German Employment Contract

A German employment contract forms the foundation of the German employer-employee relationship and formalizes agreements regarding

• salary,
• vacation days,
• notice periods,
• work location(s), and
• working hours.

Oftentimes, when drafting employment contracts, both parties are hesitant to spell out exactly what they need, want and expect. Instead, they work with model contracts, which may cover the basics of a professional relationship, but aren’t very refined and can become a liability in the event of a legal dispute. Thus, model contracts should only be used as a framework for personalized contracts that are tailored to the needs of both parties.

Given the litigation risks associated with using a model contract “as-is,” the following contract terms should always be negotiated, agreed upon and included:

• provision of a company car,
• non-compete clauses,
• preclusion periods,
• reimbursement policies,
• commissions,
• bonuses,
• probationary period and
• overtime pay.

When drafting employment contracts in Germany, clauses regarding non-competition and overtime often pose problems and can lead to litigation if not carefully prepared. Thus, for example, a post-contractual non-competition clause is always invalid unless a “waiting allowance” was agreed to at the same time.

Our attorneys for German Labor & Employment Law are familiar with these and other drafting risks and can help you draft an agreement that will avoid potential pitfalls and expensive litigation.

When drafting individual employment contracts, employers must comply with Germany’s equal treatment principle – as interpreted and applied under German labor law.

Generally speaking, the equal treatment principle requires that employers treat equally any two employees performing comparable activities in a comparable way. In addition, employers are prohibited from creating extraneous groups to seek to justify disparate treatment.

The equal treatment principle in Germany is particularly important when drafting terms regarding additional remuneration or special allowances (e.g. Christmas bonuses, commissions, etc.), so that no employee is unjustifiably discriminated against.

Despite the equal treatment principle, unequal treatment with regard to a variety of terms, including remuneration, is still possible as long as long as such unequal treatment is factually and legally justified. Our German employment attorneys can gladly review your particular case to determine if there are adequate factual and legal grounds for unequal treatment.