Employee Benefits in Germany: What To Expect As An Expat?
Working in Germany might be a dream for many people. This place provides many opportunities for foreign professionals. While being an employee in Germany, one enjoys many advantages and benefits companies are offering. It includes various types of non-wage compensation in addition to their regular salaries.
Employee benefits in Germany include social security, health insurance, retirement benefits, protection from unemployment, paid sickness and disability leave, paid parental leave, paid holidays and annual leave, and some additional perks.
Many reputable German companies are well-known worldwide; BMW and Mercedes-Benz are just some of them. Nevertheless, working in any company in Germany will guarantee you a list of different benefits and perks, which we will look at today.
Employee benefits in Germany
Guaranteed employee benefits in Germany are written in the law, and companies must provide them to their employees. Germany is one of the best countries in the world for workers, mainly because of its favorable for employees politic.
1. Social security
The mandatory Social Security System in Germany consists of health insurance, nursing care insurance, pension insurance, unemployment insurance, and accident insurance.
It’s compulsory for all employees in Germany to be insured by the German Social Security System and to pay monthly contributions.
The most expensive element in social security is health insurance; it takes a significant part of a worker’s salary (14%).
The total amount of social contributions per month is 40.45% of gross income, 19.425% is paid by the employee, and 21.025% – by the employer. Since employees contribute to the state system, they also have the right to receive compensation.
Germany has the second-highest social security contribution for a single person in the EU, above only Slovenia with 22.10%.
2. Retirement and pension insurance
This statutory pension insurance ensures that employees have an adequate standard of living even in retirement. In Germany, you qualify for retirement compensation at the age of 65.
Currently, the maximum payout is around 67% of the average net income during the insured person’s working life. The retirement age is 65 for people born before 1947 and 67 for those born after 1964.
It’s not uncommon for people to receive pension payments from two or more countries. When foreign employees return to their home country, German pension rights can be sent to them.
All employees and also some groups of self-employed persons are compulsorily insured for pension by law. If you have worked and paid contributions in Germany for more than 60 months (5 years), you will receive a German pension after reaching the official German pensionable age.
Currently, about 85% of the workforce is enrolled in Public Retirement Insurance. Contributions to the plan will also be increased to about 20% by 2025. All payment amounts represent a percentage of the employee’s gross salary. It’s usually divided equally between employee and employer.
| Paid by Employee | Paid by Employer | |
| Pension insurance | 9.35% | 9.35% |
3. Health insurance
Health insurance is obligatory for all people in Germany, no matter what. It’s divided into two main types: public health insurance and private health insurance.
Higher earners (64,350 EUR annually for 2022) could sign up for a private option, which can offer shorter waiting times and better hospital conditions.
Whether it’s state health insurance or private health insurance, it will cover most basic services by the doctor and treatments, but if you want some special unnecessary medical care or your own hospital room, you’ll need an additional private healthcare plan.
Check out the best private health insurance in Germany for foreign high earners, self-employed, freelancers, and business owners.
Services of some specialists, such as eye care, dental care, and alternative medicine not available or come with limitations on what you can claim.
In general, necessary conservative dentistry and surgical treatments are covered by all health insurance. Below, you can see monthly employee and employer contributions to health insurance.
| Paid by Employee | Paid by Employer | |
| Health insurance | 7,3% | 7,3% |
4. Long-term care insurance
This mandatory coverage provides nursing-home care, home healthcare, and personal daycare for individuals age 65 and older or with a chronic/disabling condition that needs constant supervision.
Long-term care is a big topic in Germany, as there are so many older people who need this service and so few workers in this industry; for this reason, the amount of contribution continues to rise.
| Paid by Employee | Paid by Employer | |
| Long-term care insurance | 1.275% | 1.275% |
5. Paid sickness and disability leave
In Germany, employees enjoy paid sick leave as well as other possibilities to leave work if needed and get paid.
Accordingly to the law, a worker will receive his full salary for 6 more weeks when being sick. However, only employees who are longer than 4 weeks in the company can have this right.
In general, after a period of 6 weeks, if a person is still unable to work, their salary will be paid by health insurance. It’s called statutory sickness allowance, which is paid in the amount of 70% of the gross employee’s salary for a maximum period of 78 weeks.
