On this page (7 sections)
Overview and why companies expand from Australia to Germany
- Germany is the largest economy in the European Union and a gateway to central European customers.
- It has deep engineering, manufacturing, automotive and renewable energy expertise.
- Berlin and Munich are major technology hubs with international talent.
- Australians aged 18 to 30 can use Germany's working holiday programme.
For Australian employers, Germany is a step up in formality and protection. Employees have strong statutory protection against dismissal after 6 months, social insurance contributions are significant, works councils have real influence where they exist and restrictive covenants come with a price tag.
Australia and Germany at a glance
| Topic | Australia | Germany |
|---|---|---|
| Employment contracts | A written contract is not legally required but is standard practice. Employers must give every new employee the Fair Work Information Statement, plus the Casual or Fixed Term Contract Information Statement where relevant. A modern award or enterprise agreement usually sets minimum terms. Fixed-term contracts are generally limited to 2 years or 2 consecutive contracts. | Essential terms must be documented under the Nachweisgesetz (Evidence Act). Fixed-term contracts without an objective reason are limited to 2 years. Collective agreements and works council agreements often apply. |
| Probation | No statutory probation. In practice the unfair dismissal "minimum employment period" works as one: 6 months, or 12 months for small businesses with fewer than 15 employees. | Probation of up to 6 months is common, with 2 weeks notice during that time. Statutory protection against dismissal starts after 6 months in businesses with more than 10 employees. |
| Working hours | Maximum 38 ordinary hours a week plus reasonable additional hours under the National Employment Standards. Awards set overtime rates. Employees have a right to disconnect outside working hours unless refusing is unreasonable. | The Working Hours Act limits work to 8 hours a day, extendable to 10 if the average over 6 months stays at 8. Employers must record working time. |
| Minimum wage | National Minimum Wage of $26.44 an hour ($1,004.90 a week) from 1 July 2026. Most employees are covered by a modern award with higher minimum rates for their classification. | Statutory minimum wage of €13.90 an hour from 1 January 2026, rising to €14.60 in 2027. |
| Annual leave | 4 weeks paid annual leave a year for full-time employees (5 weeks for some shift workers), accruing progressively. Untaken leave is paid out on termination. Many awards add a 17.5% leave loading. | At least 24 working days a year based on a six-day week (20 days on a five-day week). Many employers and collective agreements give more. |
| Sick leave | 10 days paid personal/carer's leave a year for full-time employees, plus 2 days unpaid carer's leave and 2 days paid compassionate leave per occasion. All employees can also take 10 days paid family and domestic violence leave a year. | Employers continue full pay for up to 6 weeks per illness. After that, statutory health insurance pays sickness benefit. |
| Parental leave | Up to 12 months unpaid parental leave after 12 months of service, with the right to request 12 more. The government funds up to 26 weeks of Parental Leave Pay at the national minimum wage from 1 July 2026, paid through Services Australia rather than the employer. | Maternity protection of 6 weeks before and 8 weeks after birth on full pay, funded by the health insurer and an employer top-up. Each parent can take up to 3 years of job-protected parental leave, with state-paid parental allowance. |
| Public holidays | National public holidays such as New Year's Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day and Boxing Day, plus state and territory holidays. Employees who work on a public holiday are usually paid penalty rates under their award. | 9 nationwide public holidays plus state holidays, so the total varies by state. |
| Retirement and social security | Superannuation Guarantee of 12% of qualifying earnings, paid by the employer on top of wages. Since 1 July 2026 super must be paid each payday and reach the fund within 7 business days (Payday Super). There is no separate employer social security levy. | Social insurance is shared roughly equally: pension 18.6% on earnings up to €8,450 a month (2026), unemployment 2.6%, health 14.6% plus a fund supplement and long-term care insurance. Employers also fund statutory accident insurance. |
| Payroll taxes | Employers withhold PAYG income tax from wages. Each state and territory charges payroll tax once total Australian wages pass a threshold, for example 5.45% above $1.2 million in NSW and 4.85% above $1 million in Victoria. Workers' compensation premiums are also payable. | Employers withhold wage tax, solidarity surcharge for higher earners and church tax where it applies. There is no separate employer payroll tax. |
| Notice periods | Employer notice under the National Employment Standards: 1 week (up to 1 year of service) rising to 4 weeks (over 5 years), plus 1 week if the employee is over 45 with at least 2 years of service. Pay in lieu is allowed. Awards set employee notice. | Statutory notice of 4 weeks to the 15th or end of a month, rising with service to 7 months after 20 years when the employer gives notice. Notice must be given in writing with a wet-ink signature. |
| Dismissal protection | Unfair dismissal protection applies after the minimum employment period to employees covered by an award or agreement, or earning under the high income threshold of $190,100 (from 1 July 2026). General protections against adverse action apply from day one. Small businesses can follow the Small Business Fair Dismissal Code. | In businesses with more than 10 employees, dismissals after 6 months must be socially justified on conduct, capability or operational grounds. Works councils must be consulted before any dismissal. |
| Severance | Statutory redundancy pay of 4 weeks (1 to 2 years of service) rising to 16 weeks (9 to 10 years), then 12 weeks at 10 years or more, when long service leave usually takes over. Small businesses with fewer than 15 employees are generally exempt. | No general statutory severance, but settlements are common. A frequent benchmark is half a month's salary per year of service. |
| Mandatory benefits | Superannuation, workers' compensation insurance (state-based and compulsory), paid leave under the National Employment Standards and long service leave under state and territory laws, usually after 7 to 10 years of service. | Social insurance, continued pay during sickness, statutory leave and works council participation rights. |
| IP and restraint clauses | Post-employment restraints are only enforceable if reasonable to protect a legitimate business interest. Employers generally own IP that employees create in the course of employment. The federal government has proposed banning non-compete clauses for employees under the high income threshold from 2027; this was not law at the last review. | Post-employment non-competes are limited to 2 years and are only binding if the employer pays compensation of at least 50% of the last remuneration for the restraint period. Employee inventions attract statutory compensation. |
| Visas and right to work | Every worker needs Australian work rights, which employers can check through VEVO. Sponsored skilled hires generally use the Skills in Demand (subclass 482) visa, which needs an approved sponsor. Some EORs can sponsor, many cannot. | Non-EU hires usually need a residence permit for work, such as the EU Blue Card. Australians aged 18 to 30 can use the working holiday programme. |
The differences that matter most
Dismissal protection
The Dismissal Protection Act (KSchG) applies to employees with more than 6 months' service in businesses with more than 10 employees. Dismissals must be socially justified, and redundancies require a social selection based on factors such as age, service and dependants. Notice must be in writing with a handwritten signature; email doesn't count.
