Translating Legalese: German Labour Law and Work Contracts

Work contracts: we all like getting them, less so reading them. When that contract is in German, probably even less so. But when you’re getting used to a new system, it’s absolutely imperative that you know what to expect and what your entitlements are.

If you want a run-down of contract types and employment statuses, you can check them out here, but right now, let’s get into the contracts themselves, what the clauses are that you need to pay attention to, and what you can negotiate.

It’s important to note that German labour law is very much on your side as an employee. It’s designed to protect you and your rights and your employer really has to provide excellent reasons if they want to let you go. Some provisions such as parental leave are provided for by law, and are not required to be written into the terms of your employment contract. But here are some clauses that are.

Limited vs. Unlimited Contracts

German: Befristeter / Unbefristeter Arbeitsvertrag

According to German law, all employees must have written contracts that lay out the key clauses of the employment relationship. This means that both you and your employer know what’s expected of you and what’s expected of them. Most startup employers will first offer you a limited contract due to the precarious nature of the business, usually for a period of one or two years. Others go straight in with the unlimited contract to make sure they’ve nabbed you. Don’t be taken aback if you’re offered a limited contract as it’s common practice and does not reflect their faith in your potential. Of course, this is always open to negotiation, so don’t be afraid to fight your corner.

Job description and place of work

German: Position, Tätigkeitsbeschreibung, Arbeitsort

All German employment contracts will describe the job you are expected to do and where you are expected to do it. In most cases, this will be at the office. Shocker. The company may of course move to another location within the same city, but they may not relocate to a different city or country that requires their employees to move there, too.

Salary

German: Vergütung, Monatsgehalt, Gehalt

This section of your contract will detail exactly how much you will be paid and when. Always bear in mind that it’s worth negotiating for a higher wage from the first day as it’s hard to trade up once you’re already within a company. In fact, moving between jobs is your best chance of getting a pay hike. However, many startups will be running on a shoestring, so if you’re coming from a richer, more expensive city, you can probably expect to be paid less than you would normally be used to. The number stated in your contract is your gross salary, and you should expect that number to shrink rather significantly before it lands in your bank account. This is due to the deductions and contributory payments that will automatically be deducted from your salary. These include income tax, health and unemployment insurance, pension payments, church tax (if you are registered to an organised religion), and the solidarity surcharge which funds German reunification projects.

Bonuses

German: Bonuszahlung, Gehaltszulage, Sondervergütung

The salary section of your contract should also contain details of any bonus systems that the employer has in place as reward for good performance. Be sure that any verbal statement about bonuses is reflected in your written contract as you will only be able to claim them if it has been agreed in writing.

Probation Periods

German: Probezeit

Most contracts will provide for a probationary period during which time you and your employer get to figure out if it’s really the right fit. The length of this period will be stated in your contract, and is usually between three and six months.

Working Hours

German: Arbeitszeit

Your contract should clearly state what your standard working hours should be per week. In Germany, this should be 40 hours for full-time employment, spread over 5 days. Almost all jobs — with the notable exception of hospitality and some vocational staff — will guarantee that you have Sunday off.

Overtime

German: Überstunden

Your contract should state what is expected of you, and how you will be remunerated (e.g. overtime pay / time in lieu etc) in the event that you are required to work overtime. Your employer may not mandate overtime for you, and it is only acceptable in exceptional cases. If you are likely to have to work overtime, your employer is obliged to make you aware of this before you sign the contract.

Side jobs

German: Nebentätigkeiten

You’re usually free to take on a side job if you so wish, unless your additional work is for a company that your employer views as a direct competitor.

Sick Leave

German: Krankschreibung

If you are sick, you need to tell your employer that you’re unable to work and won’t be showing up that day. If you’re ill for longer than three days, you’ll need to go to the doctor to get a sick note which you will then need to pass on to your employer. Some contracts will require you to get a sick note on the first day of your illness, but this is uncommon. If you have already been employed for a full four weeks and you become ill for a longer period of time, your employer is obliged to pay your full salary for up to 6 weeks. In certain circumstances, they may be required to pay you for up to 12 weeks.

Vacation Allowance

German: Urlaub

With a 5-day week, your employer is obliged to offer you 20 days of paid vacation time. Most contracts however will offer between 24 and 30 days.

Termination

German: Kündigung

Your contract should state how much notice either party needs to give to terminate the contract. This clause is designed to give the employee maximum protection against unfair dismissal. The notice period can be anywhere between four weeks and seven months, depending on the length of employment. This period is usually two weeks within the probation period.

Non-solicitation clauses

German: Abwerbeverbot

A non-solicitation clause dictates that you may not poach clients or staff from this job for your personal benefit or for the benefit of any future job you may undertake. This is common in sales roles where the pool of customers is limited.

Non-competition clauses

German: Wettbewerbsverbot, Verbot von Konkurrenztätigkeit

Your contract may include a section which states that you may not work for or with the companies that your employer is competing against. This is true even if this isn’t explicitly stated in your contract. You will no longer be bound by the non-competition clause after your employment ends. However, some contracts may contain a post-contractual non-competition agreement which may last up to 24 months. That means you can’t work for a competitor for at least two years after your contract ends. This kind of agreement is usually accompanied by a hefty monetary sum.

Obligation to secrecy

German: Verschwiegenheitsverpflichtung

Most contracts will contain a confidentiality clause, but even if it’s not explicitly stated, you may not share any trade secrets, sensitive information, or company materials outside of the company. This includes code, financial information, customer lists etc.

Other clauses may be added in depending on the terms of your contract, but these are the primary ones. Even if it’s completely standard, make sure you read through and completely understand it before you sign. It’s a good idea to initial the bottom of each page of the contract to show that you have seen it and fully understand what it entails.

Let us know if you come across any other clauses that we can clarify for you.