20 Best Employer of Record in Germany: Reviewed in 2024
Best German Employer of Record Service Shortlist
Here’s my pick of the 10 best German EOR companies out of the 20 options I’ve reviewed:
Get free help from our HR software advisors to find your match.
When hiring employees in Germany, understanding the intricacies of employment regulations, entitlements, and tax laws is crucial to avoid penalties and legal issues. My best advice is to use an Employer of Record (EOR) when hiring in Germany to outsource your legal employment responsibilities and avoid having to register a new German-based legal entity with the Commercial Register (Handelsregister), the Tax Office (Finanzamt), and with numerous social security institutions.
A Germany-based EOR will manage the complexities of German employment regulations, allowing you to concentrate on growing your business. This way, you'll avoid potential legal consequences and stay in compliance with the Federal Ministry of Labour and Social Affairs (BMAS) regulations.
However, which German EOR service is the best fit for your needs? That’s why I wrote this article, to help you narrow down your options. I’ve researched this topic extensively and compiled my findings into this list of the best Employer of Record services for hiring in Germany.
Need expert help selecting the right tool?
With one-on-one help, we guide you to your top software options. Narrow down your software search & make a confident choice.
Market Details for Hiring in Germany
- Capital City: Berlin
- Currency: Euro (€, EUR)
- Payroll Frequency: Monthly
- Official Language: German
- Approx. Population: 83 Million
- Public Holidays: 9 (plus regional variations)
Why Hire Employees in Germany?
Germany’s strong educational system ensures a steady stream of highly qualified graduates, especially in STEM fields. Germany's talent marketplace is well-known for its engineering and technological expertise, particularly in the automotive and manufacturing sectors. Plus, its IT sector is thriving, with a significant talent pool in software development, cybersecurity, and data analytics.
Germany’s innovative ecosystem, driven by a vibrant start-up culture in cities like Berlin and Munich, attracts skilled professionals in tech, finance, and creative industries. Furthermore, Germany’s leadership in renewable energy attracts experts in sustainable energy solutions and green technology.
In addition to the technical depth of Germany’s workforce, its strategic location in Europe also makes it an attractive location to hire new talent since it lends easy access to other major European markets.
What is an Employer of Record in Germany?
An Employer of Record (EOR) for Germany is a third-party service provider that acts as the legal employer for employees you want to hire within Germany, while your parent company maintains day-to-day control of your employees’ tasks and workload. As the legal employer, the EOR assumes full legal responsibility for any new hires, including payroll, tax deductions, compliance management, benefits administration, and any other Germany-specific employee requirements.
Using an EOR service is beneficial for companies wanting to hire German staff or expand their operations into Germany since it simplifies this process considerably. Rather than asking your HR professionals to become experts in German labor laws and regulations, you can outsource these requirements to an EOR in Germany and gain peace of mind that your future operations will be compliant.
Why Trust Our Reviews
We've been testing and reviewing HR software + services since 2019. As HR professionals ourselves, we know how critical and difficult it is to make the right decision when selecting a new HR service provider to work with.
We invest in deep research to help our audience make better purchasing decisions. We've tested more than 2,000 tools and 200 service providers for different HR use cases and written over 1,000 comprehensive software reviews. Learn how we stay transparent, and take a look at our review methodology.
Best Employer of Record in Germany: Pricing Comparison Chart
This comparison chart summarizes pricing details for my top Employer of Record selections for hiring staff in Germany to help you find the best EOR service for your budget and business needs.
| Tools | Price | |
|---|---|---|
| Deel | Flat rate user pricing, with a free version for businesses with up to 200 people | Website |
| Papaya Global | From $15/employee/month | Website |
| Oyster HR | From $599/employee/month or $29/contractor/month | Website |
| Skuad | From $199/employee/month or $19/contractor/month | Website |
| Remofirst | From $25/user/month | Website |
| Atlas HXM | From $595/employee/month or $49/contractor/month | Website |
| Universal Hires | Pricing upon request | Website |
| Velocity Global | Pricing upon request | Website |
| Horizons | Pricing upon request | Website |
| Rippling | From $8/user/month, (billed annually). | Website |
Compare Software Specs Side by Side
Use our comparison chart to review and evaluate software specs side-by-side.
Compare SoftwareHow to Choose an Employer of Record in Germany
An EOR service can solve many different challenges and simplify the process of hiring and managing German staff. To help you figure out which EOR service best fits your business needs, you need to document your specific challenges first.
As you work through your own unique selection process, keep the following points in mind:
- What problem are you trying to solve - Start by identifying the challenges you're trying to overcome, whether that's sourcing German staff in specific geographic locations, managing compliance with German labor laws and tax regulations, paying employees in Euros, or offering health benefits to your German staff.
