The Global Employer Focus on Germany The Global Employer: Focus on Germany | 1 The purpose of this booklet is to provide a summary of the laws and procedures applicable to anyone who enters Germany and takes up employment. It does not explore all issues in detail. The law is correct as of 1 January 2015. 2 | The Global Employer: Focus on Germany Contents Governing Rules ........................................................ 5 Employment Related Immigration to Germany ..................5 German Labour Law ............................................................5 German Social Security System ..........................................5 Immigration Requirements ....................................... 6 General Rules ......................................................................6 Administrative Steps to Obtain a Residence and Work Permit ..................................................................7 Requirements to Obtain a Residence and Work Permit ..................................................................8 Foreigners Already Established in Germany ......................8 Terms of Employment ............................................... 9 Form of the Employment Agreement .................................9 Language Requirements .....................................................9 Standard Employment Terms .............................................9 Fixed-Term Employment Contracts ..................................10 Part-Time Employment .....................................................11 Working Conditions ................................................. 13 Working Hours ...................................................................13 Remuneration and Salary .................................................13 Commission .......................................................................14 Company Car .....................................................................15 Pensions from the Employer .............................................15 Capital Participation ..........................................................16 Reimbursement of Expenses ............................................16 Legal Holidays ...................................................................16 Paid Vacations ....................................................................16 Company Rules and Disciplinary Sanctions .....................17 Sick Pay ..............................................................................18 Maternity Protection Leave and Parental Leave ...............18 Social Security Contributions ............................................19 Confidentiality and Restraints Against Competition ........20 Equal Treatment ...................................................... 22 Discrimination Grounds ....................................................22 Rights of Employees and Legal Consequences ................23 Employers’ Obligations ......................................................23 Burden of Proof .................................................................24 Anti-Discrimination Authority ...........................................24 Equal Pay ...........................................................................24 Discrimination on Grounds of Disability ................. 25 Discrimination Claims .......................................................25 Hiring Requirements .........................................................25 Obligation to Accommodate Disabled Employees ............25 Representation of Disabled Employees ............................25 Termination Protection ......................................................25 The Global Employer: Focus on Germany | 3 Business Transfers .................................................. 26 Transfer of Rights and Obligations ...................................26 Termination of Employment ..............................................26 Consultation .......................................................................27 Applicability of Section 613a Civil Code ............................27 Notification Requirements and Employee’s Right to Refuse the Transfer .......................................................28 Termination of Employment .................................... 29 Separation Agreement ......................................................29 Unilateral Termination ......................................................29 Notice Period .....................................................................29 Termination Without Notice Period ...................................30 Form and Contents of Notice of Termination ...................31 Notice Restrictions According to the Termination Protection Act .....................................31 Reasons Based on the Employee’s Person ......................32 Reasons Based on the Employee’s Conduct .....................32 Compelling Business Requirements ................................32 Pregnant Women ...............................................................33 Disabled Employees ..........................................................33 Works Council Members ...................................................34 “Garden Leave”/Release/Suspension from Work ............34 Works Council’s Rights with Regard to Termination ........34 Termination Disputes ........................................................35 Reduction of Personnel ........................................... 37 Co-Determination of Works Council .................................37 Reconciliation of Interests Agreement .............................37 Social Plan .........................................................................37 Employment Protection .....................................................38 Mass Dismissal ..................................................................38 Employee Representation and Works Constitution ............................................................. 39 Works Council ....................................................................39 The Relationship between Employer and Works Council 39 Election of Works Council .................................................39 Term of Office for Works Council Members and their Legal Position ....................................................................40 Functions of Works Council...............................................40 Other Institutions Within the Works Constitution .............42 Trade Unions, Employee Representation in Supervisory Boards ..........................................................43 4 | The Global Employer: Focus on Germany Governing Rules Employment Related Immigration to Germany The German Residence Act (“Aufenthaltsgesetz”) sets forth the preconditions under which foreigners who intend to live in Germany have to obtain a residence permit and under which preconditions a permission to work necessary to start employment in Germany will be granted. Citizens of EU member states and equally treated citizens are subject to privileged treatment with respect to immigration requirements due to EU Legislation and implementing national regulations. German Labour Law Traditionally, labour law in Germany is divided into two parts: individual labour law and collective labour law. Individual labour law covers rights and obligations of employers and employees as provided for by law or by contract. Collective labour law deals with the representation and organisation of employees through trade unions and works councils and with the co- determination of employees on company boards. The labour law of Germany covers all legal rules concerning the relationships between (i) employers and employees and their respective organisations, and (ii) employees working in the same firm and their employers, other employees (and their organisations) and the State. The main sources of labour law in Germany are: • the Constitution (“Grundgesetz”), • the Civil Code (“Bürgerliches Gesetzbuch”), • the Commercial Code (“Handelsgesetzbuch”), • the Trade Act (“Gewerbeordnung”), • the Termination Protection Act (“Kündigungsschutzgesetz”) • the Works Constitution Act (“Betriebsverfassungsgesetz”) • various acts covering specific fields of labour law, • collective bargaining agreements, • agreements between a works council and an employer, • the workplace practices, • the employer’s right of direction, • the individual employment contract. German Social Security System The social security laws of Germany can also be divided into two categories: • the laws on social insurance covering, for example, health insurance, workplace accident insurance, retirement insurance, occupational disability insurance and unemployment insurance; • the laws on social welfare providing for an economic minimum standard of living to everybody residing in Germany. The Global Employer: Focus on Germany | 5 Immigration Requirements General Rules In principle, any foreigner who intends to live and work in Germany needs, apart from his/her national passport, a combined residence and work permit (so-called “Aufenthaltserlaubnis zu Beschäftigungszwecken”) before he/she is allowed to take up employment in Germany. Depending on the foreigner’s nationality, such permit will either be issued by the competent German representation (Embassy or Consulate General) at the applicant’s place of residence abroad in the form of a national visa or by the competent local Office for Foreigners (“Ausländerbehörde”) upon approval for employment by the Employment Office (“Agentur für Arbeit”). The latter approval will