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November 6, 2023

10 Important Employee Benefits in Germany (+ Common Perks)

From health and nursing care insurance to unemployment benefit, equip yourself with the latest information on employee benefits in Germany.

Aine Kavanagh

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Aine Kavanagh

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Setting up a team in Germany?

Ensure you're familiar with social and private employee benefits in Germany, like parental leave and health insurance, that your team might expect. 

It’ll help you design an irresistible benefits package and maintain compliance with German employment laws.

Let’s dive into the details.

Who Is Entitled to Employee Benefits in Germany?

German law classifies the workforce into:

  • Employees

    • Full-time employees: Employees who work at least 30 hours per week.

    • Part-time workers: Employees who work less than 30 hours per week.

  • Self-employed or Contractors: Individuals who work autonomously and are not subject to an employment contract.

Full-time and part-time workers in Germany are eligible for all mandatory employee benefits. 

However, part-time workers may receive some benefits at a prorated rate, depending on their work hours.

On the other hand, contractors are not automatically eligible for all benefits. But they must have health insurance — either private or social. 

Contractors can also voluntarily contribute to statutory pension insurance.

6 Mandatory Employee Benefits in Germany

Most mandatory benefits in Germany fall under the social security system (Soziale Sicherung), which employers and employees jointly fund.

The exception?

Statutory Accident Insurance — which is entirely funded by the employer.

For jointly funded benefits, employers and employees equally share contributions to the social security system. The combined contribution rates span from 2.4% to 18.6% of the employee’s gross income, based on the type of benefit fund. The employer typically deducts contributions directly from the employee's salary and transfers them to the respective authorities or funds.

Let’s see what each mandatory benefit entails: 

1. Statutory Health Insurance (Gesetzliche Krankenversicherung)

Germany provides basic healthcare coverage to all eligible residents through its statutory health insurance (GKV) system.


All German residents, including employees, are eligible for public health insurance. 

Employees with an income below a certain threshold — known as compulsory insurance limit or Versicherungspflichtgrenze — are automatically enrolled (by the employer) in the GKV.

The compulsory insurance limit for statutory health insurance is €66,600 per year or €5,550 per month.

Those earning above this limit can choose between statutory and private health insurance (Private Krankenversicherung or PKV). We’ll discuss PKV later in the article.


The statutory health insurance fund covers various medical services, including doctor visits, hospital stays, medications, preventive services, etc.


  • Some medications and treatments, like advanced dental procedures, may not be fully covered and require contributions from the insured.

  • There can be long waiting times for some treatments, such as psychotherapy.

  • GKV members typically have to share rooms during hospital stays. Plus, they have fewer choices in terms of doctors and hospitals.

2. Paid Leave Entitlements

Every German employee is entitled to various paid leaves.

A. Public holidays

Germany has 9 nationwide public holidays:

  • New Year's Day (Neujahrstag) - January 1st

  • Good Friday (Karfreitag) - Floating (March or April)

  • Easter Monday (Ostermontag) - Floating (March or April)

  • Labor Day (Tag der Arbeit) - May 1st

  • Ascension Day (Christi Himmelfahrt) - Floating (May or June)

  • Whitsun Monday (Pfingstmontag) - Floating (May or June)

  • German Unity Day (Tag der Deutschen Einheit) - October 3rd

  • Christmas Day (Weihnachtstag) - December 25th

  • St. Stephens’s Day (Stephanstag) - December 26th

B. Paid Annual Leave (Urlaubsanspruch)

According to Section 3 of the Federal Holiday Act, German employees are entitled to paid annual leave.

The minimum annual leave duration depends on the employee's workweek:

  • 5-day workweek: 20 days of annual leave

  • 6-day workweek: 24 days of annual leave

Public holidays are not included in the paid annual leave entitlement.

For part-time employees, vacation days vary based on their work-hour distribution.

Employers can offer more than this minimum requirement based on collective agreements.

Pay Rate: Employees receive their regular salary during the leave.

C. Sick Leave

German employees are entitled to paid sick leave (when they cannot work due to illness or injury).

  • Duration: 78 weeks over 3 years for the same illness.

  • Eligibility: All employees with a sick note (aka arbeitsunfähigkeitsbescheinigung) from a doctor.

  • Pay Rate

    • Up to 6 weeks: 100% of gross salary for 6 weeks (paid by employer). 

    • After six weeks: 70% of gross earnings before sickness, up to a maximum of 90% of the net earnings (covered by employee’s health insurance, either GKV or PKV).