6. Unemployment insurance
All employees in Germany must be protected by unemployment insurance in case they lose their job. You can use the benefits of this insurance after working and paying contributions for at least 12 months in the last 2 years.
How much will you receive in unemployment compensation?
People with children will get 67%, and without children, 60% of the net wage you received in the last 12 months before the unemployment.
Monthly compensation may not exceed 6,700 EUR in West Germany and in 6,150 EUR in East Germany.
The employment agency pays unemployment benefits for a maximum of 12 months (for older people up to 24 months). In particular, it depends on how long you have paid contributions and how old you are.
| Paid by Employee | Paid by Employer | |
| Unemployment insurance | 1.5% | 1.5% |
7. Accident insurance
Another element of the Social Insurance Program and employee benefits is industrial accident insurance, which the employer pays in full amount.
Statutory accident insurance offers protection and assistance in the event of a breakdown/accident in the workplace or on the way to and from work. It also covers all occupational diseases.
The payments cover the costs of treatment and recovery, invalidity pensions, and funeral costs in the event of death.
| Paid by Employee | Paid by Employer | |
| Accident insurance | 0% | 1.6% |
8. Paid parental leave
In Germany, both mother and father are allowed to take a maximum of three years of paid parental leave per child. The beginning and end are freely selectable by the employee within the first years.
If the employer agrees, 12 of the 36 months can also be taken as parental leave between the child’s 3rd and 8th birthday.
Employees have a legal right to work part-time (up to 30 hours per week) during their leave. After parental leave, parents are entitled to a return to their previous working hours.
Maternity leave
Female employees are entitled to fully paid maternity leave (starting six weeks before the expected birth date and ending eight weeks after childbirth). Payments to the employee are made partly by the health insurance provider and partly by the employer.
During the employee’s pregnancy and in a period of four months after childbirth, no termination of the employment relationship by the employer is permissible.
Father/mother leave or both
Both parents also can go on parental leave at the same time. Also, with simultaneous parental leave, parents can work a total of 60 hours per week. At the end of the parental leave, the employer has to offer an adequate working position to the employee.
Compensation on parental leave
During the first six weeks and the eight weeks period after, the maternity protection period will ensure that the mother receives a full salary. After this period, the employer is not entitled to pay; the state will do it instead.
After paid 8 weeks, parents can expect 67% of the net salary in a parental allowance for the next 14 months. Although, the amount of compensation can be a minimum of 300 EUR and a maximum of 1,800 EUR per parent.
If the woman takes 12 months, a man can take another 2 months of paid leave. If needed, parental allowance can be extended to a maximum of 28 months, but the contribution will be reduced by half.
If you earn more than 1,200 EUR per month – 65% of the net salary will be paid. When combined, both parents’ income exceeds 500,000 EUR per year, neither compensation will be paid during the first 2 months of parental leave, but also parental allowance for the rest of the time.
The same applies to money for single parents whose annual income exceeds 250,000 EUR.
9. Holidays and annual leave
Employees in Germany are entitled to a minimum of 20 days of vacation per year. Those who work six days per week are entitled to an annual minimum paid leave of 24 working days.
Those who work a five-day working week will be given at least 20 working days which means 4 weeks.
In practice, most employers give more vacation days, with between 27 and 30 days of annual leave (excluding public holidays) being quite common. Some employers will also let you take additional days off in exchange for a reduction in your salary.
When can you take a vacation in Germany?
Employees can only claim their full vacation entitlement if the employment relationship has existed for a minimum of 6 months during the applicable vacation year.
In the case of a shorter employment term during the vacation year, the proportionate vacation entitlement is 1/12 for each entire month of employment.
Generally, you must use up your leave during the annual year, but some employers will let you carry it forward to the following year. Legally, you can carry your holiday forward until March 31 if you could not take it due to sickness or operational reasons (i.e., you had to cover someone else’s holiday leave).
If you have unused accumulated holidays when you leave your job, you can claim compensation from your employer for these days. Your employer may also require you to take your unused holiday leave during your notice period (Kündigungsfrist).
Paid public holidays in Germany
In Germany, employees enjoy 13 public holidays, which are paid for by the employer.
Notice period in Germany
If the employee decides to terminate a job, the deadline is 4 weeks to the 15th or the end of a calendar month. Four weeks is exactly 28 days.
