iCalculator™ DE Cost Of Employee In Germany Calculator

Calculating the 'Recruitment Cost of an Employee in Germany' in 2021

This guide is provided in support of the the 'True Cost of an Employee in Germany' calculator which is designed to encompass all possible financial cost factors that are generated when hiring a new member of staff in Germany. The calculator is geared towards senior staff and allows for the hire and set up of the staff member in a new office in Germany with no existing resource. Whilst not essential for static companies in Germany, this enables more flexible companies to cost for the set up and establishment of new offices in new locations with in Germany or for the setup of a new company branch in in Germany etc.

In order to simplify first time use, the calculator has been pre-populated with sample percentage rates and or sample costing fees. These figures provide an initial benchmark for your costing analysis and can be edited as required. We welcome your feedback and suggestions to help further improve the 'True Cost of an Employee in Germany' calculator.

Annual Basic Salary in Germany in 2021

The Annual Basic Salary in Germany is the amount you pay your member of staff each year before any benefits or benefits in kind are included. i.e. Without any deductions for tax, social security, pension schemes etc. and any bonuses, dividends, shares, etc have not been added. It should not be confused with 'gross pay', which would include all money earned in Germany for the year.

Annual Bonus in Germany in 2021

Annual Bonuses in Germany are a great incentive to keep staff on board and encourage loyalty, greater output and commitment. Many companies in Germany give an annual monetary bonus, but any form of payment is considered a bonus or 'benefit'. When a gift is given instead of a financial award, it is deemed a 'benefit in kind' and a monetary value must be awarded to the item, to enable the relevent income tax in Germany to be paid on the gift.

Taxable Income in Germany in 2021

Not all of the money a person earns in Germany is taxable. Personal allowances, tax credits and tax relief schemes can factor the way taxable income is determined in in Germany, we factor each of the relevent elements into this calculation and provide a breakdown of how we calculated the salary with a supporting salary example for Germany.

True Salary Cost in Germany in 2021

The true salary cost in Germany is the total amount of the basic pay, bonuses and employer payroll costs that the company pays out each year for wages in Germany.

Company Pension in Germany in 2021

Company pension schemes in Germany are becoming more and more popular. Company pension schemes vary in in Germany but we include this as a factor as you may operate a standard company pension scheme which you wish to extend to your new employee in Germany in addition to any private pensions they may have in Germany or state pensions in Germany.

Private Medical in Germany in 2021

Private medical insurance is popular is the US and is becoming increasingly popular in Germany. It is one of the 'benefits in kind' an employer can offer. A benefit in kind is an award given by the employer that is not financial, though usually will have some monetary value. Private Medical Treatment in Germany is complicated in terms of taxation in Germany, Private (Company) Medical plans can include dental care, ocular needs (eye tests, contact lenses, spectacles, etc) and general health cover ( in Germany and when travelling outside Germany). For simplification, we treat medical costs in Germany as a flat employee cost for the directional calculation within this tool, this is something that you would have to discusses with your payroll service provider in Germany.

Shares Equity in Germany in 2021

An employer can elect to give employees in Germany shares and some benefits may be realised by the employee, such as tax relief. The company will bear the cost of providing the shares to the employee, but may be eligible for tax relief in Germany in some circumstances.

Total Employee Benefits in Germany

Total Employee Benefits is the total amount of any provision an employer gives to an employee in Germany, as a benefit, that is not part of a salary agreement or bonus. This is what the company pays out each year for pensions, medical insurance, company car, shares/equity, etc.

Advertising Costs in Germany in 2021

This is one of the unknown/unpredicted costs that a company in Germany can face if not planning an recruitment advertising campaign in Germany appropriately. Anything that generates cost when advertising for staff in Germany should be included in this budget, this includes all media methods (hoardings, T.V., radio, telephone, internet, mobile, presentations, etc). You could also add hospitality and meeting costs in Germany, for planning the advertising campaign, otherwise place them in the management administration costs. There is a danger that these costs can escalate if not tracked effectively, so it is wise to have a budget cap for advertising and decide exactly what it will cover.

