Remuneration (Pay, Wages and Salaries)

Minimum Wage

The minimum wage, by law, for employees is EUR 9.19 an hour. (From January 1st 2020 the minimum wage will be EUR 9.35 an hour.) Any contract or work agreement for any amount below that is partly invalid. The minimum wage does not apply to trainees, young people doing entry-level qualifications, or people in compulsory practical training as part of an apprenticeship or university-level study course. (These exceptions are normally subject to a case-by-case assessment.)

If the minimum wage is not paid, employees can make a claim for the difference between their actual pay and the minimum wage from their employer. In addition, subcontractors cannot only make a claim for payment of the minimum wage from their direct employer, but they can also claim it from the main contracting company. Violations of the Minimum Wage Act can trigger fines of up to EUR 500,000.


Another part of the pay package can involve bonuses. There are a large number of different types of bonuses in Germany. These can include items such as supplemental pay; profit sharing commission; incentives and staff bonuses.

Supplemental Pay

Supplemental pay is offered in addition to the basic pay. It may be granted for any number of reasons – for example to compensate for particular difficulties on the job or for night shift work or work on Sundays and holidays.

Illness and Sick Pay

If an employee is not able to perform their contractual duties because of a physical or mental incapacity or illness, he or she can take time off from work. The employer must, however, be informed immediately. If an absence for illness extends over three consecutive days, the employee must submit a doctor’s note to the employer.

German law requires that employees be paid 100 percent of their salary or wages by their employer during the first six weeks of sickness. Under certain circumstances, this six-week period can be triggered more than once a year.

If an employee again falls ill due to the same underlying illness, the six-week period will start again if six months have passed since the end of the last sick leave, or if one year has passed since the beginning of the first sick leave. If the underlying cause of illness is a new one, the six-week period automatically starts again.

Following the six-week period, employees are entitled to statutory/private insurance sickness benefits. The sickness allowance amounts to 70% of an employee’s normal pay. The maximum period for payment of this allowance is 78 weeks.

Work Days and Hours

A normal workweek

The workweek is defined as the 6 days of Monday-Saturday. The working hours during normal workdays may not exceed eight hours and therefore 48 hours per week. The workday can be extended under certain circumstances to ten hours. Night work is only allowed for eight hours per working day. On-call work that requires the employee’s presence at the workplace also counts as working time and in some cases as overtime. On-call work in the form of constant availability, for example stand-by work, on the other hand, does not count as working time. Work on Sundays and public holidays is generally prohibited.

There are exceptions available for workers in the service industry. However, work on Sundays has to be compensated for by corresponding time off within the next two weeks (or eight weeks in the case of work on public holidays).

A working day of more than six, but no more than nine hours, requires a scheduled 30 minute rest break. This can be may be split into two breaks of 15 minutes. A 45 minute break is required after six hours of work in the case of a working day of more than nine hours. At the end of the working day, there must be an uninterrupted rest period of a minimum of 11 hours.

Holiday/Vacation Time

In Germany the minimum holiday/vacation entitlement is 24 working days a year. This is based on a working week of six working days (excluding Sundays). The German system distinguishes between working days (Werktage) and office days (Arbeitstage). Since office days are generally only from Monday to Friday, the four-week minimum vacation amounts to 20 office days. Employers regularly grant more than the minimum vacation. Between 25 and 30 days per year is common practice.

The full vacation entitlement starts after an employee has been on the job for six months. If an employee is terminated before these six months have passed or within the first half of a calendar year, the employee will only be entitled to 1/12 of the annual vacation entitlement for each month of the employment relationship. In the event of termination after the first six months and within the second half of the calendar year, an employee will be entitled to the full annual vacation.

Employees must apply for vacation time and the employer must approve the written request. An employer can turn down a request due to urgent operational reasons or vacation applications of other employees who, due to “social factors”, have a higher priority.

There is no vacation entitlement when an employee has already taken vacation while in a previous job during the same calendar year. The previous employer must certify the vacation the employee has already taken.

During the vacation period, employees are entitled to full remuneration. Frequently, the employer also grants a special vacation bonus as a voluntary staff bonus.

In general, employees must take their annual holidays/vacation during the calendar year. Otherwise, it is forfeited. However, unused holiday can be carried forward until the 31st of March of the next calendar year if the employee was unable to take the holiday due to operational or personal reasons. If any holiday entitlement still remains at the end of the employment, employees can claim financial compensation for the days not taken.