An exception is a probationary period that must not exceed 6 months. Within this period, both the employer and the employee can terminate with a notice period of two weeks on any given day.
Another exception is the extraordinary termination without notice. Therefore, there is no notice period. The contracting parties may also agree on shorter notice periods for short-term or marginal employment, e.g., in the case of common labor agreements.
Below you can see how the notice period in Germany correlated with the length of employment.
| Duration of the employment | Notice Period |
|---|---|
| 0 to 6 months (probationary) | 2 weeks on any given day |
| 7 months till 2 years | 4 weeks to the 15th or taking effect at the end of a month |
| 2 years | 1-month notice period taking effect at the end of a month |
| 5 years | 2-month notice period taking effect at the end of a month |
| 8 years | 3-month notice period taking effect at the end of a month |
| 10 years | 4-month notice period taking effect at the end of a month |
| 12 years | 5-month notice period taking effect at the end of a month |
| 15 years | 6-month notice period taking effect at the end of a month |
| 20 years | 7-month notice period taking effect at the end of a month |
Not guaranteed employee benefits in Germany
Not guaranteed employee benefits in Germany aren’t written in the law; therefore, the employer isn’t obligated to provide them. So here we are talking about more nice-to-haves.
1. Holidays and Christmas allowance (Urlaunbs- und Weihnachtsgeld)
Holidays and Christmas money is when an employee receives additional allowance during the summer and Christmas seasons. This money is meant to be spent on your summer holidays or on presents for Christmas. Yet, of course, you can decide what to do with it.
Not all employers pay these bonuses. Usually, the employer may decide whether to make special payments or not. Also, the amount of allowance depends on the decision of the management, there is no min. or max. number set.
Statistically, around 46% of employees receive a financial “gift” for the summer holidays (1,281 EUR on average).
2. Flexible schedules or Gleitzeit (Flextime)
Statistics show that German employees appreciate flexible working hours the most; therefore, more and more employers offer this benefit. Many companies will allow you to work flexibly rather than a standard working day from 9 to 5.
In Germany, it’s called Gleitzeit, when you start working day in some time window (usually from 7 am to 9 am).
Flexibility in German companies might also include:
- Option to work from home
- Open window for start and end of work
- Working on the weekends and holidays
- Time off in lieu – the paid time off work that employee gets for having worked additional hours. So, if an employee takes time in lieu, they take extra time off work instead of being paid for overtime.
3. Education assistance
Educational assistance while working in Germany can include professional training (Weiterbildung) or a full Bachelor’s or Master’s Degree.
While many companies offer professional training, only big businesses can give workers an opportunity to pursue a full degree.
Over the last ten years, there has been significant improvement in educational assistance within companies. Many make a partnership with universities, where employees can start a degree course and work at the same time.
In this case, workers will attend a university some days of the week and some days work at the company. Also, some might be obligated to work for the firm after graduation. It’s up to an agreement between employer and employee.
4. Smartphones, tablets, and laptops
Some employers also subsidize their workers with business smartphones, laptops, or tablets, which can also be used for private purposes.
5. Works council (Betriebsrat)
In companies with more than five employees, employees may elect a works council (Betriebsrat).
The works council represents the employees and negotiates, cooperates, and consults with the business owner in various situations (e.g., hiring of new employees, changes to the place of business, shut down of the business, mass layoffs).
6. Bonuses
German companies also offer some bonuses in addition to your salary, for example, for extra effort and achievements. They can also include annual or supplemental pay to compensate for extra working time.
A performance-based bonus compensates the employee for individual results, while a profit-sharing bonus – usually reserved for high-level employees – is based on the company’s achievements.
7. Employee’s health
German companies care about the health of their employees and, therefore, often offer free gym passes and free fruits and vegetables for snacks.
Additionally, health benefits for employees could be health-promoting framework conditions such as ergonomics at the workplace. As well as exercise workshops, lectures on healthy nutrition, or relaxation sessions.
Sometimes companies have preventive health checks, fitness programs, and health days. They might not only offer it to their employees but also to their children and family.
Outdoor events like hiking are often used by German employers to bring some healthy activities and to stimulate a good atmosphere in the teams.
The German automobile manufacturers Daimler, VW, and BMW, support their employees with work-life balance with limited access to emails in their free time. For example, Daimler offers the possibility that emails are automatically deleted while on vacation.
