Compliant Payroll Germany: Everything You Need To Know About It

In case your multi-national organization is growing in the market of Germany, you are in absolute luck! Germany is broadly regarded as being amongst the world’s most attainable and convenient environments for overseas businesses. For confirmation and verification, you can ask the 22 thousand foreign enterprises which have established business in the country and which employ over 2.7 million people.
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Being the strongest and the largest economy of Europe, Germany is a place which is a lot more stable for new businesses than any other EU country. Along with offering employers access to its well-educated and large population, Germany makes it comparatively easier for organizations to set up a business within its borders.

Even though Germany offers so many benefits for expanding the global business, there are many complicated nuances and rules involved in executing and launching German payroll as a part of the wider global payroll compliance strategy. To ensure that your organization is successful with payroll in Germany, (both in the future as well as in present), here are some essential things to know:
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Beginning

To set up a business in Germany, a company must register with all the applicable tax and the social security authorities. This may include applying for an employer number – an8- digit identifier for the address, name and the economy class of the company – which is important for hiring the employees and registering them for the health and social insurance. The company should also apply for the statutory accident insurance and the dedicated tax number. It can take about 6 weeks for all these kind of registration info to be completely processed. In this time, the organization should set up bank accounts. Even though it is not compulsory to pay the employees from an in- country account, it is prudent for the employers to have at least one German account where government entities can send any re-imbursement payments. In reconciliation with their local work council and the global or local payroll providers, the organizations should also determine the place, the timing and the form of the pay slips and payments.

The Employment Law

Crucial for the successful operations in Germany is to understand the nuances of the employment law of the country. It defines a number of policies regarding the payroll Germany. For example, the law says that all the employees have the option of joining a work council, a union, or a collective labor agreement, which can decide the problems linked with working decisions, wages and working times. The law also defines the min. wages as €8.84/ hour though there are some special cases to this rule depending on the status, age or any other applicable collective agreements of the employee. The employment law of Germany also covers legal entitlement to time off- which is a minimum of 24 working days/year and its max. of 48 working hrs. / Week.
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Similar rules govern the associated payment and the maternity leave. As per the maternity protection act of Germany, employers need to give the employees maternity leave & continued remuneration for 6 weeks before the delivery and 8 weeks afterwards (twelve weeks after the premature births or the multiple births). Along with this, the employees who educate and take care of their own kids can qualify for the parental time- this is the time in which their working hours is reduced to 15-30 / week – up to the end of the third year of the child. In this parental time, the employers cannot give notice of termination to the employee.
Location: Germany

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