D. Maternity & Parental leave

The parental benefits in Germany include:

1. Maternity Leave (Mutterschutz)

It’s a period of paid absence for mothers before and after childbirth. All employed women in Germany are eligible for maternity leave.

Duration of Maternity Leave

6 weeks before the due date and 8 weeks after childbirth (12 weeks in the case of premature or multiple births).

Maternity Protection Pay (Mutterschutzlohn)

It refers to the pay that pregnant and nursing mothers receive during maternity leave.

The mother receives 100% of her average net income, calculated based on her earnings in the three months or 13 weeks leading up to the leave.

Paid paternity leave (Vaterschaftsurlaub) is not yet legally required in Germany. The German government has announced plans to introduce two weeks of paid paternity leave in 2024. Some German employers already offer paid paternity leave as a voluntary benefit.

2. Parental Leave (Elternzeit)

It gives new parents time off from work to care for their newborn or adopted child.

Here’s what it includes:

  • Parents are entitled to 3 years of parental leave per child before the child turns 3.

  • Parents are not entitled to receive any salary from their employer.

  • But they can get a parental allowance (Elterngeld) from the government for 12-14 months, typically at 65% of the parent's previous net income.

  • Low-income parents can receive up to 100% of their net income.

3. National Minimum Wage (Mindestlohn)

In Germany, the minimum wage is a legally mandated hourly rate employers must pay their employees.

In 2024, workers are entitled to a minimum wage of €12.41 per hour.

But there’s more! 

The German minimum wage is set to increase to €12.82 per hour in 2025.

4. Pension Benefits

German employees are entitled to various pensions covered by social security pension insurance (Gesetzliche Rentenversicherung). 

Let’s look at the three main ones:

A. Old-age Pension (Altersrenten)

The old-age pension is a monthly payment to retirees.

Who Is Eligible for Old-age Pension?

An individual who has:

  • Reached the regular retirement age, which depends on the employee's birth year:

    • Born before 1947: 65 years

    • Born between 1947-1963: 65 years + (Number of months incrementally increasing from 1 to 17). The retirement age increases incrementally by one month for each year starting from 1947.

    • Born in 1964 or later: 67 years

  • Contributed to the pension insurance for at least 5 years.

How Much Is Old Age Pension?

In 2023, the average old-age pension in Germany for 45 years of insurance contributions is €1,543 per month.

The exact amount of old-age pension depends on the following factors:

  • Contribution years: The number of years a person has contributed to the pension system.

  • Earned ‘Pension Points’: These points are earned based on the individual's yearly income in relation to the average income in Germany.

  • Current pension value: This value is adjusted annually.

Germany also has a provision for early retirement. Individuals who’ve been insured for at least 35 years can retire as early as 63 years but with deductions in pension amount. And those with 45 years of insurance can retire early without deductions.

B. Invalidity Pension (Erwerbsminderungsrente)

Invalidity, or ‘reduced earning capacity pension,’ is a monthly payment to people who cannot work full-time due to illness or disability.

There are two types of invalidity pension in Germany:

  • Full invalidity pension (volle Erwerbsminderungsrente): For those unable to work more than 3 hours daily.

  • Partial invalidity pension (teilweise Erwerbsminderungsrente): For individuals who can work between 3-6 hours daily.

To be eligible for a German invalidity pension, an employee must have contributed to the pension insurance fund for at least 5 years. 

The pension amount depends on an employee’s past social security contributions and degree of incapacity.

C. Survivor’s Pension (Hinterbliebenenrenten)

The survivor's pension provides monthly financial support to the dependents of an insured employee in the event of their death.

There are two main types:

  • Widow's/Widower's Pension: For spouses or registered partners. In some cases, even divorced spouses may be eligible.

  • Orphan's Pension: For children up to age 18 or 27 if still in education.

Eligibility & Payments

The deceased must have contributed to the pension insurance for at least 5 years. 

The payment amount is typically a percentage of the deceased's pension entitlement.

5. Other Insurance Benefits

Here are three other essential insurance benefits in Germany:

1. Long-Term Care Insurance (Pflegeversicherung)

It’s a mandatory social insurance program in Germany that provides financial assistance to people who need long-term care due to illness, accident, old age, etc.

Who Is Eligible?

All German residents insured in social or private health insurance schemes are eligible, regardless of age.


Long-term or nursing care insurance covers the costs of care provided at home, in nursing homes, and other assisted living facilities. 

It covers services such as:

  • Personal care (e.g., bathing, dressing, grooming)

  • Nursing care (e.g., medication administration, wound care)

  • Social and recreational activities

2. Unemployment Insurance (Arbeitslosenversicherung)

The insurance provides a safety net for those facing unemployment, ensuring they have financial support during their job-seeking phase.