- Who will benefit from the service - Consider who will manage the EOR relationship (i.e., who will your main contact people be in-house?) and how having an employer of record will improve their day-to-day work tasks.
- What is your budget - To evaluate cost, estimate how many employees you anticipate hiring within the German market. Since EOR providers typically charge a monthly fee for each new hire, this will help you anticipate your monthly costs.
- What outcomes are important - Review the capabilities you want to gain or improve, and how you will measure success. For example, you may want to hire employees within a specific state or city, making it easier for them to work together in person as needed. You could compare service providers until you’re blue in the face but if you aren’t thinking about the outcomes you want to achieve, you'll waste a lot of valuable time.
- How it would work within your organization - Consider how the service provider's software ecosystem would work alongside your existing workflows and systems. Would their software framework integrate with your existing HR software, or would you face data management roadblocks?
Remember every business is different — don’t assume that a German employer of record service will work for your organization just because it's popular.
-
Deel
Visit WebsiteThis is an aggregated rating for this tool including ratings from Crozdesk users and ratings from other sites.4.8 -
Rippling
Visit WebsiteThis is an aggregated rating for this tool including ratings from Crozdesk users and ratings from other sites.4.8 -
ClearCompany
Visit WebsiteThis is an aggregated rating for this tool including ratings from Crozdesk users and ratings from other sites.4.6
Reviews of the Best Employer of Record Services in Germany
To help you find the best EOR service for hiring German employees, I’ve described my top 10 selections in detail, including the specific services each provider offers and how HR teams can use them effectively. Additionally, I’ve listed 10 more EOR service providers for Germany below if you’d like even more options to consider.
Deel is a well-established employer of record platform that helps companies rapidly employ workers in 150+ countries, including Germany.
Deel owns a local entity in Germany staffed with legal experts to keep track of regulatory changes and ensure all legal obligations are met on your behalf. To hire a German employee with Deel, the average onboarding time frame is 4 days.
Why I picked Deel: Deel excels as an EOR service provider in Germany by offering streamlined contract management, ensuring compliance with German employment laws. Deel also helps organizations offer localized employee benefits for German staff, including healthcare, pension, maternity leave, and workers' compensation insurance options.
In addition, Deel has launched several new offerings over the past year, including global payroll, global mobility support, integrated Slack tools, and advanced integrations. These services, all combined, facilitate efficient and compliant hiring processes within the German talent market.
Deel Key Services:
Deel offers end-to-end management for your German employees covering everything from hiring and onboarding to termination. Their web app is user-friendly and provides a range of features to help businesses manage their remote teams effectively, including contract management and expense tracking.
Their integrated contract management function supports advanced customizations such as stipends, signing bonuses, and stock options. You can also use Deel for visa and immigration support if you want to relocate existing employees to Germany, with Deel managing the entire visa process for your organization in-house.
Deel offers 24/7 customer support and live chat and is known for its fast support.
Pros and cons
Pros:
- Comprehensive employee benefits
- Local compliance expertise
- Fast onboarding process
Cons:
- Potential complexity for first-time users
- Limited customization options
Papaya Global is a leading Employer of Record (EOR) service provider with a presence in Germany. Their platform simplifies the complexities of global payroll, hiring, and compliance, allowing businesses to efficiently manage their international workforce. They offer tailored services for the German market, ensuring compliance with local regulations and employment laws.
Why I picked Papaya Global: I included Papaya Global in this list because their platform integrates payroll, HR, and compliance into a single, easy-to-use interface, making it simple for businesses to manage their international employees. Additionally, their focus on local compliance ensures that businesses can operate in Germany without worrying about legal complications.
Papaya’s platform includes a self-guided tour that demonstrates how payroll professionals can use their technology to automate and manage their global payroll quickly and compliantly.
Papaya Global Key Services:
Papaya Global's services include advanced compliance, liability coverage, employee contract lifecycle management, immigration and visa assistance, data security monitoring, and enterprise-grade global payroll processing using an AI-based payroll engine.
Their EOR offering also includes additional HR services such as onboarding, benefits management, and employee support. This holistic approach helps businesses provide a consistent and supportive experience for their employees in Germany, enhancing employee satisfaction and retention.
Pros and cons
Pros:
- Integrated HR services
- Strong compliance management tools
- Comprehensive global payroll solution
Cons:
- Potential delays in customer support responses
- Limited customization options
Oyster HR is a global EOR service provider that helps businesses hire employees in Germany and other countries with full compliance. Their platform is designed to support seamless global expansion with a focus on compliance and employee experience.
Why I picked Oyster HR: Oyster offers educational resources to their EOR clients to help them navigate the global employment landscape. This includes useful financial tools that help you determine the full cost of hiring a new employee in any country, or whether it would be more cost-effective to fill a position with an international contractor rather than an employee.
