I want to hire someone in Germany but don't want him/her on my payroll
What you need in this case is an “Employer of Record” or PEO (Professional Employment Organization). A local company will employ the employee on your behalf, and put the employee at your disposition.
Please note that in many countries this effectively means, that the employee will be hired by a staffing company. Special rules apply in some countries as staffing is often highly regulated.
- The local company will be legally liable for the employee (although their contract will ensure that any final costs – for instance in a termination case – are paid by you, the client).
- It is easier to offer extra local insurances, pension benefits etc to your employee. These would be difficult for an employer, who is not registered in Germany, to offer. Before you offer benefits though, check whether these are required in the local labor market.
- If there are disputes involving the employee it is the local firm’s job to manage this – even if you end up paying the bill.
- You may find that the local employment company is “tougher”, less generous than you would be in its treatment of employees – especially when employees are terminated. So you save money.
- The authorities may still say that your company is really an employer and that there is a permanent establishment. However in practice, your firm is less liable to this approach.
- The EMPLOYEE may be disappointed at getting a job offer from a company he has never heard of rather than your company. As a matter of fact, in Germany employees do not like working for staffing companies and may refuse to do so. In a tight recruitment market this might matter.
- This solution will, on an ongoing basis, be the most costly.
- It may take your management some time to adjust to the employee not being “their” employee. Some benefits, such as stock options, are not possible under this arrangement.
- In Germany the maximum allowable leasing time of an employee is 18 months. After that, the employee has to take an obligatory break from working for your company for 3 months before he can continue working for you via a staffing agency.
Talk to us about hiring an employee in Germany
We can guide you through the necessary steps to employing people in Germany and offer help and guidance along the way