Don’t Offer Your German Hire A Car Allowance. He’s Expecting The Car

With 70 offices around the world, Cornerstone International Group can guide you through the maze of hiring laws and customs in most countries. In this article, our colleague Gerhard Benneck, flags some surprising German sandtraps from his base in Düsseldorf.

Companies coming into Germany often look for sales people, business development managers or similar people in order to get business in Germany going. As recruiters in Germany specializing in helping foreign companies set up shop here we find that these companies often make the following mistakes:

1. Contracts – a German employee will much prefer a German contract with a legally established German company. Of course we often place candidates with foreign contracts but it does make hiring much more difficult. The German candidate does not know what legal framework will apply. On the other hand the foreign company will often want its own legal framework to be used – for instance British law – and writes this into the contract. Based on EU law, however, no matter what jurisdiction is chosen, German labor laws cannot be circumvented. This can lead to a situation where the German employee (sometimes unbeknownst to either party) can choose which labor laws he would like to use to interpret the contract and can use those which are most advantageous to him without the employing company having a say in the matter. Therefore care should be taken early in the hiring process to determine how a final employment contract should be designed and implemented. While we are a recruitment company in Germany, not a legal advisor, call us for more information or if you need pointers on this.

2. Company cars – When recruiting a salesperson, a business development manager, a country manager or similar people, inevitably the question regarding a company car will arise. While untypical in many countries, the company car has a long tradition in Germany. Remember, Germany is definitely a “car country”! As a consequence we have found, that when recruiting in Germany, often the subject of the company car, what kind of car, what configuration it has etc. is a subject which requires more time in the negotiation of the package than the salary itself! In Germany, the company car is definitely a status symbol and is vigorously defended. Therefore a “car allowance”, while accepted by some, is nonetheless a very poor second to a fully expensed company car. By the way, with the company car it is expected that all fuel is paid for, including fuel for private trips (particularly including vacation trips). While the German employee who gets a company car will have to pay taxes on it, the taxes paid are far less than the costs of the car as such.

3. Vacation times – Surprising for many are the German vacation times. While in countries like the USA, early vacation allowance is often only 10 working days, in Germany the norm is 30 working days. And with that, we mean real working days – a total 6 weeks of vacation! While German law dictates a minimum of 20 days and some companies offer only 25 days, probably over 90% of all companies offer the full 30 days which have become the standard. In addition to that there are the usual public holidays in Germany, which total about 12 working days. Often however, (particularly in May) these public holidays fall on a Thursday so that the Friday is taken as well, making a pleasant four-day weekend. Offering significantly less vacation will put you at a competitive disadvantage.

4. Notice periods – Many countries have quite short notice periods, often only two weeks. As your recruiters in Germany we have to warn you that German notice periods tend to be much longer. The legal minimum is 4 weeks (usually before the end of any month) but often the contractually agreed notice period is longer, often being 3 months (before the end of any month) or 6 weeks before the end of any quarter This can inhibit quick hiring and should be taken into account when making plans to enter the German markets. It will probably take longer to get the right people than it would in other countries.

There are further problems you might encounter in entering the German markets. As Cornerstone’s recruiters in Germany, we have decades of experience helping companies enter the German market and can guide you, not only in finding the right employees but also in finding the right legal assistance, accounting assistance and with other matters.

Contact Gerhard Benneck, your English speaking consultant, for more information.