This article explains how payroll works for employees engaged in Germany through RemoFirst, covering pay schedules, deductions, social security, insurance, leave, working time and end-of-employment entitlements. Employees in Germany are subject to German payroll taxes, social security contributions, mandatory health insurance and strong statutory employment protections.
If you have a question that is not answered below, contact RemoFirst support, and the team will be happy to help.
Payroll Schedule in Germany
How often are employees paid in Germany?
Employees in Germany are paid monthly.
When are employees paid in Germany?
Employees in Germany are paid on the last day of the month.
What currency are employees paid in Germany?
Employees in Germany are paid in Euros (EUR, €).
Are off-cycle payments supported in Germany?
Yes. Off-cycle payments are supported in Germany. Additional fees may apply.
Payslips in Germany
When are German payslips issued?
Payslips in Germany are uploaded within 1 to 2 days after the salary payment.
What deductions appear on a German payslip?
Common deductions on a German payslip include:
- Income Tax (Lohnsteuer)
- Health Insurance contributions
- Pension Insurance contributions
- Unemployment Insurance contributions
- Long-Term Care Insurance contributions
- Church Tax, where applicable
The employer withholds and remits all applicable payroll taxes and statutory contributions in Germany.
Salary Structure in Germany
Does Germany have a 13th-month salary?
No. There is no statutory 13th-month salary in Germany. However, many employers provide an additional annual bonus as a common practice.
How is salary typically structured in Germany?
Employees in Germany generally receive:
- 12 monthly salary payments
- Optional annual bonus arrangements
- Statutory employer contributions
- Additional allowances if contractually agreed
Salary Proration in Germany
Why was my first salary in Germany lower than expected?
Employees who join during a payroll cycle in Germany receive a prorated salary based on their start date. Proration is calculated according to the payroll period and the days worked.
Tax and Social Security in Germany
Updated for 2026: The average health insurance supplementary contribution rose to 2.9% for 2026 (from 2.5% in 2025). Pension and unemployment rates are unchanged. The figures below reflect the current year.
What social security contributions apply in Germany?
Employees in Germany contribute towards:
- Pension Insurance
- Health Insurance
- Unemployment Insurance
- Long-Term Care Insurance
What are the typical employee contribution rates in Germany?
For 2026, the approximate employee contribution rates in Germany are:
- Pension Insurance: 9.3%
- Unemployment Insurance: 1.3%
- Health Insurance: 7.3%, plus the employee's half of the health fund supplementary contribution (the 2026 average supplementary contribution is 2.9%, so roughly 1.45% for the employee, though it varies by fund)
- Long-Term Care Insurance: 1.8% as standard, rising to 2.4% for childless employees aged 23 and over (the employee share is slightly higher in Saxony)
These contributions are shared roughly equally between employee and employer. The employer also pays accident insurance in full. Rates can change each year.
How is income tax calculated in Germany?
Income tax in Germany depends on:
- Salary level
- Tax class (Steuerklasse), of which there are six
- Personal circumstances
- Applicable tax regulations
Tax is withheld monthly through payroll. Church Tax (Kirchensteuer) of 8% in Bavaria and Baden-Württemberg, or 9% elsewhere, also applies, but only to registered members of a church that collects it.
Health Insurance in Germany
Is health insurance mandatory in Germany?
Yes. Employees in Germany must maintain either:
- Statutory Health Insurance (GKV)
- Private Health Insurance (PKV)
Most employees use statutory health insurance. The option to switch to private insurance is generally only available above a set income threshold, which is €77,400 per year for 2026.
Can employees choose their health insurance provider in Germany?
Yes. Employees in Germany may choose their preferred health insurance provider if they are eligible.
Pension in Germany
Is pension participation mandatory in Germany?
Yes. Employees in Germany are automatically enrolled in the statutory public pension scheme.
Can employees opt out of the pension in Germany?
No. Participation in the statutory pension scheme is mandatory under German law.
Public Holidays in Germany
How many public holidays are there in Germany?
Germany observes 9 nationwide public holidays, plus additional public holidays that depend on the employee's federal state (Bundesland). Some states observe several more than others.
What happens if an employee works on a public holiday in Germany?
Treatment depends on the employment agreement and local regulations in Germany. Additional compensation or time off may apply.
Annual Leave in Germany
What annual leave entitlement applies in Germany?