To be eligible, individuals must:

  • Have been employed for at least 12 months in the past 3 years.

  • Be registered with the Federal Employment Agency (Bundesagentur für Arbeit) — the body that manages unemployment insurance.

  • Have paid contributions to unemployment insurance.

  • Be actively looking for work.

Eligible individuals can receive 60-67% of their net salary for up to 24 months.

Unemployment benefit duration varies by age and employment history, with a maximum of 24 months in 2024.

Find more information on the unemployment benefit.

3. Accident Insurance

It protects German employees against injuries encountered during work or work-related tasks.

This insurance covers medical treatments and rehabilitation and compensates for lost income from work-related mishaps.

6. Fair Working Conditions (Faire Arbeitsbedingungen)

This encompasses many worker rights and protections in line with European Union standards. 

These rights include:

  • A safe and healthy work environment

  • Adequate compensation

  • Reasonable working hours limits

  • The right to collective bargaining

  • Freedom from discrimination

A work council (Betriebsrat) ensures these rights are extended to workplaces. A works council in Germany is a representative body elected by employees of a company or organization.

Now, let’s explore some voluntary benefits in Germany.

4 Voluntary Employee Benefits in Germany

Here are four other benefits German companies offer to attract and retain talent:

1. Private Health Insurance

In Germany, private health insurance (Private Krankenversicherung, or PKV) is a voluntary health insurance system. 

Employees can get PKV independently, or their employer can offer it under their benefits package. 

Offering PKV is a smart move ​​for employers to woo and retain German talent.


PKV often provides faster access to specialists, more personalized care, and a broader range of medical services.

So, how can you offer PKV to your team?

Through Kota!

Kota is a cutting-edge employee benefits platform that helps businesses roll out exceptional and compliant private health insurance plans tailored to German teams.

Collaborating with Allianz, a trusted insurance provider in Germany, we offer comprehensive coverage up to €2.9 million.

Here's the premium care your team can expect:

  • Excellent intensive care services

  • Pre-authorized surgeries

  • Prompt ambulance services

  • Sanctioned scans, tests, and regular outpatient consultations

Still pondering?

Here are more reasons to use Kota:

  • Ease administrative burden off your human resources and finance teams and save more with zero broker overheads.

  • Access flexible plans catering to every budget, starting from a modest €90/month and scaling up to €124+.

  • Seamlessly enrol your employees into PKV plans and manage everything via our intuitive app.

  • Stay ahead of the curve by comparing your offerings with competitors — thanks to our geo-location insights.

2. Additional Old-age Provision (Zusätzliche Altersvorsorge)

Germany’s voluntary pension system allows employees to save for retirement beyond the state pension.

The two main types of additional old-age provision are:

  • Company pension schemes (Betriebliche Altersversorgung): Offered by employers.

  • Private pension plans (Private Altersvorsorge): Personal plans with insurers or banks.

3. Overtime Pay

While not legally required, many employers offer enhanced pay for hours beyond the maximum 48-hour, six-day workweek limit.

The overtime pay (Überstundenvergütung), often 1.5x the regular hourly wage, is usually determined by employment contract or collective agreement.

4. Severance Pay

A German employee can be eligible for severance pay in case of unfair termination by the employer. 

The benefit is subject to a collective agreement or mutual employment contract.

Other Work-Related Perks

A German employer might offer these additional perks to ensure employee well-being and work-life balance:

  • Flexible or remote work

  • Gym membership

  • Meal allowance

  • Company car (dienstwagen)

  • Public transportation or car rental allowance for work trips (free from income tax under certain conditions)

Offer a Competitive Benefits Package to Your German Team  

Germany's social protection framework secures workers with essential benefits, from medical insurance and retirement benefits to nursing care.

As an employer, you must contribute to social security for your staff and ensure fair working conditions that German employment law lays out. 

But the key to attracting and retaining top-notch German talent is to power up your benefits package with additional benefits — like private health insurance, overtime pay, and more.

The good news?

Kota provides an efficient and budget-friendly way to roll out private health insurance offerings in Germany. So hop on board Kota to secure your team in minutes.

Aine Kavanagh

Article written by

Aine Kavanagh

👋🏻 Hi I'm Aine, Head of Customer Success at Kota. Whether you're a Kota customer, a Kota user, or you're just browsing, I hope to help educate and empower those who want to know more about owning their own benefits, and building financial autonomy 📚

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