Hiring in Germany: costs, rules and the best EOR providers

No, using an EOR does not automatically break Germany’s employee-leasing law, the AÜG. The arrangement must still meet the relevant licensing and employment rules. Calling the service an EOR does not exempt it from those rules.

Usually, yes. The standard limit is 18 consecutive months with the same client. Certain collective agreements can allow a different limit. Earlier placements may count, even if another provider arranged them, so switching EOR does not automatically restart the clock.

Generally, yes. An EOR that supplies workers to a client in Germany needs a licence from the Federal Employment Agency, known as the Bundesagentur für Arbeit.

Some legal exceptions apply. Check the licence of the company that will actually employ your worker before the placement starts.

Plan the move when Germany becomes a lasting operation, and before any applicable agency-assignment limit makes the current model unsuitable. A GmbH brings company registration, employer administration and ongoing accounting rather than simply replacing an EOR fee.

Compare one- and two-year costs for the same team, including half an internal HR/operations role as a planning assumption, payroll, local advice and transfer overlap. There is no universal headcount trigger.

Agency workers assigned to a client for more than three months can vote in that client’s works-council election under section 7 BetrVG.

They generally cannot stand for election to the client’s works council: section 14(2) AÜG excludes that candidacy. Voting and membership are different rights. The proposed assignment length matters, and the worker retains their relationship with the supplying employer.

For an €80,000 annual salary, our 2026 illustration adds about €15,765 in the four main employer social-insurance contributions. It assumes voluntary statutory health cover with TK, a full year and employment outside Saxony.

Accident insurance, employer levies, benefits and the EOR fee remain additional. Someone insured privately needs a different calculation; applying one percentage to the whole salary would miss the contribution ceilings.

For ordinary dismissal, the starting statutory employer notice is four weeks to the fifteenth or month-end. It increases with service, reaching seven months after twenty years; a valid probation arrangement can permit two weeks.

Collective agreements and longer contractual terms can change the applicable period. The EOR must issue a valid written dismissal and assess dismissal protection; ending the client assignment alone is not enough.

Usually yes once continuous employment exceeds six months, if the relevant establishment normally employs more than ten employees and the statutory scope is met.

The KSchG is not triggered by the EOR label alone, nor avoided because you have only one person on the assignment. Special dismissal protections can apply separately. Establish the relevant employer and establishment before relying on a small-business exception.

The employer retrieves the employee’s electronic wage-tax details through ELStAM and uses them for payroll withholding, including tax class and church-tax information.

Church tax generally applies to members of relevant recognised churches and is normally 8% or 9% of income tax, depending on the state—not that percentage of salary. It is an employee deduction rather than another employer contribution.