Hiring in Germany means choosing one of four routes: an employer of record, your own German entity, an independent contractor, or direct employment from your foreign company with a German social security registration.
Which one fits depends on how many people you are hiring and how long you expect them to stay. That second point matters more here than in most countries, because German law treats an EOR arrangement as employee leasing and caps one worker at 18 months with the same client. The rules that follow are the same whichever route you pick. The minimum wage is €13.90 per hour and rises to €14.60 on 1 January 2027. Paid leave starts at 20 days on a five-day week.
Employer social security and levies add about 22 percent of gross pay at €45,000 and about 16 percent at €120,000, because contributions stop at €69,750 for health and care and €101,400 for pension and unemployment. Termination is where Germany diverges most sharply from what an overseas employer expects.
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Minimum wage: Fifth Minimum Wage Adjustment Ordinance, in force 1 January 2026, rising to €14.60 on 1 January 2027. Contribution ceilings and the provisional average wage of €51,944: Social Insurance Calculation Values Ordinance 2026, in force 1 January 2026. Leave: section 3 Federal Leave Act, 24 working days on a six-day week, which is 20 on a five-day week. Notice and probation: section 622 German Civil Code. Assignment limit: section 1(1b) Temporary Employment Act.
Two of these four routes carry a clock. Compare them on the row that will decide it for you, which is usually the last one.
| Comparison criteria | Employer of record | Your own German entity | Independent contractor | Direct from your foreign company |
|---|---|---|---|---|
| Setup time | 1 to 2 weeks | 6 to 12 weeks to trading, longer to first payroll | Days | 4 to 8 weeks to get an employer number and a payroll agent |
| What it costs | Provider fee per employee per month, on top of gross pay and employer contributions | €25,000 share capital for a GmbH, half paid in, plus notary, register and annual accounts costs | Invoiced rate only, no employer contributions | Payroll agent fee, plus gross pay and employer contributions |
| Legal employer | The provider, with the worker leased to you | Your German company | Nobody, the person is self-employed | Your foreign company |
| Main exposure | If the provider has no leasing permit, you become the employer by law from day one | Corporate tax, filing and director duties from the first day, whether or not anyone is hired | False self-employment, with four years of contributions recoverable from you | Creating a permanent establishment through what the employee actually does in Germany |
| Time limit | 18 months per worker | None | None, but risk rises with length | None |
| Best for | The first one to three hires, or a market test with a defined end | Five or more people, or anyone you expect to keep past 18 months | Genuinely independent work with several clients and no fixed hours | One or two long-term hires where an entity is not worth the overhead |
Assignment limit: section 1(1b) Temporary Employment Act, in force since 1 April 2017. Share capital: section 5(1) and section 7(2) Limited Liability Companies Act. A UG can be formed from €1 under section 5a. Recovery period for contributions: section 25(1) Social Code Book IV.
Germany has two separate misclassification problems, and most overseas employers only know about the first one.
Ask any EOR provider for a copy of its leasing permit and check the expiry date before you sign. First permits run for one year and are renewed annually. They only become open-ended after three consecutive years, under section 2(4) and 2(5) of the Temporary Employment Act.
The first is false self-employment, Scheinselbstständigkeit. Section 7(1) of Social Code Book IV defines employment by what the person actually does, so fixed hours, a single dominant client, your equipment and a place in your reporting line point to employment whatever the contract says. The Deutsche Rentenversicherung can rule on status under section 7a of the same book, either on application or after an audit. Where it finds employment, you owe both the employer and the employee share of contributions, and section 25(1) lets it recover four years, or thirty where it shows the contributions were withheld intentionally. Withholding employee contributions is also a criminal offence under section 266a of the Criminal Code, with a maximum of five years.
The second problem is specific to the EOR route. German law treats employee leasing as a licensed activity, so a provider needs a permit from the Bundesagentur für Arbeit under section 1(1) of the Temporary Employment Act. If it does not hold one, section 9(1) voids the contract between the provider and the worker and section 10(1) puts an employment relationship between you and that worker in its place, backdated to the start. Section 16 adds fines of up to €30,000. Two further rules bite even when the permit is valid: the worker gets equal pay with your comparable staff after nine months under section 8(4), and the 18 month cap in section 1(1b) runs against you as the client, so moving the same person to a different provider does not restart it.
Two of these rules moved in the last four years and account for most of the compliance gaps we see in German contracts written abroad. The rest have been stable for decades.
Employer contributions are close to flat for most German salaries and only fall away above the two ceilings. The figures below assume a low-risk office or IT accident insurance class.
The statutory leave minimum is low by European standards and the market rate is not. The chips show who actually pays, which is where Germany differs from most countries an overseas employer will have hired in.
Annual leave: section 3 Federal Leave Act, 24 working days on a six-day week. Sick pay: section 3 Continued Remuneration Act, and section 47 Social Code Book V for sickness benefit. Maternity: sections 3 and 24i Maternity Protection Act, where the health fund pays €13 per day and the employer pays the difference up to net pay. Parental leave: section 15 Federal Parental Allowance and Parental Leave Act. Child sickness: section 45 Social Code Book V. Care leave: sections 2 and 3 Care Leave Act. There is no statutory thirteenth month payment, though collective agreements and market practice often create one.
Whether you need a reason to dismiss depends on your headcount and the employee's service, not on what the contract says. That single threshold changes the cost of a German exit more than anything else on this page.