Agency Fees in Germany in 2021

Agency fees in Germany are those the company pays to another business to manage a particular aspect of work, in this instance, it refers to the recruitment of staff in Germany and forms part of the 'onboarding' costs.

Recruiters Costs in Germany in 2021

Recruiters costs are what the business pays for individuals to manage the hiring of staff in Germany. It can include wage/fee for recruiters in Germany, location costs for interviews, stationery, administration, interview time, travel to or within Germany and subsistence, etc.

Employee Referral Costs in Germany in 2021

Employee referral costs are the costs associated with providing a finder’s fee or recognition reward when an employer recommends a friend etc. who subsequently is hired by the company in Germany.

Travel Costs in Germany in 2021

It is important to anticipate and understand what travel costs have been incurred or are likely to be incurred in the future. It can be difficult though. Decide who is eligible to be reimbursed, what rate will be paid and whether there is a cap on the total amount paid. Some travel costs in Germany can be subject to tax relief.

Relocation Costs in Germany in 2021

Relocation costs are what a business pays to an individual who is required to move home permanently to a new location in Germany, in order to accommodate work needs. When considering relocation costs in Germany in 2021, remember to include the actual physical cost of the move, plus any paid leave and additional benefits, such as contributing to furnishing the new home, storage of furniture, etc. It is also worth considering how the standard of living inflation in 2021 could distort your costings.

Management Admin Costs in Germany

Management administration costs can include meetings, hospitality, staff to carry out checks, arrange timetable, stationery, etc

Payroll Costs in Germany in 2021

Payroll costs in Germany are the expenditure a company bears for preparing and distributing pay to staff. It includes net pay and the materials used to calculate that pay, as well as labour costs to complete the payroll work and legislative costs associated with Germany payroll management .

Legal Costs in Germany in 2021

Legal costs in Germany can include insurances, assurances and legislative requirement costs. When recruiting internationally it is important that you have any contracts checked by a specialist international employment lawyer and is familiar with employment law in Germany.

Total Onboarding Costs in Germany in 2021

'Onboarding costs' are the total amount of the one off costs associated with hiring a new staff member in Germany. On-boarding costs are limited to the hiring process only, they are not ongoing financial commitments like salary or office space costs etc.

Office Setup in Germany in 2021

Office and business space costs in Germany can vary substantially dependent on the desired office location.

Communications Setup in Germany in 2021

Communications setup costs include Internet, mobile telephone, FAX and fixed landline telephone costs.

Line Manager Resource in Germany in 2021

The Line Manager Resource costs in Germany are those associated with managing the individual in a traditional hierarchical model. This include HR (Human Resource), Health and Safety, Finance and pastoral care. As a baseline cost, a figure of 10% is recommended.

Total Facilities and Other Costs in Germany

Total Facilities and other costs are the sum of the office set-up in Germany, communications systems and line management. Office set-up is simply the initial member of staff in and initial organisation. Communications systems include telephone, mobiles, faxes, internet, etc.

Training Costs in Germany in 2021

In order to have an effective workforce, it is essential to have 'knowledgeable in their field' members of staff and therefore wise to have an appropriate training programme in Germany. Some training is required by Law, such as Health and Safety (H&S) awareness. Training also includes orientation/induction periods, shadowing, in-house skills updates and external courses, as well as professional qualifications.

True Cost of an Employee in Germany in 2021

The true cost of an employee in Germany is the overall amalgamation of all the costs listed above. It is quite staggering when you take into consideration how much a member of staff in Germany can cost during the first year of employment. It is essential to maintain a happy workforce to keep stability as this avoids churn and in turn, drive down recruitment costs in Germany. After the initial year, staff costs should come down, onboarding costs in Germany are experienced in the first year of employment only.