Germany: Operating a business
In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources | Welsh diplomatic representations
Legal Forms of Companies
- Gesellschaft mit beschrankter Haftung (GmbH): limited liability company
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Number of partners: No minimum: one or more partners.
Capital (max/min): EUR 25,000 minimum with at least half fully paid up at the creation of the company.
Shareholders and liability: Liability is limited to the amount of capital contributed by all shareholders.
- Aktiengesellschaft (AG): public limited company
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Number of partners: No minimum: one or more partners.
Capital (max/min): EUR 50,000 minimum with at least one quarter fully paid up at the creation of the company.
Shareholders and liability: Liability is limited to the amount of capital contributed by all shareholders.
- Offene Handelsgesellschaft (OHG): general partnership
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Number of partners: Minimum: two; no maximum.
Capital (max/min): No minimum capital.
Shareholders and liability: Liability is joint and indefinite on the obligations and debts of the company.
- Kommanditgesellschat (KG): limited joint-stock partnership
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Number of partners: Minimum: two; no maximum. There are two types of partners: active partners and silent partners.
Capital (max/min): EUR 50,000.
Shareholders and liability: The liability of active partners is personal and indefinite. The liability of silent partners is limited to the amount of capital contributed.
Business Setup Procedures
Setting Up a Company | Germany | OECD |
---|---|---|
Procedures (number) | 9.00 | 5.21 |
Time (days) | 8.00 | 9.47 |
Source: The World Bank - Doing Business, Latest data available.
- The Competent Organisation
- The Common register portal of the German federal states.
- For Further Information
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Doing Business Website, Information related to procedures to start a business in Germany
Common Register Portal of the Federal States
Company Register
Financial Information Directories
Dun & Bradstreet - Worldwide directory with financial information on businesses
Handelsregister - Common register portal of German Federal States
Kompass Germany - Business directory for Germany
Unternehmenregister - Register of German companies
Recovery Procedures
- Principle
- With a regular insolvency procedure, the insolvent business is generally broken up in order to release as much money as possible through the sale of individual items or rights or even of parts of the company. Proceeds can then be paid out to the creditors in the insolvency proceedings. The distribution of the monies to the creditors follows the detailed instructions of the Insolvency Code.
- Bankruptcy Laws
- Insolvency Code.
The Active Population in Figures
2018 | 2019 | 2020 | |
---|---|---|---|
Labour Force | 43,562,285 | 43,871,267 | 43,382,544 |
Source: International Labour Organization - ILOSTAT, Latest data available.
2017 | 2018 | 2019 | |
---|---|---|---|
Total activity rate | 78.06% | 78.49% | 79.08% |
Men activity rate | 82.22% | 82.74% | 83.30% |
Women activity rate | 73.79% | 74.11% | 74.73% |
Source: International Labour Organization - ILOSTAT, Latest data available.
Working Conditions
- Opening Hours
-
- Legal Weekly Duration
- Maximum of 48 hours a week
-
- Maximum Duration
- An employee work day should not technically be more than 8 hours a day. The time schedule can be increased to 10 hours only if in the period of 6 months or 24 weeks an average of 8 hours a day has not been exceeded.
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- Night Hours
- At least 2 hours worked between 11 pm and 6 am..
- Working Rest Day
- Employees are not allowed to work on Sundays and public holidays. But there are exceptions according to the branch of activity.
- Paid Annual Vacation
- 20 days
- Retirement Age
- 67 years old
- Child Labour and Minimum Age For Employment
- In Germany, the minimum age one can start working is 18 years old.
The Cost of Labour
Pay
- Minimum Wage
- Starting from January 2022, the statutory minimum wage is set at €9.82 per hour. Starting from July 2022, the statutory minimum wage will be set at €10.45 per hour. The federal minimum wage applies to almost all employees, including foreign workers, part-time workers, interns (under certain conditions) and people working through a probationary period.
