual agreement between the employer and the employee.

   o Termination by unilateral notice taking into account statutory restrictions.

   o Notice period is dependent on length of employment relationship.

   o Unilateral termination without notice period in case of important reasons within
      2 weeks of the employer becoming aware of the important reason or when the
      circumstances arise.

• When and how can an employee terminate an employment relationship?

   o Termination by mutual agreement between the employee and the employer.

   o Termination by unilateral notice taking into account the notice period and
      possible restrictions set out in the labour contract.

   o Unilateral termination without notice period in case of important reasons within
      2 weeks of the employee becoming aware of the important reason or when the
      circumstances arise.

 • What are the economic consequences in each case?

German law does not know the concept of severance payments. The only statutory exception is a social plan with the works council or under a collective bargaining agreement. However, it is common practise that employers pay 50% of the monthly salary per year of service in order to avoid employment litigations.

If an employee challenges the validity of a termination notice, his or her litigation will aim for continued employment. Such litigation is quite common in Germany. Nevertheless, it is common to settle such litigation by paying compensation to the employee.

• Are there any situations in which an employment relationship would 
  terminate automatically and without the need for action by either party?
  If so, what are they?

   o Reaching retirement age, if agreed upon

   o Death

   o The end of a fixed-term for which the employment contract was concluded.