Hiring Someone in Germany: Where to Focus

Germany is an economic powerhouse in the 21st century, bringing in the fourth-highest GDP in the world, exactly 3,845,630.03 billion dollars in 2019 according to The World Bank. These figures represent a 0.6% growth from 2018. As a German, foreign employer, or even for someone who is looking for an entrepreneurial opportunity, it’s important to understand these numbers and use them in your favor,

If you’re looking to enter this big market, expanding your company internationally, you need to know where to find the best assets for your business, local labor laws, and payroll regulations.

You have the support and want to expand your business internationally, but don’t have the time or logistic resource to hire the totality of the human capital required to expand it

The process of setting up a payroll in this country can be complicated, but there are a number of options to make it easier, such as through Germany payroll outsourcing. These E-professional employment organizations offer different services, like PEO, payroll administration, contracts, and recruitment services.

What is a PEO?

A PEO or professional employer organization is an entity that provides services of talent recruiting for small and medium businesses, such as:

  • HR consulting
  • Payroll processing
  • Risk and safety mitigation services
  • Tax filing
  • Employee insurances (liability, health, compensation)
  • Training and development

How does it work?

The PEO makes a co-employment agreement with his clients for payroll and taxation matters, allowing the client company to outsource those seasonal talent needs. They charge anywhere from 3 to 15% of the total payroll.

Benefits of PEO in internationalization

PEO does not only reduce the total cost for their client company, but they also save them material resources by diminishing the steps in the hiring process. This allows your company to focus on your day to pay employees and activities.

It’s an important tool to have when expanding because it enables a better and quicker adaptation of the legal side of the client company to the different country’s legislations.

Benefits of PEOs in Germany

It allows companies to overcome regulations and connects them at the same time to an already registered and legal entity inside the country that enables them to onboard, manage, hire, terminate or renew contracts and pay, all in one place and without having to set it up themselves.

Using a PEO in Germany can be extremely useful for:

  • Temporary Businesses
  • Businesses outside the EU
  • Specialized companies
  • Artisanal companies such as jewelry or bakeries.

PEO in Germany

Universal Hires

The only HQ in Germany, it offers contract drafting, social security, and a local team to take care of their clients. The employment liabilities are absorbed by the companies which allow foreigners to focus on other elements of their business.

How to find a PEO?

If your best interest is expanding your company into or from Germany there are PEO matchmaking services online for a low price.

What you save as a company

PEOs have appeared as a global tool for expansion, that enables the better and most efficient management of a company overseas. It saves time, training hours, and legal inconveniences. In Germany the standard process to hire an employee is the following:

Once you find a person who meets the requirements on a surface level is time to review their application: cover letters, CV, certificates, and references. If the application is online it should be sent through a designated email or a digital form. The next step is usually an interview to ask questions inside of the law requirements, the interview cost is assumed by the employer.

The final step is the contract, in which agreements are negotiable. The main parts of a contract are:

  • Start and duration
  • Trial phase
  • Stipulated hours of work
  • Holidays
  • Description of the position
  • Company agreements
  • Remuneration
  • Period of notice

For a company looking to expand overseas or coming from overseas, especially taking into consideration the focus on small and mid-sized businesses, is simply too big of a process to do autonomously.

PEOs allow the start of projects quickly. Germany payroll outsourcing through one of these companies is not only effective but logical since it takes care of the human resources, insurances, legal and contractual needs.