The statutory minimum annual leave in Germany is 20 days for a 5-day work week, which corresponds to 24 working days on a 6-day basis. Many employers provide enhanced leave entitlements above this minimum.
Can leave be carried over in Germany?
Yes. In Germany, unused leave may be carried over in limited cases and must generally be used by 31 March of the following year.
Sick Leave in Germany
What sick leave entitlement applies in Germany?
Employees in Germany receive up to 6 weeks of paid sick leave at full salary for the same illness, paid by the employer. After this period, statutory sickness benefit (Krankengeld) may apply through the employee's health insurance, typically at around 70% of gross salary up to a cap, for an extended period.
Parental Leave in Germany
What maternity leave applies in Germany?
Employees in Germany are entitled to 14 weeks of maternity leave (Mutterschutz), usually 6 weeks before and 8 weeks after the birth. This extends to 18 weeks in certain qualifying circumstances, such as premature or multiple births.
What parental leave applies in Germany?
Eligible parents in Germany may take up to 3 years of parental leave (Elternzeit) per child. Government parental benefit (Elterngeld) may apply for part of this period, subject to eligibility.
Working Hours in Germany
What are standard working hours in Germany?
Standard full-time schedules in Germany typically range between 35 and 40 hours per week. German law limits daily working time, generally to 8 hours per day, which can extend to 10 hours if the average stays within limits over a reference period.
What rest periods apply in Germany?
Employees in Germany are entitled to:
- A minimum 30-minute break after more than 6 hours worked
- A minimum 45-minute break after more than 9 hours worked
- A minimum of 11 consecutive hours of rest between shifts
How is overtime handled in Germany?
Overtime arrangements in Germany depend on the employment contract. Overtime compensation may be provided through additional pay or time off in lieu. German law limits excessive working hours.
Expenses and Reimbursements in Germany
How are expenses reimbursed in Germany?
Approved expenses in Germany are processed through payroll reimbursement.
Process of Expense Submission and Reimbursement
What documentation is required for German expense claims?
For an expense claim in Germany, employees must submit:
- A valid invoice or receipt
- Proof of payment where required
- A supporting business justification
Expense Reimbursement Guidelines for Germany employees
Can mileage be reimbursed in Germany?
Yes. The current mileage reimbursement rate in Germany is €0.30 per kilometre for business travel by car.
Why might an expense be rejected in Germany?
An expense in Germany may be rejected if it:
- Lacks compliant documentation
- Does not meet reimbursement requirements
- Cannot be supported as a legitimate business expense
Non-compliant expenses may be rejected until correct documentation is provided.
Probation in Germany
What probation periods are supported in Germany?
Probation periods in Germany typically range from 0 to 6 months. Six months is the legal maximum and the recommended length. During probation, a shorter statutory notice period of 2 weeks generally applies.
Employment Changes in Germany
What changes commonly require an addendum in Germany?
Examples of changes in Germany that commonly require a contract addendum include:
- Salary increases
- Allowances
- Working arrangement changes
- Contract extensions
- Job title changes
Are bonuses allowed in Germany?
Yes. Bonuses are supported in Germany and may be documented through contract annexes or separate agreements.
Resignation in Germany
What happens when an employee resigns in Germany?
An employee resigning in Germany must provide notice in line with their employment contract and statutory rules. The statutory minimum notice for an employee is generally 4 weeks, though the contract may require more.
What is included in final pay in Germany?
Final pay in Germany may include:
- Outstanding salary
- Unused annual leave payout
- Approved expenses
- Other contractual entitlements
Termination in Germany
Are employees protected from dismissal in Germany?
Yes. Germany has strong employee protections and strict termination requirements. In businesses with more than 10 employees, statutory dismissal protection generally applies once an employee has been employed for more than 6 months.
What payments may apply on termination in Germany?
Depending on the circumstances, termination payments in Germany may include notice pay, a PTO payout, severance arrangements, or compensation under a mutual termination agreement. Statutory notice from the employer increases with length of service, starting at 4 weeks and rising in steps up to 7 months for very long service.
Does severance always apply in Germany?
No. Severance is not automatic in Germany, but it is commonly negotiated as part of a termination or mutual separation agreement. A common benchmark in such agreements is half a month's salary per year of service, though the actual amount is subject to negotiation. Protected employee groups, such as pregnant employees, those on parental leave and severely disabled employees, require additional review before any termination.
For any payroll question about Germany not answered above, contact RemoFirst support and the team will be glad to help.
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