The monthly minimum wage in Germany is set at EUR 2088.
Mandatory benefits for employees in Germany encompass the Pension Fund, Health Insurance, Accident Security (Worker Compensation Insurance), Unemployment Insurance, Nursing Care Insurance (Long-term Insurance Fee), and Maternity benefits.
Regarding overtime pay, it is not obligatory. Overtime is defined as hours worked outside the standard working hours, which typically amount to around 40 hours per week, from Monday to Friday. Employees receive the same hourly wage for overtime as they do for their regular working hours.
Legally, employees are not entitled to additional bonuses. However, employers have the option to grant voluntary bonuses, which will be subject to taxation as part of the employee's salary.
In Germany, employers usually handle payroll on a monthly basis, and many companies adopt the following schedule:
Individual income tax in Germany follows a progressive rate system, ranging from 14% to 45%. The specific rate is determined based on the employee's tax class (which considers factors such as marital status and multiple income sources) and the amount of monthly wages.
The Federal Government updates these tax rates annually.
A comprehensive employment contract in Germany should include various essential details such as the names and addresses of both parties, the commencement date of employment, the designated workplace, a clear job description, the complete salary breakdown (including all supplements), the agreed-upon payment date, the stipulated working hours, the duration of annual holidays, and the notice period for termination.
The statutory notice period for employees in Germany is a minimum of four weeks, to be given either prior to the 15th of the month or before the last day of the following month. The specific length of the notice period will depend on the employee's tenure with the company.
Although there is no statutory requirement for severance pay in Germany, it is common practice at the local level to offer severance to employees who have been with the company for at least six months. This measure is taken to reduce the risk of potential litigation.
Typically, newly hired employees should anticipate a probationary period of three to six months. During this time, either party can terminate the employment with a two-week notice period.