In addition, the Oyster Academy is a helpful resource for companies that are new to the international work-from-anywhere scene, and includes training courses on ‘how to prepare for distributed work’, and ‘how to create a company culture in a distributed environment’.
Oyster HR Key Services:
Oyster HR offers a range of features, including streamlined onboarding, payroll, and benefits management, tailored specifically for the German market. Their platform stands out for its ease of use, compliance assurance, and dedicated support, making it an ideal choice for businesses looking to expand in Germany.
Their onboarding process is designed to be quick and efficient, helping new hires integrate into their roles smoothly. This feature includes digital contract management and automated document collection, making the entire process hassle-free for both employers and employees.
Pros and cons
Pros:
- Efficient onboarding process
- Strong compliance support
- Comprehensive global benefits packages
Cons:
- Potential delays due to time zone differences
- Limited customization options
Skuad is a comprehensive global HR platform designed to simplify international hiring, payroll, and compliance management for businesses. It enables companies to hire and manage employees and contractors in over 160 countries, including Germany, without the need for local subsidiaries. When you hire them as your German EOR partner, they’ll manage the whole hiring process on your behalf, including creating employment agreements and other legal documents.
Why I picked Skuad: As part of their EOR service, Skuad offers remote onboarding and can facilitate payroll in multiple currencies. This includes the management of invoices as well as payroll automation. Skuad also ensures compliance with local regulations and labor laws.
Skuad Key Services:
Skuad's EOR services include employee benefits, time-off tracking, and managing tax compliance. It also offers coverage for your copyrights, trademarks, and any other sensitive IP projects. As part of their global hiring service, they will even stickhandle all the required documentation on your behalf, including work permits and visas for your new hires as well as their dependents.
Beyond that, Skuad can also help you distribute computer equipment to your new employees, and track company assets like phones and other IT devices.
Pros and cons
Pros:
- User-friendly platform
- Extensive HR support
- Comprehensive compliance management
Cons:
- Limited customization options
- Tax deductions limited to Enterprise plan
Best for 24/7 customer support and a dedicated account manager
Remofirst is a global EOR service provider on a mission to free employers from geographical boundaries so they can build global teams with ease. They offer EOR services in 180+ countries, eliminating the need to set up multiple legal entities abroad.
Why I picked Remofirst: If you plan to hire many EOR employees in different countries, like Germany, Remofirst is a good option because of its aggregated invoice function. To simplify your payroll process, Remofirst summarizes and aggregates your EOR invoices for review, showing each EOR employee’s salary in their local currency, including Euros (EUR).
They'll automatically calculate your team’s hours, time off, holidays, bonuses, and commissions so you don’t have to worry about it. Instead, you only need to review a single monthly invoice and approve it for payment, rather than approving multiple individual invoices and payments.
Remofirst Key Services:
Their team of legal experts and HR professionals will ensure your business operations are always compliant with changing German regulations, with compliance documentation accessible at all times through your secure dashboard. Their customer support team is also available 24/7 in case you need additional help. All clients also receive a dedicated account manager as their main point of contact.
On top of their EOR services, Remofirst also provides international payroll and invoice management, global benefits management (including insurance and equity plans, plus time-off management), and employee support with obtaining visas and other immigration documentation. They can even help you with provisioning equipment to your distributed employees around the world. EOR pricing starts from $199/person/month.
Pros and cons
Pros:
- Comprehensive compliance management
- User-friendly platform
- Robust employee support
Cons:
- Dependence on third-party providers for some services
- Service availability may vary by region
Atlas HXM offers innovative companies the tools they need to compete in a global economy. As one of the largest, direct EOR service providers, they believe that businesses should be able to employ whomever they want, wherever the talent exists.
Why I picked Atlas HXM: They're a popular choice across numerous industries, including non-profits, financial services, oil & gas, energy, life sciences, pharmaceuticals, technology, and government, and they can tailor their service offerings to your needs, whether you're a new startup, an SME, or an enterprise organization.
Atlas is committed to widening the margins of entrepreneurship and employment alike. As such, their business model helps startups and SMBs compete on the international playing field—turning commercial innovations into viable global enterprises. In doing so, Atlas brings opportunities to local economies and the people who work there.
Atlas HXM Key Services:
Services include German-specific compliance monitoring, employee engagement and productivity monitoring, benefits administration (health, dental, and vision), and guidance on safety programs to minimize business risks.
Their technology platform is supported by international experts who deliver flexible services to companies wanting to expand across borders, including into Europe. Their services can help you onboard talent, manage compliance, and pay your global workforce without the need for a local entity or multiple third-party providers.
