Hire to exit: the German payroll lifecycle

The Nachweisgesetz obliges the employer to document the essential terms of the employment — a 15-item statutory list: the parties, start date, any fixed term, place of work, job description, any Probezeit, the composition and amount of the pay (each component stated separately) with its due date and manner of payment, working time and breaks, leave entitlement, the termination procedure, applicable collective agreements, and more. A written employment contract containing the required items substitutes for the separate Niederschrift — which is why the German contract does double duty.

These two fields are the key to ELStAM, the electronic wage-tax attribute register. Without a Steuer-Identifikationsnummer the employer cannot retrieve the employee's Steuerklasse — and must withhold at Steuerklasse VI, the punitive fallback (§ 39c EStG), until the data arrive.

The Versicherungsnummer comes from the employee or, missing that, via the electronic VSNR query through the payroll system — no paper Sozialversicherungsausweis needed. The employee names their Krankenkasse; if they haven't within two weeks of starting, the employer enrols them under the statutory fallback (§ 175 Abs. 3 SGB V). Onboarding cannot stall on either.

The hand-over deadlines are tiered: the parties, the full pay breakdown with due date and payment method, and the working-time terms must be in the employee's hands at latest on the first day of work; most further items by the seventh calendar day; the rest within a month. Breach is an Ordnungswidrigkeit at up to €2,000 per violation (§ 4 NachwG).

With the Steuer-ID and date of birth, the employer registers the employee in ELStAM and retrieves their Steuerklasse, child allowances, church-tax attribute and any Freibeträge. From then on the system serves monthly change lists — payroll applies whatever ELStAM says, never a paper note.

The start of an insured employment is reported to the employee's Krankenkasse with Abgabegrund 10 — with the first payroll run, at latest six weeks after the employment starts. (In the Sofortmeldung sectors this comes on top of the day-0 report, not instead of it.)

Wages fall due after the period in which they were earned (§ 614 BGB) — in practice, the contractual payday. The MiLoG adds a hard backstop: at least the minimum-wage share must be paid by the last bank working day (Frankfurt) of the following month.

The payslip is a regulated document: Textform under § 108 GewO, with the Entgeltbescheinigungsverordnung prescribing its contents — down to the Versicherungsnummer, Steuer-ID, Beitragsgruppenschlüssel and the split of every pay component by its tax and SV effect.

Per the lodgement timeline: the Beitragsnachweis must be with each Krankenkasse by 0:00 of the fifth-last bank working day, the Gesamtsozialversicherungsbeitrag is due the third-last bank working day of the same month, and the Lohnsteuer-Anmeldung with payment follows by the 10th of the next period. Same trio, every cycle, for every employee on the books.

The employee reports sick without delay; beyond three calendar days the incapacity must be medically determined (the employer may require that earlier). For statutorily insured employees there is no paper note for the employer: the data flow from the doctor to the Krankenkasse, which must stage a "Meldung zum Abruf für den Arbeitgeber" — a report for retrieval by the employer (our translation) — and payroll retrieves it through a system-tested program or completion aid. The employer pays 100 % for up to six weeks per illness (after four weeks' employment); from week seven the Kasse pays Krankengeld — 70 % of Regelentgelt, capped at 90 % of net — and payroll files the Unterbrechungsmeldung. Employers with ≤ 30 employees get 80 % of the Entgeltfortzahlung back through the U1 scheme.

A wage-attachment order makes payroll split the net pay under § 850c ZPO. From 1 July 2026 (Pfändungsfreigrenzenbekanntmachung 2026, BGBl. 2026 I Nr. 80): the first €1,587.40 per month is unattachable, rising by €597.42 for the first maintenance dependant and €332.83 for each of the second to fifth; of the excess, three tenths stay protected plus two tenths for the first and one tenth for each further dependant; net income above €4,866.30 per month is fully attachable. The figures reset every 1 July — never hard-code them.

Parental leave is demanded from the employer in Textform at latest seven weeks before it begins (13 weeks for periods between the third birthday and the completed eighth year). The entitlement runs to the child's third birthday, with up to 24 months usable later; during Elternzeit the employee may work up to 32 hours a week, with a part-time claim against employers of more than 15 employees.

Elternzeit itself is an unpaid suspension: Elterngeld is applied for by the parent and paid by the state Elterngeldstelle, not through payroll. Payroll's jobs are the DEÜV Unterbrechungsmeldung (Grund 52) within two weeks after the first full unpaid calendar month — and, where the employee works part-time during the leave, a normal tax- and SV-liable pay run for those hours.

Every employee can demand that up to 4 % of the RV contribution ceiling of their pay be converted into occupational pension contributions (minimum 1/160 of the Bezugsgröße a year). The employer must add a 15 % Arbeitgeberzuschuss — but only "soweit er durch die Entgeltumwandlung Sozialversicherungsbeiträge einspart" — insofar as it saves social-insurance contributions through the conversion (our translation, § 1a Abs. 1a BetrAVG). Above the ceilings there is no saving, so no compulsory top-up: the 15 % is conditional, not flat. On the payslip, the converted amount is Gesamtbrutto-neutral.

Marriage, a factor election, a second job — tax-class changes land as ELStAM change lists, which payroll polls monthly and applies from the next run. The employee brings no paper, and payroll keys nothing by hand; a Steuerklasse typed in from a photocopy is the classic German payroll audit finding.

The basic notice period is four weeks to the 15th or the end of a calendar month, both sides. Employer-side notice climbs with service: after 2 years one month, 5 years two, 8 years three, 10 years four, 12 years five, 15 years six, 20 years seven months — each to a calendar-month end. During probation: two weeks. Collective agreements may deviate; the employee's own notice period may never be longer than the employer's.

Final wages ride the ordinary due date for the last period (§ 614 BGB); the MiLoG backstop and its working-time-account rule (settle parked hours at latest in the calendar month after the end) close behind them. The mandatory extra line is the leave payout — § 7 Abs. 4 BUrlG: "Kann der Urlaub wegen Beendigung des Arbeitsverhältnisses ganz oder teilweise nicht mehr gewährt werden, so ist er abzugelten." — if, because the employment has ended, the leave can no longer be granted in whole or in part, it must be paid out (our translation). The Urlaubsabgeltung is taxed and contributory like pay; it belongs in the final run, not in a later goodwill transfer.

The Bescheinigung for the last settlement period must state the end date of the employment (EBV § 1 Abs. 1 Nr. 5). The DEÜV Abmeldung (Grund 30) goes with the next payroll run, at latest six weeks after the end, stating the period and contributory pay — or a combined An-/Abmeldung (Grund 40) where the employment ended before the Anmeldung was due. ELStAM gets the end-of-employment notice, releasing the employee's attributes to the next employer.

The employee is entitled to a written Arbeitszeugnis — einfach (kind and duration of the work) or, on demand, qualifiziert (extending to performance and conduct); clear wording, no coded messages; electronic only with consent. The Arbeitsbescheinigung (§ 312 SGB III) for the Arbeitslosengeld decision is created only on demand of the former employee or the Bundesagentur — and must then go electronically via BEA, from the payroll system or the SV-Meldeportal, for every employment ended on or after 1 January 2023; the BA sends the employee a copy. Don't send unrequested certificates.