It’s no wonder that companies often look at Germany for overseas expansion and would need to understand Germany’s employment law. Could it be the highly developed infrastructure, central European geography, well-educated workforce? Or something else entirely like the truly unmatched beer culture? Beer culture aside, Germany’s appeal for foreign direct investment does not come without its challenges…especially relating to Germany employment law.
Employment law in Germany may look slightly closer to US employment law than say France. However, it still has vast differences and regulations that international employers need to be keenly aware of when considering expansion. For a broader view of European expansion, take a look at our post about simplifying the process of going global.
But for today, let’s focus on Germany employment hurdles and solutions:
Betriebsrat – More Than Just a Pink Slip and the Department of Labor
First thing is first, “at will” employment is fundamentally a US-based concept. Expecting to be able to enter into an “at will” employment agreement in Germany is a flawed foundation.
Taking “at will” a step further when it does come to terminations German employers are generally required to consult with the German works council, or Betriebsrat, for all termination proceedings and severance obligations. The results vary greatly in each scenario and require a high burden of proof in justifying redundancy and even insolvency prior to an approved termination then severance.
Where Does Your Data Protection Officer Sit?
Continuing the culture of employee-focused employment law, employee data protection rights are more exhaustive than any statutory requirement in the States. Employers have an actual legal obligation regarding the collection, access and use of employees’ personal data. In fact, organizations with electronically saved personnel data for more than nine individuals must designate a “data protection officer” to oversees the compliant access and use of employee personal data. Is your job description for that role written yet?
“Too Complicated. I’ll Make Them Contractors.”
Your head may be spinning at the idea of tackling the intricacies of Germany employment law. You may be thinking to yourself, “Well, I’ll just hire my talent there as a contractor.” Not so fast; it’s never that simple and you can get yourself in even deeper trouble if that relationship is called into question. Check out our post on the topic.
Bridging the Gap to Get You Through German Employment Challenges
Thankfully there is a model that can help you bridge the gap between German employment law and your desire to hire and expand there. Rather than taking on this task yourself directly, consider leveraging Velocity Global’s Foreign Subsidiary as a Service (FSaaS), which allows you to hire and terminate in a compliant manner quickly while limiting your risk and exposure as much as possible. Germany is one of 185+ countries we support so leave that expertise to us!
To be clear, Velocity Global is not providing legal advice pertaining to international employment law. Please use this as a reference and be sure to contact an attorney if you need legal advice. We simply wish to share our expertise in the field and awareness of the many options companies have when considering expanding abroad, like for example our FSaaS model. When making decisions with legal implications pertaining to employment, we recommend you consult counsel.