Pros and cons
Pros:
- User-friendly platform with localized support
- Comprehensive and customized onboarding
- Extensive local compliance expertise
Cons:
- Initial setup may require significant time and resources
- Limited customization options for specific HR policies
Universal Hires is an established Employer of Record service provider that offers comprehensive EOR services in Germany. They offer expertise in local compliance, payroll management, and employee benefits administration. Notably, they emphasize a tailored approach to meet the unique needs of the German market, ensuring smooth operations and legal compliance.
Why I picked Universal Hires: First and foremost, I include Universal Hires in this list because of their well-developed local presence across Germany. Secondly, their standout features include personalized service plans, extensive local market knowledge, and a commitment to seamless onboarding and HR support. These attributes make Universal Hires a top choice for businesses seeking reliable and efficient EOR services in Germany.
Universal Hires Key Services:
Universal Hires will handle employee correspondence and contracts, and assist with mandatory social security contributions and pension insurance registration, German income tax withholding, and termination liabilities, including severance calculations.
Universal Hires also assigns dedicated account managers to each client, providing personalized support and immediate assistance with any HR-related issues. This high level of customer service ensures that companies receive the attention and solutions they need promptly.
Pros and cons
Pros:
- Strong expertise in the German market
- Dedicated account managers for personalized support
- Customizable EOR solutions tailored to client needs
Cons:
- Smaller company size compared to some global EOR providers
- Limited language support options beyond German and English
Velocity Global is a well-known employer of record (EOR) and professional employer organization (PEO) provider that simplifies global hiring thanks to its network of on-the-ground experts in 185+ countries, including Germany.
Why I picked Velocity Global: I included Velocity Global in this list because of their well-known reputation for global EOR services and their expertise in navigating complex regulatory environments. They stand out with their ability to handle intricate regulatory landscapes, ensuring companies can expand efficiently without legal hurdles.
Velocity Global Key Services:
Velocity Global offers comprehensive support for their EOR clients, including everything from onboarding to ongoing HR management, backed by a deep understanding of local employment laws. Key services include payroll, compliance, benefits management, employee training, and risk management for your German employee operations.
In addition to its EOR services, Velocity Global can also help you simplify your plans for global expansion or offer additional global immigration services in case you want to move international employees to another location.
Pros and cons
Pros:
- Strong understanding of the German regulatory environment
- Localized payroll management
- Efficient and thorough onboarding process
Cons:
- Communication delays due to time zone differences
- Limited customization options
Horizons offers streamlined global HR solutions including EOR and PEO services, international payroll and recruitment, and global mobility & immigration support.
Why I picked Horizons: I included Horizons in this list because their EOR service is cost-effective compared to others, and they offer flexible contract terms. You can end your EOR relationship with them at any time without worrying about costly termination fees or other penalties.
Their German EOR services are administered by their local experts based in Berlin who are well-versed in German employment laws, including statutory maternity leave and parental leave.
Horizons Key Services:
In addition to their standard EOR services, they offer additional niche service offerings such as tips for doing business in Germany, guides to help with global expansion, resources for strategic mergers & acquisitions, and advice on how to access new and emerging markets.
Horizons also provides cultural training and support to help employees integrate seamlessly into the German work environment. This service enhances employee satisfaction and retention by addressing cultural nuances and fostering a positive workplace culture.
Pros and cons
Pros:
- Cultural integration support
- Strong focus on compliance
- Deep knowledge of German labor laws
Cons:
- Service offerings may vary by region
- Dependence on local partners for some services
Rippling is an all-in-one global HR, payroll, and IT platform that offers additional EOR and PEO services. You can use their combined software and services to run payroll easily, with each EOR employee paid in their local currency, including Euros.
Why I picked Rippling: I included Rippling because of its unique dual functionality as both an HR platform and an IT management system. Using Rippling, you can provide a streamlined employee experience for all your new employees, easily granting them access to all the IT assets they’ll need as part of their employee onboarding process.
Rippling Key Services:
Rippling’s unified platform offers enterprise-grade security, scalability, and operational efficiency, helping companies manage payroll and benefits, time-tracking, and reporting for your entire global workforce from a single user interface.
Their combined services and software include compliance monitoring, automated tax filings, accurate time tracking, expense reporting, policy management, and HR reporting.
Pros and cons
Pros:
- Integrated benefits administration
- Localized payroll management
- Comprehensive compliance automation
Cons:
- Learning curve for new users
- Limited customization options
Other German Employer of Record Services
Here are some other EOR service providers in Germany that didn’t make it into my top 10 shortlist, but are still worth considering:
- Remote
Best for competitive benefits packages
- Multiplier
Best EOR service for quick employee onboarding
- Foxhire
Best for hiring German healthcare and higher education workers
- Mercans
Best EOR for supporting payments in cryptocurrency
- Plane
Best for US-based companies looking to hire German staff
- GoGlobal
Best EOR service provider for 24-hour quotes
- Airswift
Best EOR for hiring in technology-driven STEM industries
- Globalization Partners
Best for an AI-driven global employment platform
- Safeguard Global
Best EOR service for NGOs and non-profit organizations
- Omnipresent
Best for estimating employment costs
Hiring in Germany: Important Details
Here are some key details to note if this is your first time hiring staff located in Germany. Your EOR provider will manage these compliance details on your behalf. However, proactively informing yourself of these details is always recommended before you invest your resources into sourcing staff based in Germany.
