Contracts of employment
Contracts of employment
Employers can benefit from a range of employment models to optimise their business’ structure. These include indefinite and fixed-term employment contracts and so-called “mini” and “midi” jobs.
Indefinite employment contracts
Indefinite employment contracts are not limited to a specific period of time. However, they often contain a six month probationary period.
Fixed-term employment contracts
Fixed-term contracts are limited to a specific period of time (e.g. nine months). They can be renewed a maximum of three times, provided the total duration of the contract does not exceed two years. Businesses less than four years old may make use of fixed-term contracts with a maximum duration of four years.
Where employers only require a temporary boost in their staffing capacity, they can engage the services of a temporary employment agency. Here the employee is employed by the agency, not the lessee business. The employment relationship is largely governed by the contract between the lessee company and the employment agency and not by statutory employment provisions. In addition, employment conditions are usually regulated by collective agreements and a statutory minimum wage applies.
Mini jobs are a form of employment under which employees can either earn up to a maximum of 450 euros a month, or work up to 50 days a year. Where the former applies, employees pay pension contributions, but can opt-out. They pay no social security contributions. Employers pay fixed rate contributions to income tax, social insurance contributions and accident insurance, which are additional to the 450 euros. They are withheld and paid directly to the authorities. If the employment is based on the number of days worked, employers pay contributions towards income tax and the statutory accident insurance only.
Midi jobs refer to employment in which the employee earns between 450.01 euros and 850 euros. Employers pay the full rate of social security contributions, while employees pay a reduced rate. Income tax also applies.
German minimum wage
Following the 2013 federal elections, the German government announced it would introduce a national minimum wage. The wage of 8.50 euros per hour will be introduced from 2015 and under transitional measures will apply to certain sectors until being extended to the whole of Germany from 2017.
For more information on German employment law and our employment law services contact our expert team of German lawyers on 0221 / 951 563 0 (Beratung bundesweit) or use our contact form.