To effectively manage your workforce in Germany, it is completely necessary to understand and adhere to the employment laws and regulations set in place to protect workers. This not only mitigates legal and financial risks but also cultivates a fair and inclusive work environment for your organisation.
This guide offers valuable insights into specific employment laws that employers in Germany should know, such as whistleblower protections, data privacy regulations, equal treatment of temporary agency workers, anti-discrimination laws, and pay equity legislation. We’ll cover all these topics to help you protect your business from potential risks and establish a solid foundation for your workforce management. Remember, non-compliance with these regulations can slow down your growth and operations, which could impact your brand reputation.
In May 2023, Germany officially passed the Whistleblower Protection Act, also known as the “Act for Better Protection of Persons Providing Information” (HinSchG).
The whistleblowing law intends to provide a safe environment for whistleblowers to report violations of relevant laws or misconduct in their organisations, such as legal violations or unethical behaviour, without fear of reprisals. This ensures that whistleblowers are protected from retaliation and prevents any adverse actions against them for speaking out.
Under the Whistleblower Protection Act, companies with over 50 employees are required to establish a system for processing and documenting reports made by whistleblowers. In addition, these companies must appoint an ombudsperson to serve as a primary contact for whistleblowers and guarantee the confidentiality and integrity of the reporting process.
Moreover, Germany’s Whistleblower Protection Act enables whistleblowers to report concerns internally within the company or externally to authorities or designated bodies. The Whistleblower Protection Act grants legal protection against unfair treatment, dismissal, or discrimination to whistleblowers who disclose sensitive information in the public interest or for the protection of vital interests.
The implementation of the law was a result of the European Union’s Directive (EU) 2019/1937, which set rigid guidelines for the protection of whistleblowers. The German legislature took steps to ensure that the provisions of the Directive align with the national legal framework and provide protection for those who report wrongdoing.
The Whistleblower Protection Act serves to enhance transparency within organisations, protect whistleblowers from potential repercussions, and create a framework that encourages the reporting of unlawful activities.
The General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG) govern Germany’s data privacy laws. The GDPR, an EU-wide regulation, imposes strict rules on the processing of personal data, including that of employees within organisations, while the BDSG complements the GDPR at the national level, providing specific regulations for data processing in Germany, including employee data protection in the context of employment.
These data privacy laws require employers in Germany to obtain valid consent for data processing, ensure data security, and inform individuals about the purpose of data collection. To remain compliant, companies hiring in Germany must follow the data protection rules and standards enforced by these data privacy laws.
Moreover, employers must adhere to strict data protection requirements when collecting, storing, and processing the personal information of employees. This involves implementing secure data management systems, obtaining consent for data processing activities, and restricting data access to authorised personnel only.
Non-compliance with data privacy laws in Germany can result in severe consequences for organisations, including fines and reputational damage.
In Germany, employee contracts should clearly outline the purpose of data collection, the type of data being processed, and the legal basis for processing. Employers should ensure that the language used in contracts is easy to understand and that employees are aware of their rights under Germany’s data protection laws.
In addition, employers must ensure that the data collected is necessary and proportionate to the purpose for which it was collected. It is mandatory to have a clear data retention policy outlining how long the data is stored and its eventual deletion. The contract should also specify the process for exercising employees’ rights to access, rectify, or delete their data.
Employers must also include provisions in employment contracts that protect employees’ data privacy, such as confidentiality obligations and data protection measures to protect against unauthorised access to personal information. We recommend implementing data security measures, such as data encryption and access controls for systems and facilities that store personal data to mitigate risk.
When it comes to third parties processing employee data, such as payroll service providers, employers must also adhere to the same data protection standards outlined in employment contracts. Employers can do so by including provisions related to third-party data processing and monitoring compliance.
In Germany, temporary workers are entitled to equal pay after 9 months of employment, as required by the German Act on Temporary Employment (AÜG, Arbeitnehmerüberlassungsgesetz). This law guarantees that temporary employees are treated in the same manner as the permanent employees in the hirer’s company. Even after the initial 9-month period, the hirer must continue to adhere to the collective agreement.