In Germany:
- Employment laws are determined by the Federal Ministry of Labour and Social Affairs (BMAS). They are responsible for setting and managing regulations for labor conditions, health and safety at work, and social security.
- You can hire employees or contractors. Within the employee category, you can hire full-time or part-time employees, as well as temporary, seasonal, or interns. Each category has its own set of labor laws in Germany. Your German EOR provider can help you determine the correct classification to avoid employee misclassification errors.
- Germany has both mandatory payroll deductions and social security contributions that must be collected.
- Mandatory payroll deductions include income tax (Lohnsteuer), Solidarity surcharge (Solidaritätszuschlag), and the Church tax (Kirchensteuer, if applicable).
- Social security contributions include Health Insurance (Krankenversicherung), Pension Insurance (Rentenversicherung), Unemployment Insurance (Arbeitslosenversicherung), and Long-term Care Insurance (Pflegeversicherung).
- German is the official language, though English and French are used frequently too.
- The standard working week in German is 48 hours, with 10 hours per day maximum. Employees also must not work for more than six continuous hours without a break, or for more than six days consecutively without one day off.
- Paid vacation in Germany starts at a minimum of 24 working days per year. This is mandated by the Minimum Vacation Act for Employees.
- There are nine public holidays in Germany that are recognized nationally, plus others that vary by region or state. Paid public holidays include:
- New Year's Day (Neujahrstag)
- Good Friday (Karfreitag)
- Easter Monday (Ostermontag)
- Labour Day (Tag der Arbeit)
- Ascension Day (Christi Himmelfahrt)
- Whit Monday (Pfingstmontag)
- German Unity Day (Tag der Deutschen Einheit)
- Christmas Day (Erster Weihnachtstag)
- Boxing Day (Zweiter Weihnachtstag)
Understanding and complying with employment norms and legal requirements surrounding German public holidays is one area where your EOR service will shine, managing these occurrences hassle-free on your behalf.
- Germany offers maternity leave and paternity leave.
- Maternity leave begins 6 weeks before birth and ends 8 weeks after both (14 weeks total).
- Paternity leave can last up to 3 years and can be shared by both parents.
- Paid sick leave is 6 weeks in Germany. If an employee is still sick after 6 weeks, health insurance will typically kick in to provide financial support to the employee.
- The probationary period in Germany is 6 months. During this period, the notice period for termination is usually two weeks.
- Termination of employment in Germany requires adherence to specific legal regulations, including notice periods and valid reasons for termination. Notice periods vary based on the duration of employment and can range from 2 weeks to 7 months. Termination protection laws safeguard employees against unfair dismissal, particularly in companies with more than 10 employees.
Selection Criteria for Employer of Record Germany
Uncovering the best EOR services for this list required a deep understanding of how these services can alleviate common challenges, such as legally hiring employees abroad, managing international payments, ensuring compliance with local labor laws, providing competitive benefits, and facilitating smooth onboarding.
My approach to choosing the best EOR services is grounded in thorough research into recent employer of record market data and an understanding of which partnerships would add the most value for organizations hoping to access the global talent market.
