Contracts of employment
As a matter of principle, companies and their staff are free to negotiate employment agreements. These agreements may be put down in writing or be concluded orally. In order to ensure that evidence of the employment relationship exists, it is recommended that a written employment agreement be concluded. Should the employment agreement not have been concluded in writing, the employer is under obligation to lay down the material terms of employment in writing at the latest one month following the commencement of the employment relationship.
The agreement may be written in any language; however, a German translation definitely will be required should any disputes be brought before a court.
The employment agreement should stipulate the material terms of employment:
- Commencement and (prospective) duration of the employment relationship;
- Place of employment;
- Brief job description;
- Composition, amount and payment date of the wages/ salary;
- Agreed working hours;
- Duration of annual recreational leave;
- Period of notice for termination;
- Applicable collective wage agreements, operating agreements or company agreements;
- If the employment is for a fixed term, this must always be agreed in writing. Should the parties fail to do so, the employment agreement shall be deemed to have been concluded for an unlimited period of time.
Limitations on the parties freedom of contract
In framing an individual employment agreement, the parties must comply with:
- Statute Law
various legal provisions that govern the minimum rights of employees (e.g. The Continued Remuneration Act, The Labor Protection Act). - Collective Bargaining Law
applies directly and compulsorily to any employee who is a member of a collective bargaining union;
and to any employer who concludes a collective bargaining agreement himself or herself, or who is a member of an employers’ association that has agreed collective bargaining agreements on his or her behalf. - Bargaining agreements
apply, as a rule, directly and compulsorily to employees of a company whose works ccommittee has concluded one or several of such agreements with the employer.
Probation period
The parties entering into an employment contract may agree upon a trial period of up to six months. During the probation period, the statutory period of notice for terminating the employment relationship is two weeks.
Working hours
Employees working hours may not exceed eight hours per day and 48 hours per week. They may be extended to up to ten hours per day provided the hours worked additionally are balanced out by free time within maximum six months. As a rule, weekly working hours of 35 to 40 hours have been agreed upon in most of the collective wage agreements currently in force.For six hours of working time, breaks totaling 30 minutes are to be granted; for nine hours of working time, the total break time must amount to 45 minutes. Each individual break must be at least 15 minutes long. The daily rest period between the end of work and the start of work the next day is eleven hours.
Vacation
German labor law stipulates that employees are entitled to four weeks of vacation in which their wages / salaries continue to be paid. Some collective wage agreements provide for vacation entitlements of up to six weeks time.
Termination of employment relationships
Employment relationships can be terminated extraordinarily and without notice if there is an important reason. The termination must take place within two weeks after the employer becomes aware of the important circumstances. In any case, the employer is granted one week to investigate the facts.
In the case of ordinary termination taking into account the individual notice period, the following applies:
The employee must observe a four-week notice period to the 15th or the last day of each month.
The employer must comply with a statutory notice period if the employee has been with the company for
- up to 2 years of 4 weeks to each 15th or last day of the month
- from 2 to 4 years of 1 month to the last day of each month
- from 5 to 7 years of 2 months to the last day of each month,
- from 8 to 9 years of 3 months to the last day of each month,
- from 10 to 11 years of 4 months to the last day of each month,
- from 12 to 14 years of 5 months to the last day of each month,
- from 15 to 19 years of 6 months to the last day of each month,
- from 20 years of 7 months to the last day of each month.
Collective agreements sometimes provide for shorter, but often longer notice periods.
Both the notice of termination by the employer and the notice of termination by the employee must be in writing and must be served on the other party. If the written form is not complied with, the termination is invalid.
Reasons for termination
In companies with more than ten employees The termination of an employee’s employment relationship in companies with more than ten employees requires a justifiable reason after the employment relationship has lasted for six months. Operational, behavioral and personal reasons may be considered.
However, a termination outside the scope of the Dismissal Protection Act, e.g. during the probationary period, can also be in breach of trust.
No statutory entitlement to severance pay
There is no statutory entitlement to severance pay. The usual formula for calculating a severance payment is as follows: Length of service x gross monthly salary times 0.5. Social plans may provide for other factors in the event of operational changes.
Time limit for taking legal action
A dismissed employee must initiate dismissal protection proceedings on the grounds of social unfairness of the dismissal by filing a lawsuit with the labor court within three weeks of receiving the notice of dismissal. After that time, the dismissal is then deemed to be socially justified.