Germany: Operating a Business

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.

Business Setup Procedures

The Competent Organisation

The Common register portal of the German federal states.

For Further Information

Doing Business Website, Information related to procedures to start a business in Germany
Common Register Portal of the Federal States
Company Register

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Handelsregister - Common register portal of German Federal States

Kompass Germany - Business directory for Germany

Unternehmenregister - Register of German companies

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.

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.

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

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

Monster
Manpower

The Contract

Dispute Settlement

Social Partners

Employer Associations

SIHK - South Westphalian Chamber of Commerce
BDA DIE ARBEITGEBER - Confederation of German Employers‘ Associations
BDI - Federation of German Industries

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%

Labour Unions

DGB
Verdi
IG Metall

Regulation Bodies

Ministry of Agriculture
Deutscher Bauernverband
BOLW