Here are the specific criteria I used to carefully compare the service offerings for each provider in this list:
Core Employer of Record Services (25% of total score): To be considered for inclusion in this list, each EOR provider had to offer the following basic services first:
- The corporate structure to legally and compliantly hire employees in multiple countries without a local entity
- The ability to manage global payroll and taxes in compliance with local regulations
- Assistance with offering competitive and locally compliant benefits packages
- Assistance with navigating visa and work permit processes for expatriate employees
- Robust procedures to ensure data privacy and security that comply with international standards, including GDPR and other requirements
Additional Standout Services (25% of total score): To help me narrow in on the best EOR services out of the numerous options available, I also took note of any unique or less common services, including:
- Advanced technology platforms that streamlined payroll and HR processes while still offering ease of use
- Specialized experience in hiring employees within specific new countries or key industries
- Services that enhance remote work compliance and global mobility needs
- Specialized customer support for complex immigration cases
- Assistance with international IT requirements, including managing computer equipment, software licenses, and other asset-tracking requirements
- A focus on eco-friendly and sustainable employment practices
Industry Experience (10% of total score): To evaluate the industry experience of each EOR service provider, I considered the following:
- How many years their business has operated in the EOR space
- Any industry recognitions or certifications the provider may hold in international HR and payroll
- Their depth of knowledge in local labor laws across multiple jurisdictions
- Their expertise in new markets, including how many different countries they offer local expertise in
- Evidence of a strong track record managing global expansion processes
- The combined experience and credentials of their team members, if available
Customer Onboarding (10% of total score): To get a sense of each provider's customer onboarding process, I considered the following factors:
- The availability of comprehensive onboarding materials, such as fact sheets, guides, FAQ repositories, or other training resources
- Support for integrating the EOR provider's software with existing HR systems
- Direct access to onboarding specialists, customer support, or a dedicated account manager during the setup phase
Customer Support (10% of total score): Since the EOR provider will act as your remote workers' legal employer, it's important to ensure you'll receive timely communications and top-level support. To evaluate the level of customer support each company offered, I considered the following:
- The availability of a multilingual support team that covers different time zones
- Multiple support channels, including phone, email, and live chat
- Evidence of responsiveness and effectiveness in resolving issues, as inferred from customer reviews
- The existence of dedicated account managers to provide assistance as needed
Value for Price (10% of total score): To gauge the overall value of each service, I considered the following factors:
- Transparent pricing models without hidden fees
- Comparative analysis of service offerings versus cost
- Flexibility in service packages to suit different business sizes and needs
Keep in mind that EOR services are complicated, and because of that the price tag can sometimes be high. However, the prices for their services still offer a good ROI considering the complexity of the premium-grade services you're gaining.
Customer Reviews (10% of total score): Evaluating customer reviews is the final element of my selection process, which helps me understand how happy real users are with a service. To determine this, I considered the following factors:
- Consistently high ratings across various consumer review platforms
- Specific feedback on the ease of use of the EOR services
- Testimonials highlighting exceptional customer support and problem resolution
Using this assessment framework helped me identify the employer of record services that go beyond basic requirements to offer additional value through unique services, deep industry experience, smooth onboarding, effective support, and overall value for price.
Trends in Employer of Record Services
As more businesses expand across borders, the need for efficient, compliant, and user-friendly solutions for hiring employees abroad, and managing international payments, compliance, benefits, and onboarding has never been more critical. As a result, Employer of Record services have continued to evolve, with an emphasis on technology-driven solutions that offer flexibility, comprehensive support, and innovative features to facilitate global operations.
Here are the most recent trends affecting EOR services and the HR software systems that are used to offer them:
- Immigration Support: There is a growing demand for assistance with immigration services like visa and work permit sponsorships, simplifying global talent acquisition processes for client companies immensely.
- Specialized Services for Diverse Needs: Several EOR providers have begun to offer IP and invention rights protection and equity incentive planning services, to cater to the specific needs of their client companies.
- Enhanced Employee Benefits Packages: There's a growing trend in EOR providers going beyond standard healthcare coverage to offer a full spread of enterprise-level medical and health benefits, stock options, and even one-time benefits like moving bonuses. This trend demonstrates an understanding of the importance of attracting and retaining top talent globally.
- AI-Backed Knowledge Bases: Some EOR providers (including Deel) are beginning to offer legally vetted knowledge bases or information wikis that use artificial intelligence to surface answers to common questions quickly. This helps customers source details on hiring within a specific country fast, without relying on human-run support systems.
As the market continues to evolve, these trends are likely to shape the future of international employment, making it easier for businesses to navigate the challenges of global expansion. For a closer look at specific EOR providers that are capitalizing on these trends, I recommend reading our in-depth reviews of Atlas HXM, Deel, and Remofirst.
Key Employer of Record Services
By leveraging an EOR service, companies can manage international payments, ensure compliance with local labor laws, provide competitive benefits, and optimize their new hire onboarding process. Here are the most important services to look for in an EOR service provider:
- Global Payroll Management: Arguably one of their most important tasks, an EOR service will ensure your employees are paid accurately and on time in their local currency. This service is essential for maintaining employee satisfaction and financial stability in diverse geographic locations.
- Tax Compliance and Withholding: An EOR service will also manage employee income tax withholdings and employer tax obligations per local laws, preventing legal issues and ensuring smooth operations across different tax jurisdictions.
- Local Labor Law Compliance: EOR service providers offer country-specific knowledge of employment laws and regulations. This knowledge protects businesses from legal disputes and fines, ensuring a respectful and lawful work environment for all employees. Knowledge of these laws also applies to monitoring employee work hours, including timesheets and time-off requests.
- International Talent Acquisition & Background Checks: An EOR service will work with their client company to source additional talent from the global market as needed. As part of this process, many EOR services include background checks for potential new hires to confirm their credentials and ensure they're suitable for their role. Once approved, an EOR will also manage your country-specific employment contracts as well.