- Average Wage
- Average annual wage: $ 53,745 (source: OECD, 2020 - latest available data).
- Other Forms of Pay
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- Pay For Overtime
- There is no obligation, it depends on sectorial agreements and individual negotiations. Overtime may be compensated for financially or by extra days of vacation.
-
- Pay For Rest Days Worked
- To be negotiated.
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- Pay For Night Hours
- In practice compensated for, but it depends on the sector.
-
- Pay For Overtime at Night
- According to the sector and negotiations.
Social Security Costs
- The Areas Covered
- Health insurance (medical care, maternity, disability, death), retirement pensions, family allowances, unemployment benefit.
- Contributions
-
Contributions Paid By the Employer: In total, the employer's share of social insurance contributions amounts approximately 20.5% of employee's gross wages:
• Pension (9.3%),
Contributions Paid By the Employee: Social security contributions are generally shared equally by employer and employee. Employees pay approximately 19.3% of gross wages:
• Health (7.3%),
• Unemployment (1.2%),
• Nursing care (1.525%),
• Accident insurance (varies depending on the industrial sector and accident risk),
• Insolvency (0.12%).• Pension (9.3%),
• Health (7.3%),
• Unemployment (1.2%),
• Nursing care (1.525%). - Competent Organization
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Federal Ministry of Labour and Social Affairs
Management of Human Resources
Recruitment
- Method of Recruitment
- By adverts in the national press (FAZ, die Zeit), in the regional press, by head hunters (Michael Page, Manpower, Arbeitsagentur), by job centers.
- Recruitment Agencies
- Job centers.
- Recruitment Websites
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Monster
Manpower
The Contract
- Type of Contract
- Employment contracts are usually open-ended, with a trial period that may not exceed six months.
Employment contracts may also be fixed term, which can be renewed a maximum of three times and may last for a maximum duration of two years.
Breach of Contracts
-
- Dismissals
- Termination by the employer can be done under different conditions:
- Redundancy either individual or of a group
- Termination because of professional misconduct, absenteeism or end of seasonal employment -
- Other Possible Methods
- - Because of reasons tied to the person.
- Labour Laws
- Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises
Dispute Settlement
Conciliation Process
- Cases of Dispute
- Work Conditions, unfair dismissal, sexual and moral harassment, verbal violence and physical violence
-
- Procedure
- Labor law (second section)
Judicial Structures
-
- Legal Framework
- A social conflict is deemed to be present when a collective labor agreement has expired or when salary negotiations have failed. For more information, refer to theLabor law
-
- Competent Legal Body
- See the Labor law (first section and the second section)
Social Partners
- Employer Associations
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SIHK - South Westphalian Chamber of Commerce
BDA DIE ARBEITGEBER - Confederation of German Employers‘ Associations
BDI - Federation of German Industries
- Social Dialogue and Involvement of Social Partners
-
Unions are strong throughout Germany, but the eastern side of Germany is more union-oriented than the west. The overwhelming majority of union members are part of eight unions, each grouped by industry or service sector. They are each affiliates of the German Trade Union Federation (DGB), which counted 6.3 million members in 2009.
At the company level, works councils represent the interests of workers vis-à-vis their employers. German labour unions are generally constructive in their cooperation with employers, as securing jobs is one of the unions' core objectives.
Since 2012, Germany experienced a considerable rise in the number of strike days, as labour unions sought greater benefits from Germany’s strong economic recovery. - Unionisation Rate
- 21%
- Labour Unions
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DGB
Verdi
IG Metall
- Regulation Bodies
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Ministry of Agriculture
Deutscher Bauernverband
BOLW
Welsh diplomatic representations:
The Welsh Government overseas offices aim to grow the economy by increasing exporting and attracting inward investment, raising Wales' profile on the international stage and establishing Wales as a globally responsible nation. Details on the offices in Germany are below:
- Berlin (Germany HQ)
- +49 3020 457135
Open from 9:00am to 5:00pm local time
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Latest Update: February 2025