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What Foreign Employers Need to Know About German Labor Law

German labor law is renowned for its comprehensive employee protection provisions and complex regulations. For foreign employers operating in Germany, understanding the fundamental aspects of German labor law is crucial to minimize legal risks and ensure a successful collaboration with German employees.

1. Employment Contract

• Essential Content: Employment contracts should be concluded in writing and include at least details on the workplace, tasks, working hours, remuneration, vacation, and notice period. An indefinite employment contract can also be concluded in electronic form under certain conditions.
• Recommendation for Foreign Employers: Ensure all employment contracts are in the German language (additional language versions are possible, but the German version is binding) and in written or, where permissible, electronic form to avoid disputes.

2. Minimum Wage and Remuneration

• Essential Content: The statutory minimum wage in Germany currently amounts to EUR 12.82 per hour (as of January 1, 2025). Exceptions only apply to certain groups, such as trainees.
• Recommendation for Foreign Employers: Regularly check the current minimum wage level and ensure all employees are remunerated accordingly.

3. Working Hours and Rest Periods

• Essential Content: Daily working hours must not exceed 8 hours, with a possible extension to 10 hours under certain conditions. Adequate rest periods must be provided (at least 11 uninterrupted hours of rest in every 24-hour period). For working hours exceeding 6 hours, employees must take at least a 30-minute break. For working hours exceeding 9 hours, the break time extends to at least 45 minutes. Moreover, employers are obligated to systematically record employees’ actual working hours, which can also be done by the employee, provided the employer offers a reliable time-tracking system. This documentation must record the start and end times of work, as well as break times. It is advisable to use digital programs to record working hours to fulfill these requirements.
• Recommendation for Foreign Employers: Implement an effective and digital time-tracking system to objectively, tamper-proof, and legally document and prove compliance with working hour regulations.

4. Protection Against Dismissal and Notice Periods

• Essential Content: After a waiting period of 6 months and provided at least 10 full-time employees are employed in the establishment at the time of dismissal, the general protection against dismissal under the Employment Protection Act (KSchG) applies. For calculating the number of employees in the establishment, the following applies: an employee working more than 30 hours a week counts as a full employee; one working more than 21 but less than 30 hours a week counts as 0.75 employees; and one working up to 20 hours a week counts as half an employee. The statutory notice period varies depending on the length of service, starting at 4 weeks to the 15th or end of a month.
• Recommendation for Foreign Employers: Consider the specific notice periods and requirements to ensure legally effective terminations.

5. Data Protection in the Workplace

• Essential Content: The processing of employees’ personal data is subject to strict regulations. A transparent data protection policy and compliance with the GDPR are mandatory.
• Recommendation for Foreign Employers: Establish a clear data protection policy and inform your employees about data usage.

6. Key Differences Between Foreign and German Employers

• Essential Content: Foreign employers with staff in Germany must fulfill the same social security obligations as domestic employers, including contributions to health, pension, and unemployment insurance. This applies even without a physical presence or a permanent establishment in Germany; registration with the relevant authorities and regular filings are still required. Unlike German employers, foreign employers are generally not obligated to withhold wage tax (Lohnsteuer). Instead, employees must declare and pay their income tax via their annual tax return. Additionally, foreign employers without a German office may need to appoint a local representative to receive official communications and have a mailing address.
• Recommendation for Foreign Employers: Ensure compliance with social security regulations, inform employees about their tax responsibilities, and assess whether appointing a local representative is necessary for effective communication with German authorities.

German labor law offers comprehensive protection for employees, which can pose a challenge for foreign employers. By adhering to the above points, legal risks can be minimized, and a successful collaboration with German employees can be fostered.

We Recommend: For specific questions or when implementing labor law measures, consult a German employment law attorney to best cover your individual needs.

The main changes of the Hungarian Labor Code in 2025

The Labor Code applicable in Hungary will change in several respects in 2025.