- Visa and Work Permit Sponsorship: Many EOR providers offer assistance with obtaining necessary visas and work permits for expatriate employees. This service is critical for facilitating the legal employment of foreign nationals and ensuring a seamless relocation process.
- Onboarding and Offboarding: An EOR will also manage the processes of integrating new hires into their client's company or managing their departure. This ensures a smooth transition for both employees and the organization and gives peace of mind that employee terminations are handled as per the labor laws of each jurisdiction.
- Benefits Administration: By leveraging economies of scale, EOR service providers can access competitive, region-specific health insurance benefits packages to cover your international employees. Tailored employee benefits are crucial for attracting and retaining top talent, enhancing job satisfaction, and meeting legal requirements for employee welfare.
- HR Support and Consultation: EOR specialists are a valuable resource as they can provide ongoing human resources support and expertise on international employment practices. This support ensures that businesses can navigate complex HR issues, deal with grievances effectively, and maintain positive employee relations without affecting their employer brand.
- Risk Management and Insurance: Since EOR providers assume legal responsibility for your foreign staff, this also includes managing employment-related risks, handling workers' compensation matters, and maintaining certificates of insurance, including both professional indemnity and public liability. This coverage is vital for protecting businesses and employees against unforeseen circumstances.
- Multi-Language Support: EOR providers offer services in multiple languages to help organizations operate efficiently in a global marketplace and serve the needs of a diverse workforce. This can include translation services for your corporate policy documents, as well as localized assistance in your international employees' native language, to prevent possible miscommunications.
As you can see, EOR service providers offer a full set of comprehensive services to help businesses expand their operations globally without the burden of navigating international employment laws and practices on their own. By securing an EOR partner to cover these critical services, you'll gain peace of mind, and more time to concentrate on your core business objectives.
Benefits of an Employer of Record Service
EOR services are a savvy option for organizations looking to expand their global footprint without the complexities and liabilities associated with international employment laws and practices. For companies contemplating global expansion, understanding the benefits of partnering with an EOR can provide the clarity and confidence you need to move forward.
Here are several EOR benefits you can expect to gain:
- Quick Market Entry: For organizations aiming to test new markets or hire talent in new countries where they have no legal presence, an EOR offers a swift and efficient solution to initiate operations, saving time and resources.
- Simplified Global Payroll: Using an EOR service simplifies the complex process of managing international payroll, including tax deductions, withholdings, and currency conversions for your employees worldwide.
- Global Compliance & Risk Mitigation: By managing compliance, an EOR service provides expertise in navigating the intricacies of employment laws, tax regulations, and insurance requirements in multiple jurisdictions, helping businesses safeguard their operations against compliance-related risks.
- Enhanced Benefits Negotiation: By leveraging their extensive networks and purchasing power, EORs can negotiate better international insurance rates and secure competitive benefit packages on your behalf, enhancing your ability to attract and retain top talent worldwide.
- Improved Cost Effectiveness: Using an EOR service is a cost-effective way for businesses to enter new markets, compared to the significant costs of establishing a new foreign entity. The latter option involves significant upfront legal fees, plus other costs related to office infrastructure, staffing, and local benefits and insurance coverage.
Understanding the benefits of an EOR service is crucial for strategic planning and operational efficiency. As businesses look towards international markets for growth opportunities, partnering with an EOR provider offers a streamlined, cost-effective, and compliant pathway to global expansion.
Need a bit more firepower to convince your upper management to partner with an EOR service? Focusing on the costs of hiring a foreign employee and how an EOR can simplify the hiring process might just be the winning strategy you need.
Costs & Pricing for Employer of Record Services
Typically, the cost of an EOR service follows a fee per-employee, per-month pricing model, which can vary widely depending on a range of factors. This model allows for scalability and predictability in budgeting for international expansion efforts.
In general, EOR services in Germany cost between $400 to $2,000 per employee, per month.
Key factors that can influence the pricing of an employer of record service include:
- Geographic Location: Costs can vary significantly based on the country or countries you're hiring in. This is due to local economic conditions, labor laws, and the complexity of compliance requirements.
- Employee Seniority and Role Complexity: The level and nature of the roles being filled can also impact the monthly cost. Senior positions or roles requiring special qualifications may increase the price due to higher benefits and compensation management costs.
- Number of Employees: The total number of employees being managed can also impact the cost. In some cases, higher volumes may lead to volume discounts, making per-employee costs more economical.
- Custom Requirements: Any specific needs beyond the standard service offering may also contribute to the monthly cost. This may include customized solutions for recruitment, specialized employee onboarding, or unique compliance requirements, all of which can affect pricing.
Some EORs also operate under different pricing models, including a percentage of employee salary model, a fixed pricing model, and custom pricing models. If you'd like to delve deeper into the different factors that influence prices, my article explaining the intricacies of different EOR pricing models is a natural next step.
