Employee rights & obligations: German labour law explained in plain English

An employment contract gives rise to various rights and obligations for employees and employers. In this article find out what the law says and who is legally considered an employee.


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Rights, primary & secondary obligations of the employee

Employment contracts set out the obligations of each party to the contract. Contractual duties are always divided into essential duties (Hauptpflichten or primary duties) and non-essential duties (Nebenpflichten or secondary duties). While primary obligations specify the type of contract, secondary obligations contain general clauses that apply universally to different types of contracts. Normally, the employee’s obligations correspond to the employer’s rights and vice versa.

Employee rights Duties of employees
  • Remuneration for work performance
  • Punctual and complete payment of remuneration
  • Continued payment of remuneration during vacation, illness or incapacity for work
  • Proper payment of taxes and social insurance contributions
  • Work performance during the contractual period
  • Recreational leave
  • Breaks to prevent overwork
  • Written issuance of payroll
  • Protection against unfair dismissal
  • Equitable treatment
  • Protection against discrimination and harassment
  • Data protection
  • Compliance with occupational health and safety
  • Issuance of earnings statements
  • A qualified reference
Main obligations

  • Provision of the contractually guaranteed work performance
  • Arriving at the workplace at the agreed time 
  • Performance of work
  • Duty to report sick
  • Non-competition clause
  • Duty to give instructions and management
  • Performance of overtime within the contractually agreed scope

Secondary duties

  • Confidentiality
  • Loyalty
  • Prohibition of bribery
  • Disclosure, accountability and surrender
  • Refraining from damaging the reputation of the employer
  • Protection of employer’s property

In addition to these rights and obligations, the employment contract may contain industry-specific or company-specific provisions, such as the obligation to work shifts.


The legal basis of the employment relationship

Labour law is a branch of law that deals with the legal relations between the parties of an employment relationship, i.e. the rights and obligations of employees and employers. This may sound simple, but in reality, it is complicated because many different pieces of legislation make up labour law and there is no single source that ties them together neatly. This makes it extremely difficult for the layperson to keep track of all the provisions on the rights and obligations of workers and employers, and even more difficult to assess which of these provisions apply to a specific job.

Binding nature of the employment contract

To ensure that employees and employers know their rights and obligations, a separate employment contract is drawn up for each employment relationship. All agreements specific to that employment relationship are set out in clauses in the contract. Whether the legal standards are used or individual provisions are made can be negotiated by both parties to the contract.

As a general rule, the statutory minimum requirements of the employment contract may not be circumvented by contractual clauses or reduced to the detriment of the employee. Clauses that, for example, reduce the number of days of leave to below the statutory minimum or describe overtime as “compensated with salary” are prohibited and therefore invalid.

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How is an employee defined in Germany?

The legislature defines an employee as a person who is “obliged to work in the service of another in personal dependence based on a contract under private law”. Thus, as soon as a person signs an employment contract, he or she becomes an employee and provides his or her services in return for payment.

In practice, however, the distinction between employee and self-employed is not always so clear-cut, as evidenced by numerous cases of Scheinselbständigkeit (bogus self-employment).


Rights & obligations in the employment contract

Every employment contract must contain provisions on the rights and obligations of the employee and the employer. These include:

For some provisions, if they’re not regulated in the employment contract, the legal standards apply (e.g. notice periods). However, this is not the case for overtime – if there is no provision for overtime in the contract, the employee is free to refuse to work extra hours. You can use this employment contract checklist to check which aspects should be included in the contract.


Breaches of duty (Pflichtverletzungen)

Both parties must comply with the contract they have entered into and the rules they have agreed upon. This applies regardless of whether the contract is an individual contract or a collectively bargained one.

Failure to perform (Leistungsstörungen)

There is a breach of contract if the employee doesn’t fulfil or violate the duties agreed in the employment contract. This means that the employee can expect a warning, pay reduction or, in the worst case, dismissal. If the breach of duty is negligent or intentional, the employer may even be entitled to damages.

The same applies if the employer fails to fulfil its obligations. The employee can then claim damages, including default interest, or refuse to work until the contract is fulfilled (§§ 280, 288 BGB). In the event of a serious (intentional or grossly negligent) breach of duty by the employer, the employee may also terminate the contract without notice (Section 626(1) BGB).

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