The complete guide to offering employee benefits in Germany

When you’re hiring employees in Germany, you’ll need to put together an employee benefits package. It’s crucial to offer the right benefits both to stay compliant with German labor laws and to attract and retain high-quality talent.

In this guide, you’ll learn everything you need to know about offering benefits that meet the statutory minimum requirements under German employment law, as well as how to go above and beyond for your employees in Germany.

Who qualifies for employee benefits in Germany?

Eligibility for employee benefits in Germany depends on an individual’s worker classification. Full-time employees are typically entitled to the full range of statutory benefits, such as health insurance, pension contributions, and paid leave. 

Part-time employees also qualify for these benefits, although their contributions and entitlements are proportional to their working hours. 

Contract and freelance workers may not automatically qualify for statutory benefits; however, specific contractual agreements can sometimes cover them. Understanding these distinctions is key for both employers and employees to ensure compliance with German labor laws and secure appropriate benefits.

What employee benefits are mandatory in Germany?

German labor laws aren’t so much a unified code as a series of Acts, Codes, and Agreements that cover a wide range of employment-related issues, including the benefits to which full-time employees in Germany are legally entitled. 

While the thought of navigating the separate pieces of legislation might seem daunting to someone unfamiliar with the system, it’s crucial to remember that you must include all statutory benefits required under the umbrella of German employment laws. If you employ a German worker and fail to offer one or more mandatory benefits, you could find yourself facing legal repercussions.

Before we dive into what’s required of you as an employer, there are two important things you need to keep in mind. First, these statutory benefits are the minimum required by the German government. Companies are welcome to offer more to their employees, and many do. Second, only employees in Germany are entitled to these benefits. Independent contractors are not.

Retirement pensions

Employers in Germany are not legally required to offer company-provided pension schemes or retirement insurance since the state offers a statutory social security plan that will cover Germans’ financial needs once they reach retirement age. However, both employers and employees are expected to contribute to the mandatory social security plan; the contribution rate is 18.6%, split evenly between the company and the worker. 

Unemployment insurance

According to German employment laws, unemployment insurance is a mandatory benefit for employees and covers them in the event they are dismissed from or resign from their job. 

All German employees who work a minimum of 18 hours a week qualify for unemployment insurance. Those who have worked for the same company for at least 12 months over the past two years are entitled to receive benefits the day after they’re dismissed, while those who voluntarily resign will start receiving their benefits 12 weeks after they’ve left. Employers and employees each contribute half of the 2.5% rate.

Vacation entitlements

The minimum number of paid vacation days German employees are legally entitled to is determined by their workweek. Employees working a 5-day week are entitled to at least 20 paid vacation days annually, while those working a 6-day week receive a minimum of 24 days. Many employers, however, offer between 25 to 30 days of paid leave per year, exceeding the legal minimum. If employees are unable to use their vacation days within the calendar year, they may roll them over into the following year, but these days must typically be used by March 31st.

Employers do not have to grant vacation requests if the employee has been working for the company for less than six months.

Employees are entitled to the following minimum vacation entitlements:

Employees who are severely disabled are entitled to five additional paid vacation days beyond these minimums.

Statutory holidays

Employees in Germany are entitled to different statutory holidays depending on which of the 16 German states they live in. 

Workers’ compensation

In Germany, work-related accidents and occupational illnesses are covered under statutory accident insurance, provided by the employers' liability insurance. Employers bear the full cost of this insurance. If an employee is unable to work due to a work-related injury or illness, the employer continues to pay the employee's full salary for the first six weeks. After this period, the statutory accident insurance provides injury benefits—typically 60-80% of the employee’s gross salary—for up to 78 weeks. Policy coverage also includes any services the employee requires to facilitate their return to the workforce. 

Healthcare benefits

German law requires health insurance for residents and workers. Most are covered under a public health insurance plan. However, if they make more than 64,350 EUR a year, workers can opt out of the public plans and select a private health insurance policy.

In both cases, employers are legally required to contribute to health insurance premiums.

The flat contribution rate for statutory public healthcare plans is 14.6%, which is split evenly between employers and employees. 

Paid sick leave

German employers are required to pay employees who are on sick leave 100% of their salary for the first six weeks of their illness. Employees must inform their employer immediately upon falling ill. While there is no universal regulation, many employers require a doctor’s note if the illness extends beyond three consecutive calendar days. However, employers may request a doctor's note earlier, even from the first day of absence.

If the illness persists beyond six weeks, statutory health insurance provides sick pay. This benefit typically amounts to 70% of the employee's gross salary, capped at 90% of the net salary.

It’s important not to automatically interpret the six weeks of employer-paid sick leave as “employees get six weeks of paid sick leave each year.” If the worker gets sick again and the illness isn’t the same as last time, that six-week period of paid leave starts over.

Maternity and parental leave

In Germany, maternity leave is governed by the Maternity Protection Act (Mutterschutzgesetz), ensuring the health and economic security of expectant and new mothers. This is separate from parental leave, which is eligible for all new parents for a period of up to three years. 

