Payroll Services for Your Employees in Germany

We handle German payroll processing for international companies – even without your own local entity.

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Want to Hire an Employee in Germany Without a Permanent Establishment, but Need German Payroll?

IPS can help you hire and pay employees in Germany in full legal compliance, even without a German branch or permanent establishment.
With us, you can outsource your foreign payroll processing.

There are 2 options:

1. Employer of Record (Germany)

Here, your employee is hired directly by us and assigned to you on a full-time basis. In Germany, this is also known as employee leasing or an umbrella company arrangement.

✓ Fast market entry in Germany

✓ No local entity required

✓ Payroll and administration fully outsourced

Note: Under German law, this arrangement is limited to 18 months.

Employer of Record

2. Direct Employment

Direct employment within your own company, but with payroll processed under German law by registering your company as a foreign employer.

✓ Long-term employment possible

✓ Employee hired directly by your own company

✓ German payroll processing handled by IPS

IPS is your global payroll solution for successful and efficient
cross-border payroll management without the need for your own local entity.

Employing and Paying Staff in Germany - Key Information on German Payroll

To ensure your immediate success abroad, IPS serves as your partner for cross-border payroll and compensation, supporting you in correctly employing your staff in Germany and preparing payroll that fully complies with German requirements.

Below is some key information to help you better understand the German payroll system.

Employer Payroll Contributions

When running payroll in Germany, international companies should budget for additional employer costs of roughly 22–25%. The exact amount of social security contributions depends on the contribution assessment ceiling and the employee’s gross salary.

Overview of German Employer Payroll Contributions

Health insurance
Unemployment insurance
Long-term care insurance
Pension and workers’ compensation insurance

Sick Leave

When running payroll services in Germany, international companies need to comply with statutory continued wage payment rules during periods of employee illness.

Employers in Germany are generally required to continue paying full salary for up to 6 weeks during an employee’s illness.

Vacation and Public Holidays

In Germany, every employee working a 5-day week is entitled to a minimum of 20 paid vacation days per year. However, it is common practice for employers to grant between 24 and 30 vacation days.

These are the public holidays observed nationwide across all German states:

→ January 1 – New Year’s Day

→ Good Friday

→ Easter Monday

→ May 1 – Labor Day

→ May – Ascension Day

→ May/June – Whit Monday

→ October 3 – German Unity Day

→ December 25 – Christmas Day

→ December 26 – Boxing Day (Second Day of Christmas)

Probationary Period and Termination

In Germany, the probationary period may be set for a maximum of 6 months. During the probationary period, the notice period is 2 weeks.

The notice period following the probationary period is defined in the employment contract. It can either be set for a specific duration (for example, a minimum of 1 month) or follow the statutory notice period:

→ Up to five years of tenure: 1 month

→ After five years: two months

→ After eight years: three months

→ After ten years: four months

→ After twelve years: five months

→ After 15 years: six months

→ After 20 years: seven months

Employ and Pay Staff in Germany with Full Legal Compliance

Employing your own staff in Germany involves numerous legal and administrative requirements. With our international payroll solutions, we ensure a legally compliant and efficient process.

Your benefits:

✓ Payroll fully compliant with German law

✓ Compliance assurance and risk minimization

✓ Full handling of all social security matters

✓ Ability to employ staff without a local entity

✓ Flexible expansion into new markets

Get a free consultation now and start employing staff in Germany with full legal confidence.

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