Authors: Janka Schmeißer & Maren Lutterbach,

Amongst other factors, the success of startups depend on a dedicated, able and enthusiastic team. Therefore, it is critical for startups coming to Germany to find employees who match their culture. This article provides and overview of the German labour market and relevant regulation as well as helpful advice on how to find the best candidates.

The German labour market

The German labour market is a recruitment market in which top candidates are a much sought-after and highly contested commodity. With a university degree or a vocational training certificate, some work experience and basic knowledge of the German language, chances are high for landing a job.

Germany has the second lowest unemployment rates within the EU. 3.3% of the labour force (15- to 74-year-olds) were unemployed in December 2018. At the same time, Germany is suffering from a lack of skilled workers in many professions – for instance, engineers, IT specialists, developers and medical professionals. As a result, qualified applicants can more or less pick and choose the job they want in Germany. This also applies to startup relevant functions, such as tech, engineering, online marketing, etc. In these sectors, there is a shortage of qualified candidates, which can make the hunt for new employees difficult.

Therefore, to attract relevant candidates, it is advisable for startups to explicitly advertise their advantages in contrast to more established companies. Especially “Digital Natives” often find young and agile company cultures, broad development opportunities and an international setup more attractive than the supposed security of big corporations.

Despite Berlin’s transformation to a startup capital and tourist magnet, wages and costs of living are still lower here than in the Southern or Western parts of the country.

Finding candidates

Generally, startups should take recruitment aspects into consideration when deciding on a location. Wages, living conditions but also talent graduating from universities and research facilities play a significant role when deciding where to build your company.

Like many other countries, Germany has a variety of online platforms for job postings, many of which are specialized in select industries. It is important to note, that the largest ones, such as Stepstone and Monster, are relatively expensive and not necessarily useful for startups: as a small and rather unknown business, it is rather difficult to stick out from the large pool of job postings there. Additionally, these platforms are mostly frequented by candidates that are actively seeking a new job. These are usually not the top candidates in the job market. For startups, it makes more sense to post on specialized posting platforms and use more direct approaches to recruitment – especially for junior to mid-level positions.

Find your next hire via social networks

Another possibility is active sourcing and recruiting via social networks. LinkedIn is well-known in Germany, especially among digital professionals. However, Xing is still the biggest German business-oriented social network that offers comprehensive search options.

The person in charge of recruitment should consider getting a premium account or the even more advanced Talent Manager account, which offers the broadest range of options for actively sourcing candidates. For startups that want to get a foot in the door in the German market, it is also essential to quickly build their own network and visit relevant events and hubs.

Co-working spaces are a good starting point, as they frequently host and organize such events. If founders regularly attend these, there is a good chance they may recruit their first employees there in person or by word of mouth.

Recruiting at universities

When looking for juniors or interns, targeting universities is worth a try. Almost all German universities have so-called Career Centers or Career Services via which job postings can be spread. Sometimes, it also pays off to contact relevant departments directly with job openings. In that case, the technical fit is decisive – Online Business and IT departments can be relevant for startups in tech or e-commerce. Moreover, many students in Germany like to work part-time next to their studies, i.e. 10-20 hours a week. The maximum of 20 hours counts as minor employment (geringfügige Beschäftigung) and is free of social security contributions.

Employing a working student (Werkstudent) can thus provide startups with the opportunity to get specific tasks done at a relatively low cost, and help young people gain experience which is relevant to their studies and career plans. In many cases, part-time working student jobs develop into a longer-term professional relationship.

According to German law, full-time internships that are not required by universities have to be paid based on a minimum wage of EUR 9,19 Euro per hour and from 1st January 2020 EUR 9,35.

Outsourcing & service providers

When it comes to hiring senior specialists, country leads, or generally more experienced leadership positions, recruitment becomes more difficult. Active sourcing via social networks may work here as well, but many high-level professionals do not react to those messages anymore, because they are contacted too frequently for jobs that are only of little or no relevance to them.
Therefore, for selected key positions, it may help to turn to a specialized recruitment service provider or consultant to take over the search for the best candidates. The recruitment industry (matching services, consultants, and headhunters) is on the rise, which makes a targeted pre-selection essential.

The following indicators can help to find a good recruitment agency for specialist and leadership roles:

  • The agency or consultancy has a clearly discernible industry specialization.
  • The consultancy can provide client references and has placed similar positions in the past.
  • A customer request is handled quickly, professionally and by a competent consultant.
  • The search process used for placing a position is communicated clearly and transparently.
  • The pricing model matches the placement model: matching (for instance via pool / database search) is generally compensated with a success-based fee, a professional executive search usually requires a pricing model that works with gradual retainer payments and is not (entirely) success-based.
  • The briefing for the vacancy includes (at the very least) a telephone call and touches upon aspects beyond the points already mentioned in the job description (if available).

Hiring regulations & labour laws

Germany is well-known for its bureaucracy and detailed regulations – recruiting and hiring are no exception. The most important guideline for the recruitment and application process is the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz, AGG). This law is meant to ensure that no one is discriminated against because of his or her race, origin, religion or other personal conditions.

Furthermore, employers have to abide by some statutory regulations in the application process in Germany. For instance, every application requires a reply – even if it is just a standard e-mail. Moreover, travel expenses for candidates have to be reimbursed, upon request.

Germany’s reputation as a bureaucracy nation also extends to employment contracts. Generally, German labour law is very employee-friendly. There is comprehensive protection against unlawful dismissal, as well as special regulations for the trial period of an employee, a statutory right to a minimum of 24 days of paid leave per year and continued payment of wages in cases of illness.

Furthermore, the employer has to contribute to the social security of his/her employees. For more detailed insights into the rights of their employees, employers should familiarize themselves with the different forms of employment contracts in Germany. The main forms are:

  1. Regular employment contracts,
  2. Fixed-term contracts,
  3. Temporary employment contracts, as well as
  4. Mini and midi job contracts, which all differ in regulatory conditions.

In general, temporary and freelance employment models are often advisable if there is little planning security.

However, long-term retention of employees is easier with fixed contracts and some basic team benefits.

In companies with five or more people, employees can form a work council which represents the interests of the employees internally. The council members have informative and advisory rights relating to the company’s internal policy and organization but cannot get involved in corporate governance.