Maternity leave

• Duration: Pregnant employees are entitled to 14 weeks of maternity leave, typically commencing 6 weeks before the expected due date and continuing for 8 weeks postpartum. This period extends to 12 weeks after birth in cases of premature births, multiple births, or if the child is born with a disability.
• Compensation: During maternity leave, employees receive maternity benefits (Mutterschaftsgeld). Statutory health insurance providers pay up to €13 per day. Employers are required to top up this amount to match the employee's average net income, ensuring full wage compensation during the leave period.

Parental leave

• Duration: Each parent is entitled to up to 3 years of parental leave (Elternzeit) per child, which can be taken any time before the child's eighth birthday. This flexibility allows parents to distribute leave periods according to their family's needs.
• Compensation: During parental leave, parents can apply for parental allowance (Elterngeld), a state-funded benefit that partially replaces lost income. The allowance amount varies based on prior income and the chosen duration of payments.
• Job protection: Employment is protected during parental leave, ensuring that parents have the right to return to their previous or an equivalent position after the leave period.

In addition to these benefits, German employment law protects employees from being fired while they are out on maternity and/or parental leave.

Long-term/nursing care

Employer benefits in Germany are legally required to include contributions to long-term care insurance, also called nursing care insurance. This type of insurance covers the needs of workers who require ongoing medical care after they’ve suffered an accident or contracted a prolonged illness. It also covers employees who need care due to old age. Both employers and employees contribute to long-term/nursing care insurance premiums and split the 3.05% contribution rate down the middle.

What employee benefits are optional in Germany?

The benefits we’ve covered so far in this guide are all mandatory and represent the minimums the German government expects employers in Germany to provide. Though the list is quite extensive, many German employers choose to provide additional, supplementary benefits—both to make their companies more attractive to prospective team members and to increase the satisfaction of their current employees. 

Below, we’ll cover some of the most common supplementary benefits employers offer when looking to hire employees in Germany.

Extra subsidies

One supplemental benefit German employers often opt to include in their package is an extra subsidy for rent, the costs associated with raising children, and/or the cost of commuting to work for employees who use public transportation.

The 13th-month bonus

It’s common practice for employers across the globe to offer at least some of their employees an end-of-year bonus. In Germany, this is often referred to as the Christmas or 13th-month bonus because the amount the employee receives is equivalent to a full month’s worth of wages.

Working from home

Offering employees the option to work from home has become increasingly popular in recent years. Many companies have embraced remote or hybrid working arrangements as part of their workplace policies to attract and retain top talent. 

This flexibility benefits employees by fostering a better work-life balance, reducing commute times, and allowing for more focused and comfortable work environments. For employers, remote work policies can lead to increased productivity, higher employee satisfaction, and access to a broader talent pool that isn’t limited by geographic location. By adopting flexible working arrangements, organizations create a modern, adaptive work culture that meets the evolving needs of their workforce.

6 Fringe benefits to attract and retain talent in Germany

Companies in Germany are increasingly offering fringe benefits to enhance employee satisfaction and retention. These additional perks go beyond statutory requirements and help create a more attractive workplace environment:

Wellness and fitness perks 

Providing access to gym memberships, fitness classes, or wellness programs encourages employees to maintain their health and reduces stress, contributing to overall productivity and morale.

Additional PTO 

Offering extra paid time off beyond the statutory minimum gives employees more flexibility to recharge, fostering a better work-life balance and increasing job satisfaction.

Meal allowances and food vouchers

 Subsidizing meals through allowances or vouchers helps employees save on daily expenses and creates a sense of appreciation, especially for those working on-site.

Childcare and housing allowances 

Supporting employees with childcare services or housing subsidies demonstrates a commitment to their well-being, making it easier for them to balance personal and professional responsibilities.

Accident insurance 

In addition to other employee benefits insurance, accident insurance is a fringe benefit that employers can offer to ensure that employees feel secure and supported in case of unforeseen circumstances, enhancing their trust in the company.

Customizable benefits packages 

Offering tailored benefits packages allows employees to choose perks that best suit their needs, whether it’s additional health coverage, professional development funds, or flexible working arrangements. 

Hire employees in Germany and provide affordable benefits with Rippling

Running a global workforce isn't easy. It can be a challenge for global companies just to keep their benefits compliant—let alone managing offer letters, equipment, payroll, and everything else global employees and contractors need.

That’s why, if you’re going to hire employees in Germany or any other overseas locale, you need Rippling. 

Rippling EOR makes it easy to compliantly hire and pay global employees:

• Onboard in minutes. Hire and onboard global employees to maximize productivity on day one. Rippling handles everything from benefits enrollment to assigning required trainings.
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FAQs about employee benefits in Germany

Is there a 13th month pay in Germany? 

Yes, many employers in Germany offer a 13th month salary as an additional bonus. While it is not a statutory requirement, this practice is common and often used as an incentive to reward employees and enhance job satisfaction.

How many benefits do you get in Germany? 

The number of benefits employees receive in Germany varies based on their employment contract, company policies, and statutory requirements. Common benefits include health insurance, pension contributions, paid leave, and unemployment insurance. Additional perks such as fringe benefits can also be provided.

Do employers pay for health insurance in Germany? 

Yes, employers are required to contribute to their employees’ health insurance. Typically, the cost is split equally between employers and employees, ensuring access to comprehensive healthcare coverage for all workers.

This blog is based on information available to Rippling as of December 17, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.