Do you want to hire an employee in Germany without a permanent establishment but need a German payroll?

IPS can help you hire and pay employees in Germany in compliance with the law, even without a German branch or permanent establishment.

There are 2 ways you can hire someone in Germany without a permanent establishment:

  • Employer of Record (Germany) – this is where your employee is employed directly by us and deployed to you full time. This is also known as employee leasing in Germany or Umbrella Company. Attention: this is only legally possible for 18 months in Germany.
  • Direct employment in your company but with payroll accounting according to German law by registering your company as a foreign employer.

Both employment options offer their advantages and disadvantages. Contact us to find out which one suits your project better. We will be happy to advise you and find the best solution for your company.

IPS is your global payroll solution for a successful and fast international expansion without a permanent establishment.

Remote Work Full Time from Germany – Information for Hiring Employees in Germany

To ensure that you succeed in your first go abroad, IPS as your international payroll partner is here to assist you with the correct employment of your employees in Germany and the preparation of German payroll in accordance with the laws of the country. Following is some information to help you understand the German payroll system.

Wage costs

Employer costs in Germany vary and range from 22% to 25% on top of the gross salary. This includes health care, unemployment insurance, long-term care insurance, pension and accident insurance.

In Germany a cap exists on the social insurances that the employer has to pay. This cap changes every year.

If you do not have an office in Germany, you will need a service like IPS to calculate and pay these additional employer costs correctly according to German law. With international payroll in Germany from IPS, you can ensure that your employee is paid compliantly according to German law.

International payroll services in Germany require compliance with German employment law.

As your international payroll service in Germany, we make sure you are equipped with the information you need. 


If an employee in Germany falls ill, the employer is required to pay the first 6 weeks of the illness. After 6 weeks, the social insurances take over. A note from a medical doctor is required to receive the support from the government.  

Vacation and public holidays

In Germany, each employee is entitled to a minimum of 20 working days of paid vacation, based on a 5 day work week. However, it is normal to offer between 24-30 days holiday.

The public holidays are in addition to the personal holidays. Each province (Bundesland) in Germany has their own public holidays.

These are the ones, that all provinces share:

  • January 1 – New Year’s Day
  • Good Friday
  • Easter Monday
  • 1 May – Labour Day
  • In May – Ascension Day (Christi Himmelfahrt)
  • May/June – Whist Monday
  • 3. October – German Unification Day (Tag der deutschen Einheit)
  • December 25 – Christmas Day
  • 26 December – Boxing Day

Probationary period/termination

In Germany, the maximum length of the probationary period is 6 months. During the probation period, the notice period is 2 weeks.

After the probation period, the notice period is a minimum of 1 month. The statutory notice period can also be used:

  • After two years, the notice period from the employer is one month to the end of a calendar 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.

As your international payroll company in the Germany, we will ensure that you comply with the legal framework when giving notice.

Use our service to hire employees in Germany. We register you as an employer without you needing a branch office.

We take care of payroll, social security contributions and everything else. You will receive a simple invoice from us that includes everything.

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