Social insurance
Instead of 12% super, German employers pay roughly half of pension (18.6% total), unemployment (2.6%), health (14.6% plus a fund supplement) and long-term care insurance, up to contribution ceilings, plus statutory accident insurance. Total employer on-costs are typically higher than in Australia.
Working time and leave
The Working Hours Act limits daily hours, and employers must record working time. Statutory leave is 20 days on a five-day week, and many employers and collective agreements give more. Employers continue full pay for up to 6 weeks of illness.
Works councils and co-determination
Where a works council exists, it must be consulted before dismissals and has co-determination rights on matters such as working hours and performance monitoring software. Collective agreements may also apply through industry membership.
Non-competes cost money
A post-employment non-compete in Germany requires compensation of at least 50% of the last remuneration for up to 2 years. Use them selectively.
Common compliance traps
- Giving notice by email or e-signature, which is invalid for terminations.
- Fixed-term contracts renewed beyond the 2-year limit without an objective reason.
- No working time records, despite the legal duty to record.
- Introducing monitoring tools without works council agreement where one exists.
- Non-competes without compensation, which are not binding on the employee.
How an EOR works in Germany
A German EOR employs your hire through its German company, issues a contract that meets documentation requirements, registers the employee for social insurance and wage tax and applies German leave, sick pay and working time rules. You manage the work. Larger teams often move to a German GmbH, which requires its own registration, capital and governance.
Frequently asked questions
Is it hard to dismiss an employee in Germany?
Yes, once the Dismissal Protection Act applies. In businesses with more than 10 employees, a dismissal after 6 months must be socially justified on conduct, capability or operational grounds, and any works council must be consulted beforehand.
What social insurance do German employers pay?
Employers share contributions to pension, unemployment, health and long-term care insurance roughly equally with employees, and fund accident insurance alone. Contribution ceilings apply, such as €8,450 a month for pension insurance in 2026.
What is the minimum wage in Germany?
The statutory minimum wage is €13.90 an hour from 1 January 2026, rising to €14.60 in 2027.
Do I have to pay employees for a non-compete?
Yes. A post-employment non-compete is only binding if the employer pays compensation of at least 50% of the employee's last remuneration for the restraint period, which can last up to 2 years.
What is a works council?
A works council (Betriebsrat) can be elected by employees in businesses with at least 5 permanent employees. It has information, consultation and co-determination rights on many workplace matters, including dismissals, working time and monitoring tools.
Sources
Last reviewed:
Figures on this page were checked against these official sources on 8 October 2026. Rates and thresholds change, often on 1 January, 1 April or 1 July, so confirm current figures before relying on them.
- Federal Government: Minimum wage at €13.90
- Federal Leave Act (BUrlG)
- Working Hours Act (ArbZG)
- Continued Remuneration Act (EntgFG)
- Dismissal Protection Act (KSchG)
- Civil Code section 622 (notice periods)
- Commercial Code section 74 (non-competes)
- Deutsche Rentenversicherung
- Fair Work Ombudsman: National Employment Standards
- Fair Work Ombudsman: Annual Wage Review 2026
- Fair Work Ombudsman: Fair Work Information Statement
- Fair Work Ombudsman: Dismissal and notice
- Fair Work Ombudsman: Redundancy pay
- Fair Work Ombudsman: Unfair dismissal
- Fair Work Ombudsman: Right to disconnect
- ATO: Payday Super
- Services Australia: Parental Leave Pay
- Revenue NSW: Payroll tax
- State Revenue Office Victoria: Payroll tax
- Department of Home Affairs: Skills in Demand visa (subclass 482)
Related guides
New to the model? Start with what an Employer of Record is, then compareEOR costs and pricing models.