Exemption from working obligation during the elections

The first noteworthy change is that from 1 January 2025, employees will be exempted from their obligation to be available and to work for a maximum of two hours for the purpose of participating in the election of members of parliament, members of the European Parliament, local government representatives and mayors, national minority representatives, and local or national referendums, if the duration of the regular or extraordinary working time scheduled for that day exceeds eight hours.

Longer working hours in special cases

A further new provision is that, in the case of a worker employed on standby duty or who is a relative of the employer or the owner, the worker’s scheduled daily working time may not exceed twenty-four hours and the weekly working time may not exceed seventy-two hours, by written agreement between the parties. This agreement may be terminated by the worker on the last day of the calendar month, or on the last day of the working time period if a working time period is agreed, or on the last day of the calendar month if the working time period is longer than six months, or on the last day of the calendar month if the working time period is longer than six months, after six months, by giving fifteen days’ notice. A collective agreement may provide for a longer period of notice of up to 30 days. If the employee terminates this agreement before the end of the working time period, the parties will settle the account at the end of the working time period. The employee shall not be prejudiced if he does not agree to such an agreement or terminates it.

Additional working period concerning severance payment

It is also worth highlighting the change that, as an exception to the general rules, the period of employment with the previous employer must also be taken into account when determining entitlement to notice and severance pay if the employment relationship was terminated by mutual agreement and the employee received only such wages or other benefits as he or she was entitled to under the law in respect of the termination.

Important ruling of the Constitutional Court

A significant change was also brought about by Constitutional Court Decision No 1/2025 (27.II.), when it annulled the provision of the Labor Code that, in addition to an employee who is unable to work on a public holiday, or who is in receipt of sick pay or accident sick pay on account of his/her inability to work, an employee who is otherwise unable to perform his/her duties for health reasons is not entitled to an absence allowance.

About Ecovis in Hungary

Ecovis Zalavári Legal Hungary (Ecovis Zalavári Ügyvédi Iroda) performs legal, data protection and mediation, real estate brokerage activities in Hungarian and English.

Ecovis Zalavári Legal Hungary is a member of the international Ecovis International network. Ecovis International is a network of independent tax consultants, accountants, auditors and lawyers operating in more than 90 countries with approximately 12,000 employees. Ecovis International through Ecovis partner companies provide an additional advantage for customers with cross-border services.

The activities of the network include lawyer services – legal advice, corporate tax advice, accounting, accounting, M&A services, and mediation.

Ecovis Zalavári Legal Hungary cooperates with Ecovis Accounting Kft., Ecovis Audit Kft., Ecovis Tax Solution Kft. with partner companies, with whom it offers complex solutions and professional service to its clients in the “one-stop shop services” concept.

The Main Challenges Faced by Foreign Companies in Brazil

Understanding Employment Practices

One of the main challenges for international entrepreneurs is understanding labor conditions and their legal implications in Brazil, where there is strong protection for employees—especially in labor courts. Aiming to boost job creation and attract foreign investment, Law No. 13.467 introduced major reforms to labor legislation in 2017, modernizing the Consolidation of Labor Laws (CLT).

The flexibility of employee rights guaranteed to workers through individual negotiations, as well as outsourcing in all company activities, regardless of the sector or the nature of the contract, are among the topics included in the text.

Employee Rights

In Brazil, employees are entitled to:

• A minimum wage with annual adjustments;
• A work schedule of 8 hours per day and 44 hours per week, with 50% extra pay for overtime;
• An 8% deposit of the employee’s salary into the FGTS (Severance Indemnity Fund);
• A 13th salary, 30 days of paid vacation with an additional one-third bonus, and a weekly paid rest day;
• Additional compensation for night shifts, hazardous work, unhealthy conditions, or job transfers;
• Profit-sharing (PLR), transportation vouchers, and mandatory time tracking for companies with over 20 employees.