When considering an EOR service, it is crucial to understand how these factors impact the overall cost to ensure that the service aligns with your business's needs and budget constraints. Anticipating the specific requirements of your international expansion strategy will help you choose the most cost-effective and efficient EOR solution for your needs.
FAQs about EOR Services in Germany
If you’ve got specific questions about the requirements to hire German employees or how EOR services work, these answers to frequently asked questions are a good place to start:
What does an Employer of Record do?
An Employer of Record (EOR) service provider is a third-party entity that can help an organization hire a new employee in a country where it has no physical presence. It’s a useful service for businesses that are expanding internationally but don’t have physical offices established yet, or don’t ever plan to establish them. In these situations, the EOR provider becomes the legal employer of your remote staff on your behalf.
In this type of partnership, the EOR service provider deals with local employee-related matters such as managing payroll, deducting taxes, and administering the onboarding process for new employees. This allows organizations to access global talent while reducing their legal liabilities and compliance risks. This is because the EOR company assumes the legal responsibility for your international new hires on your behalf.
What are the minimum wage requirements in Germany?
The minimum wage in Germany is €12.41 per hour as of January 1, 2024. This rate is determined by the German Minimum Wage Act (Mindestlohngesetz) and is subject to periodic review and adjustments by the Minimum Wage Commission.
For more details, consult a German EOR partner, or visit the Mindestlohn Kommission website.
Do EOR providers offer other types of global HR services?
Yes, most of the time they do. Many service providers in this space also offer professional employer organization services (also known as PEO services), as well as global payroll services.
PEO services are a way of outsourcing your HR function to support your international teams. PEO companies can help you with international compliance issues, benefits administration, workers’ compensation, and other HR administrative tasks.
Global payroll services allow you to easily pay remote employees or independent contractors within a unified payroll run. They manage in-country compliance requirements and juggle payments in multiple local currencies on your behalf.
To dive even deeper into this topic, read our article covering other types of global HR services to figure out the best fit for you.
What are some of the consequences of non-compliance?
As an organization, you never want to be deemed as non-compliant in the eyes of any government body. The exact rules and regulations will vary according to the jurisdiction you’re operating in, which is one of the main benefits of using an EOR service provider.
If you don’t use an EOR and you do hire international workers, you may quickly find yourself in non-compliance. The consequences of doing so will depend on the severity of the violation, but they could include all of the following:
- Fines and penalties
- Legal actions such as lawsuits or other litigation proceedings
- Corrective measures and compliance orders
- Revocation of business licenses or operating permits
- Reputational damage if the news becomes public (loss of public trust and loss of internal employee respect)
- Increased monitoring and additional government scrutiny
Companies who fail to follow international labor laws cannot simply say they were unaware of the legalities, and hence, didn’t follow them. That’s where an EOR service can really remove a lot of potential risk and liability from the international hiring process.
To brush up on your compliance best practices, have a quick read through our 2024 HR Compliance Guide.
Are there any risks to using an Employer of Record service?
In the world of business, nothing is ever 100% risk free, and that is true for EOR services as well. While EOR services do offer substantial advantages, here are some of the risks you should also be mindful of as you choose the right partner for you:
Financial risks:
- Hidden costs and service fees: Some EOR providers may charge additional service fees for specific tasks, such as processing documents, onboarding or offboarding employees, or providing additional HR advice.
- Mandatory benefits: Some countries require mandatory benefits for employees. In that case, the EOR will charge you for those benefits in addition to the employee salary and their service percentage, which can add up.
- Currency fluctuations: Exchange fluctuations can impact the cost of payroll and other financial transactions as the strength of a currency you’re using goes up or down.
Operational risks:
- Data security: Since you’re entrusting sensitive employee data to your EOR, you’ll want to consider the strength of their data protection practices and policies, including their incident response plans, IT penetration testing, and data management certifications, such as ISO 27001.
Strategic risks:
- Loss of control: You will need to relinquish some degree of control over the workforce management processes of your EOR employees, which may impact your organization’s strategic decision-making capabilities.
- Brand reputation: Any negative actions, incidents, or practices of your chosen EOR can directly impact your organization’s brand reputation and create a negative employee experience if not handled properly.
For a deeper dive into this topic, read our comprehensive guide to EOR risks, including strategies to mitigate each potential issue upfront.
Gain Access to the Best Talent with an EOR in Germany
If you made it this far, I hope you have a better sense of how EOR services can simplify the process of hiring German employees. They're truly a valuable resource, whether you're an enterprise organization looking to snap up the top talent in Germany, or a small business or startup trying to break into the German talent marketplace without launching your own entity.
If you found this article helpful, I recommend signing up for our weekly People Managing People newsletter too. You'll get access to the latest insights from thought leaders, as well as our latest podcasts, and more software and service recommendations.