Maternity Matters/Parental Leave

Pregnant women are not obliged to work at all in the last six weeks leading up to the expected date of birth, unless they explicitly declare their willingness to do so. The same applies to a period of eight weeks following the birth, during which the mother is absolutely forbidden to work.

Maternity leave starts automatically without any notice. However, if the pregnant woman has a medical certificate that states that the health of the mother or the unborn child will be endangered due to the employment, the employer may be prohibited from employing the employee before the start of the six-week period before childbirth (individual maternity protection period).

During the six weeks prior to birth and the eight weeks following birth, women are entitled to maternity pay that is equivalent to their monthly remuneration during the last three months before the start of their maternity leave.

During pregnancy and until four months after the childbirth, it is illegal to terminate employment unless the competent public authorities have granted their prior consent. In practice, public authorities will only grant this consent under exceptional circumstances (for example, the shut-down of the entire business). A woman’s right to terminate her employment agreement during this period remains unrestricted.

Both the father and the mother of a newborn child are entitled to parental leave for a period of up to three years (until the child has reached the age of three.) In Germany, any mother or father who is in an employment relationship may apply for parental leave. The applicant must be an employee and have a German employment contract. This also applies to employees with time-limited contracts, part-time contracts and marginal employment, as well as to apprentices in companies.

Parental leave can be taken by the father or mother separately or together. Up to 24 months of the three-year period can be transferred to a later time until the child reaches the age of 8.

An additional option, “Parental Allowance Plus”, is also available for parents of children born on or after 1 July 2015. This gives employees the right to receive the parental allowance from the government for a period of up to 24 months or, if both parents decide to take parental leave, parental allowance can be shared between the parents for a period of up to 28 months.

An employee on parental leave may be employed part-time for a maximum of 30 hours per week.

During their parental leave, employees may apply twice for a reduction of their working time, provided that, among other conditions, the working time is reduced to 15 to 30 working hours per week for a period of at least two months. The employer may only deny such a request within four weeks, stating the grounds for the denial in writing.

In order to provide a clear situation for both parties, an employee must request parental leave in writing seven weeks before its onset or 13 weeks in the period between the child’s third and eighth birthday, stating the precise time he or she wishes to take parental leave within two years.

During the parental leave, employers are not obliged to pay the employee’s salary. However, during parental leave, employees may be entitled to parental benefits that are provided by the state. Under the German law the parental benefits amount to 67% of the employee’s average income in the 12 months prior to the child’s birth. There is no income limit, but the maximum amount of parental benefits is EUR 1,800 and the minimum amount is EUR 300. Parents are entitled to parental benefits for 14 months starting from the date of the child’s birth. One parent may only receive the parental benefits for 12 months.

Citizens of European Union countries and of Iceland, Liechtenstein, Norway and Switzerland may receive parental benefits if they live and work in Germany.

Employees may be entitled to parental benefits even if they are citizens of another country. For this purpose, the employee must have a residence permit that allows him or her to work in Germany. This is the case if the applicant has a permanent residence status or if he/she has a residence permit and is permitted to work in Germany.

Protection from Discrimination

The Equal Treatment Act (AGG) contains special rules prohibiting discrimination in the employment relationship based on specific characteristics provided for in the Act. The following characteristics are protected from discrimination:

  • Age
  • Disability
  • Race
  • Religion or belief
  • Gender
  • Sexual orientation

However, discrimination and harassment are still generally prohibited even where they do not involve any of the above characteristics. Discrimination is defined as unequal treatment based on one or more of the above characteristics, which is not justified.

The following types of discrimination are prohibited:

  • Direct discrimination. Treating an individual less favourably because of a characteristic protected by the AGG or any other unjustified reason. Direct discrimination can be lawful if the employer can objectively justify the treatment.
  • Indirect discrimination. Applying a policy, criterion or practice to all individuals in a group, which disproportionately disadvantages individuals with a characteristic protected by the AGG or for any other unjustified reason, unless the discrimination is objectively justified.
  • Victimisation. Subjecting an individual to a detriment or dismissal because they have taken action in relation to a protected characteristic (for example, submitted a discrimination grievance).

However, not every instance of unequal treatment constitutes discrimination. Discriminatory treatment can be justified if a substantial and vital work-related requirement can be demonstrated.

Article contributed by Peter Fürnthaler

This article is meant to provide an overview on the most important rules and provisions. It can, of course, not be a substitute for in-depth legal advice, but might serve as a starting point for those interested in the German marketplace and employment laws.