Types of Employment Contracts

Most employment contracts are for an indefinite term and may be in-person, hybrid, or remote. Outsourcing is also permitted, through which a third-party company becomes responsible for recruiting, supervising, and paying the workforce.

Termination of Employment Contracts

Employment contracts may be terminated in several ways, including unfair dismissal, mutual agreement, or for cause.

By way of example, in the event of an unfair dismissal by the employer, the employee is entitled to receive additional benefits such as a 40% penalty on the FGTS (Severance Indemnity Fund) balance, payment in lieu of or performance of prior notice, proportional 13th salary, unused vacation, and unemployment insurance.

Employee Guarantees

In Brazil, some employees are legally protected from dismissal without just cause. This applies in cases such as work-related accidents, pregnancy, elected union representatives, and members of internal accident prevention commissions.

Labor Unions

Brazil’s union system is robust, and collective agreements often prevail over statutory law in many areas. The 2017 labor reform abolished mandatory union contributions and strengthened collective bargaining.

Right to Strike

Workers have the right to strike; however, the employer must be notified at least 48 hours in advance. In the case of essential services or activities, the notice period is extended to 72 hours. If the conflict that led to the strike persists and no agreement is reached, the Labor Judiciary may be called upon to intervene, including declaring the strike abusive and ordering employees to return to work under penalty of a daily fine.

Social Security

Social security in Brazil is based on a contributory system, with payments made by both the employee and the employer. Under the current system, companies are required to contribute monthly to social security in the amount of 20% of the total remuneration paid to employees, with no maximum limit established.

In addition to this, employers must contribute an extra 1%, 2%, or 3% of the employee’s remuneration to cover work accident insurance, currently referred to as GILRAT (Degree of Occupational Disability Due to Environmental Work Risks).

Companies are also responsible for an additional contribution of 6%, 9%, or 12% on the remuneration of employees working under conditions that may impact their health or physical integrity. This contribution is intended to fund early retirement benefits, which may be granted after 25, 20, or 15 years of contributions, respectively.

Social Costs

Hiring costs are significantly impacted by social charges on payroll, which fund public services and programs such as education, healthcare, and social assistance.

Investing in Brazil can be a great opportunity to expand your business into an emerging and dynamic market. Understanding employment conditions and labor rights is essential for ensuring compliance and running a successful operation.

Vaz de Almeida has the expertise and experience to support foreign companies in structuring employment relationships within legal parameters, offering specialized legal advice at every stage of the process.

Useful Links

• Full Version of the CLT (Consolidation of Labor Laws)
  • https://bd.camara.leg.br/bd/items/198fbacb-963e-496d-8224-e3dead2eb8a6
• Brazilian Constitution (English Version)
  • https://www2.senado.leg.br/bdsf/bitstream/handle/id/243334/Constitution_2013.pdf?sequence=11&isAllowed=y
• Brazilian Ministry of Labor and Employment (English Version)
  • https://www.gov.br/trabalho-e-emprego/en
• Brazil: New Law Reforms Labor Relations | Library of Congress (USA)
  • https://www.loc.gov/item/global-legal-monitor/2017-07-20/brazil-new-law-reforms-labor-relations/
• Labor Law Glossary – Key Legal Terms in English
  • https://www.jusbrasil.com.br/artigos/direito-do-trabalho-na-lingua-inglesa-glossario-de-termos-juridicos-recorrentes/490740927

About the Authors

Julhi Bonespírito

Julhi is a partner and head of the Dispute Prevention and Resolution Practice, which also includes Labor Relations and Global Mobility. She holds postgraduate degrees in Civil Procedure and Administrative Law and has experience working at law firms in São Paulo and Curitiba. Her team assists other practice areas of the firm with alternative dispute resolution or, when necessary, litigation through the judicial system.

Graziela Barreto

Graziela is a senior associate in the Labor Relations Practice, advising domestic and international companies on how to establish compliant employment relationships with their workforce.