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flag Germany Germany: Operating a business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Gesellschaft mit beschrankter Haftung (GmbH): limited liability company
Number of partners: No minimum: one or more partners.
Capital (max/min): EUR 25,000 minimum with at least half fully paid up at the creation of the company.
Shareholders and liability: Liability is limited to the amount of capital contributed by all shareholders.
Aktiengesellschaft (AG): public limited company
Number of partners: No minimum: one or more partners.
Capital (max/min): EUR 50,000 minimum with at least one quarter fully paid up at the creation of the company.
Shareholders and liability: Liability is limited to the amount of capital contributed by all shareholders.
Offene Handelsgesellschaft (OHG): general partnership
Number of partners: Minimum: two; no maximum.
Capital (max/min): No minimum capital.
Shareholders and liability: Liability is joint and indefinite on the obligations and debts of the company.
Kommanditgesellschat (KG): limited joint-stock partnership
Number of partners: Minimum: two; no maximum. There are two types of partners: active partners and silent partners.
Capital (max/min): EUR 50,000.
Shareholders and liability: The liability of active partners is personal and indefinite. The liability of silent partners is limited to the amount of capital contributed.
Company Directories
Handelsregister, Common register portal of German Federal States
 

Business Setup Procedures

Setting Up a Company Germany OECD
Procedures (number) 9.00 5.21
Time (days) 8.00 9.47

Source: Doing Business - Latest available data.

 
For Further Information
Doing Business Website, Information related to procedures to start a business in Germany
Judicial Register of the Federal States
Company Register
The Competent Organisation
The Common register portal of the German federal states.
 

Recovery Procedures

Principle
With a regular insolvency procedure, the insolvent business is generally broken up in order to release as much money as possible through the sale of individual items or rights or even of parts of the company. Proceeds can then be paid out to the creditors in the insolvency proceedings. The distribution of the monies to the creditors follows the detailed instructions of the Insolvency Code.
Bankruptcy Laws
Insolvency Code.

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The Active Population in Figures

201820192020
Labour Force 43,562,28543,871,26743,382,544

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 78.06%78.49%79.08%
Men activity rate 82.22%82.74%83.30%
Women activity rate 73.79%74.11%74.73%

Source: International Labour Organization, ILOSTAT database

 
Employed Persons, by Occupation (% of Total Labour Force) 2015
Manufacturing 19.3%
Wholesale and retail trade; repair of motor vehicles and motorcycles 14.1%
Human health and social work activities 12.7%
Public administration and defence; compulsory social security 6.9%
Construction 6.8%
Education 6.6%
Professional, scientific and technical activities 5.5%
Administrative and support service activities 5.0%
Transportation and storage 4.9%
Accommodation and food service activities 3.9%
Financial and insurance activities 3.1%
Information and communication 3.0%
Agriculture, forestry and fishing 1.4%
Arts, entertainment and recreation 1.4%
Electricity, gas, steam and air conditioning supply 0.8%
Water supply; sewerage, waste management and remediation activities 0.6%
Real estate activities 0.5%
Mining and quarrying 0.2%
 

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
Maximum of 48 hours a week
  • Maximum Duration
An employee work day should not technically be more than 8 hours a day.  The time schedule can be increased to 10 hours only if in the period of 6 months or 24 weeks an average of 8 hours a day has not been exceeded.
  • Night Hours
At least 2 hours worked between 11 pm and 6 am..
Working Rest Day
Employees are not allowed to work on Sundays and public holidays. But there are exceptions according to the branch of activity.
Paid Annual Vacation
20 days
Retirement Age
67 years old
Child Labour and Minimum Age For Employment
In Germany, the minimum age one can start working is 18 years old.

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The Cost of Labour

Pay

Minimum Wage
Starting from January 2022, the statutory minimum wage is set at €9.82 per hour. Starting from July 2022, the statutory minimum wage will be set at €10.45 per hour. The federal minimum wage applies to almost all employees, including foreign workers, part-time workers, interns (under certain conditions) and people working through a probationary period.
Average Wage
Average annual wage: $ 53,745  (source: OECD, 2020 - latest available data).
Other Forms of Pay
  • Pay For Overtime
There is no obligation, it depends on sectorial agreements and individual negotiations. Overtime may be compensated for financially or by extra days of vacation.
  • Pay For Rest Days Worked
To be negotiated.
  • Pay For Night Hours
In practice compensated for, but it depends on the sector.
  • Pay For Overtime at Night
According to the sector and negotiations.
 

Social Security Costs

The Areas Covered
Health insurance (medical care, maternity, disability, death), retirement pensions, family allowances, unemployment benefit.
Contributions
Contributions Paid By the Employer: In total, the employer's share of social insurance contributions amounts approximately 20.5% of employee's gross wages:

•    Pension (9.3%),
•    Health (7.3%),
•    Unemployment (1.2%),
•    Nursing care (1.525%),
•    Accident insurance (varies depending on the industrial sector and accident risk),
•    Insolvency (0.12%).
Contributions Paid By the Employee: Social security contributions are generally shared equally by employer and employee. Employees pay approximately 19.3% of gross wages:

•    Pension (9.3%),
•    Health (7.3%),
•    Unemployment (1.2%),
•    Nursing care (1.525%).

Competent Organization
Federal Ministry of Labour and Social Affairs

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Management of Human Resources

 

Recruitment

Method of Recruitment
By adverts in the national press (FAZ, die Zeit), in the regional press, by head hunters (Michael Page, Manpower, Arbeitsagentur), by job centers.
Recruitment Agencies
Job centers.
Recruitment Websites
Job scout
Monster
Jobpilot
Manpower
National Daily FAZ
 

The Contract

Type of Contract
Employment contracts are usually open-ended, with a trial period that may not exceed six months.

Employment contracts may also be fixed term, which can be renewed a maximum of three times and may last for a maximum duration of two years.

Breach of Contracts

  • Dismissals
Termination by the employer can be done under different conditions:
- Redundancy either individual or of a group
- Termination because of professional misconduct, absenteeism or end of seasonal employment
  • Other Possible Methods
- Because of reasons tied to the person.
Labour Laws
Labor Law
Labor Law
Law on the work hours
Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Work Conditions, unfair dismissal, sexual and moral harassment, verbal violence and physical violence
  • Procedure
Labor law (second section)
 

Judicial Structures

  • Legal Framework
A social conflict is deemed to be present when a collective labor agreement has expired or when salary negotiations have failed. For more information, refer to the Labor law
  • Competent Legal Body
See the Labor law (first section and the second section)
 

Social Partners

Social Dialogue and Involvement of Social Partners
Unions are strong throughout Germany, but the eastern side of Germany is more union-oriented than the west. The overwhelming majority of union members are part of eight unions, each grouped by industry or service sector. They are each affiliates of the German Trade Union Federation (DGB), which counted 6.3 million members in 2009.

At the company level, works councils represent the interests of workers vis-à-vis their employers. German labour unions are generally constructive in their cooperation with employers, as securing jobs is one of the unions' core objectives.

Since 2012, Germany experienced a considerable rise in the number of strike days, as labour unions sought greater benefits from Germany’s strong economic recovery.

Unionisation Rate
21%
Unions
DGB
Verdi
IG Metall
Regulation Bodies
Ministry of Agriculture
Deutscher Bauernverband
BOLW
 
 

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Latest Update: June 2022