This entitlement of temporary workers in Germany to equal pay can only be waived for a maximum of nine months. However, if equal pay is achieved through the gradual alignment of working conditions as per collective agreements, this waiver period can be extended to 15 months. This provision not only warrants fair treatment for temporary workers but also promotes workplace equality.
Employers who are subject to the Temporary Agency Work Act (Arbeitnehmerüberlassungsgesetz) in Germany must comply with a few requirements. Aside from covering equal pay, the Act tackles:
In Germany, temporary agency workers are required to have a temporary work permit. To comply with the requirement, employers acting as temporary work agencies assigning employees to perform temporary work must obtain a permit as mandated by the Act on Temporary Agency Work. This permit is necessary for temporary agency workers to legally work within the scope of their business activity under German law.
The anti-discrimination law in Germany is known as the General Act on Equal Treatment (Allgemeines Gleichbehandlungsgesetz, AGG). This Act addresses various forms of discrimination in the workplace and seeks to ensure equal treatment for all employees. These include:
Under the AGG or the anti-discrimination law in Germany, employers are obligated to take organisational measures to protect employees from discrimination and to point out and prevent inadmissible discrimination at the workplace. The law also incorporates four Anti-Discrimination Directives of the EU into German law, with the purpose of preventing or stopping discrimination based on the grounds of race or ethnic origin, gender, religion or belief, disability, age, or sexual orientation.
In addition to the AGG, German employers have specific obligations to protect individuals against discrimination in the field of working life, resulting in specific obligations ranging from preventive measures and immediate actions to general organisational obligations.
The AGG or General Act on Equal Treatment addresses workplace harassment in Germany. Employers are required to take proactive measures to prevent harassment and to promptly address any reported incidents, including sexual harassment. It is crucial to establish clear policies and procedures for reporting and handling harassment claims. This ensures that employees feel comfortable coming forward with complaints and that their concerns are taken seriously.
Moreover, employers in Germany should provide regular training to employees on recognising and preventing harassment in the workplace. Collaborating with the Works Council (Betriebsrat) can be beneficial in developing and implementing effective anti-harassment measures. The Works Council represents the interests of the employees and can play a vital role in promoting a harassment-free workplace environment.
Non-compliance with anti-discrimination laws can result in legal consequences, including compensation for damages, penalties, and reputational damage.
The statutory minimum wage applies to all employees, regardless of the sector they work in. This is a crucial aspect of promoting fairness and equality in the workforce, and it ensures that all workers receive a baseline level of compensation for their labour.
Furthermore, the Remuneration Transparency Act provides employees with an individual right to information about their remuneration, promoting greater transparency and accountability in the compensation process. This allows workers to better understand their pay and to identify any potential discrepancies or disparities that may exist.
However, while the Remuneration Transparency Act grants employees the right to information on their remuneration, it does not provide clear regulations on how to enforce claims for equal pay based on this information. This can create some challenges for employees seeking remedies for pay discrimination. Nonetheless, there are other existing legal mechanisms, such as the General Act on Equal Treatment, which can be used to tackle unequal pay practices.
While there is no specific law mandating pay transparency in Germany, many companies voluntarily disclose information about their pay structures to promote fairness and transparency in their compensation practices. The principle of pay transparency is further supported by collective wage agreements in various industries, which establish minimum wage standards and promote equal pay for all employees performing equivalent work.
For companies operating in Germany, it is crucial to conduct regular pay audits to identify and address any gender-based pay gaps that may exist within the organisation. By analysing and comparing the salaries of employees performing similar roles, businesses can ensure that their compensation practices align with the principles of pay equity and non-discrimination.
Understanding and adhering to employment laws and regulations in Germany while growing your operations can be overwhelming, but it doesn’t have to be.
By partnering with CXC, you have a dedicated team of experts and handy compliance tools to protect your organisation from various workforce risks, such as tax, benefits, immigration, and worker misclassification. Now, you can quickly and compliantly hire in Germany or anywhere in the world.
Reach out to our team today to simplify your international workforce management.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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