Thresholds: sections 1 and 23 Dismissal Protection Act. Notice: section 622 German Civil Code. Employees who joined before 1 January 2004 keep a five-employee threshold under the old rule. Severance on notice: section 1a Dismissal Protection Act. Claim deadline: section 4 Dismissal Protection Act. Protected groups: section 17 Maternity Protection Act, section 18 Federal Parental Allowance and Parental Leave Act, section 168 Social Code Book IX, section 15 Dismissal Protection Act. Two form rules apply to every dismissal above: it must be signed on paper under section 623 German Civil Code, where email and electronic signature are void rather than defective, and where a works council exists it must be heard first under section 102 Works Constitution Act.
EU, EEA and Swiss nationals need nothing. For everyone else the route and the salary floor depend on the qualification.
Most EOR providers cannot sponsor a first-time work visa in Germany. The residence permit is tied to a specific employer and job, and a leased worker is placed with a client rather than employed to work for the provider, which many immigration offices refuse. If your candidate needs a visa, assume you need your own entity and check with the provider in writing before you make the offer.
The EU Blue Card under section 18g of the Residence Act is the main route for graduates. From 1 January 2026 it needs gross annual pay of €50,700, or €45,934.20 for shortage occupations, recent graduates and IT specialists with three years of experience and no degree. The lower figure needs approval from the Bundesagentur für Arbeit. Both thresholds are fractions of the pension contribution ceiling, so they rise every January. Vocationally qualified workers use the skilled worker permit under section 18a instead, which has no salary floor but requires a recognised qualification.
Blue Card thresholds effective 1 January 2026, set as 50% and 45.3% of the pension contribution ceiling of €101,400 under section 18g Residence Act and the Social Insurance Calculation Values Ordinance 2026. Skilled worker permit: section 18a Residence Act. Opportunity Card: section 20a Residence Act, in force since 1 June 2024.
Timings below assume the EOR route, which is the fastest of the four.
Ask for the permit document and check the expiry date. Annual permits become open-ended only after three consecutive years. Without a valid permit you become the employer by law from day one.
Before signingAgree gross pay, leave above the 20 day minimum, notice and any variable pay. The provider issues the employment contract and signs a separate leasing agreement with you covering the assignment.
Days 1 to 5Core terms must be in writing by the first day and the document needs a wet signature. Electronic signature does not satisfy the Verification Act, so build the courier time into your start date.
Before day oneThe provider registers the employee with a health fund, the pension insurer and the accident insurer, and reports the hire electronically. Payroll runs monthly, usually paid on the last working day.
Weeks 1 to 4Equal pay with your comparable staff applies from month nine. The assignment ends at month eighteen. Start the entity or the transfer around month twelve, because a GmbH takes six to twelve weeks to reach trading.
Months 9 and 18Written form: sections 2 and 3 Verification Act, and section 126 German Civil Code for the signature requirement. Registration duties: section 28a Social Code Book IV. Equal pay after nine months and the eighteen month cap: sections 8(4) and 1(1b) Temporary Employment Act.
Four providers we have reviewed that cover Germany. Ask each one for its leasing permit before you compare anything else.
DeelOwned entities across most markets and the deepest integration library in the category. The highest published rate of the four.
MultiplierPublishes a full rate card rather than gating it behind a call. Deepest in Asia Pacific, which matters less for a Germany hire.
RemoFirstThe lowest published rate of the four. Employs entirely through local partner firms, so a third party holds the German contract.
Oyster HRPublishes liability cover of 12x salary up to $1 million, which no competitor matches. The highest rate of the four.
Rates are platform fees per employee per month, taken from each provider's published pricing page and confirmed between June and August 2026. Gross salary and the employer contributions set out above are billed on top. Multiplier's $459 is the annual rate, $499 monthly. Oyster's country figure is its EOR footprint of 120+, not the 180+ that counts contractor and payment locations. None of these figures is Germany-specific, and no provider publishes a per-country rate, so get Germany quoted in writing.
Our Germany EOR page carries the full ranked list with pricing, coverage and support detail on each provider.
See the full Germany EOR rankingSupporting guides in this cluster, each covering one part of the page above in full detail.
The six questions overseas employers ask most often before their first German hire.
Yes, but German law treats it as employee leasing, so the provider must hold a permit from the Bundesagentur für Arbeit under section 1(1) of the Temporary Employment Act. Without that permit, section 10(1) makes your company the employer from the first day of the assignment. Ask for the permit document and its expiry date before you sign.
Section 1(1b) of the Temporary Employment Act caps any one worker at 18 consecutive months with the same client. The clock runs against you as the client, not against the provider, so switching to a different EOR does not restart it. A break of three months and one day resets it, and a collective agreement covering your sector can extend the cap, though most technology employers cannot rely on one.
Around 23 percent of gross pay at €45,000 a year, falling to about 17 percent at €120,000. The rate drops at the top because contributions stop at €69,750 for health and long-term care and at €101,400 for pension and unemployment. Accident insurance is set by trade risk class and employers with 30 or fewer staff pay an extra sickness apportionment, so the real figure moves with your sector and headcount.
Only if you employ more than ten people and the employee has more than six months of service. Above that threshold the Dismissal Protection Act applies and you need conduct, personal or operational grounds, with a written warning first in most conduct cases. Below it, notice alone is enough. Notice runs from four weeks to seven months depending on service, and there is no statutory severance in either case.
Not reliably. The Verification Act requires the core terms on paper with a wet signature, and a dismissal is void without one under section 623 of the Civil Code. An electronically signed contract still creates a valid employment relationship, but it exposes you to a fine of up to €2,000 and leaves you with an evidence problem in any dispute. Build courier time into the start date.
The EU Blue Card needs €50,700 gross a year, or €45,934.20 for shortage occupations, recent graduates and qualifying IT specialists, both effective 1 January 2026. The skilled worker permit under section 18a has no salary floor but requires a recognised vocational qualification. Most EOR providers cannot sponsor a first-time visa in Germany, so a visa hire usually means your own entity.
