very useful- germany guide

8/8/2019 Very Useful- Germany Guide

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RECRUITINGIN GERMANY

IRL

EXPORTERS’HANDBOOK

Getting it right frst time.



Foreword by Enterprise Ireland 4

Executive Summary 6 - 8

Section 1

Know what to expect 91.1 Demographics 10

> State comparison 10

1.2 Education, Age and Qualifcation / The “older German Candidate” 12> University 13> Germany’s top ranked Universities 13> University of Applied Science (UAS) 14> Germany’s top ranked UAS 14> Berufsakademie (BA) (literally career academy) 14> Verwaltungs- und Wirtschaftsakademie (VWA) (literally academy of administration and economics)> Remote Learning 15> Industrie- und Handelskammer (IHK) (Chamber of Industry and Commerce) 1

1.3 Salaries 15

> Average Starting Salary 15> General Trends 16> Variable Salary 16

1.4 Notice Periods 17

Section 2

First step to success ul Recruiting – Job specifcation 19

2.1 Education 202.2 Language Skills 20

2.3 Key Account Contacts 20

2.4 Specifc Product Knowledge 20

2.5 Home o fce versus local presence 21

2.6 Leadership experience 21

2.7 Seniority 21

2.8 Salary 21

2.9 Summary 21

2.10 Sample Job Specifcation 22



Section 3

Choosing the Recruiting Method 253.1 Networking 26

3.2 Going it alone – Advertised Selection / Own Label 28

3.3 Advertised selection / Consultants Label 29

3.4 Executive Search / Direct Approach 30

3.5 Students / Interns / Temporary Employees 32

Section 4

Getting the Most rom the Interview 33

Section 5

Cross Checking and Re erencing 365.1 Arbeitszeugnis (letter o re erence) 36

5.1 Re erencing 36

Section 6

Boarding 37

Section 7

Recruiting Do’s and Don’ts 41

Section 8

A Guide to German Employment Lawby CMS Hasche Sigle 43



Foreword by Enterprise Ireland 4

Signium International 5

Executive Summary 6 - 8



Foreword

Foreword by Giles O’NeillRegional Director – Germany, Central & Eastern Europe, Russia & CIS

Finding the right person to represent your company internationally is one o the most important decisions youwill make. Getting it right can be costly. Getting it wrong can be more costly, not just in inancial terms but

also in terms o company image and standing in the market. Your company is judged not only by the productsand services you o er but by the people who are o ering them. Finding the right people to do this at anexcellent level is a constant challenge at home and overseas.

Enterprise Ireland is being asked or more and more advice in this area so much so that it made sense tocapture and answer a lot o those questions. This guide to recruitment in Germany aims at providing you withthe sort o advice and direction that only comes with years o experience in executive search and selection romone the leading companies in Germany and internationally, Signium.

We have also taken this opportunity to include a comprehensive update on employment law in Germany. Weare grate ul or the time and consideration given to this material by Enterprise Ireland’s employment lawadvisers in Germany, CMS Hasche Sigle.

Our team o market advisors in Düsseldor is there to proactively help you grow your businesses withinGermany, Austria and Switzerland. Whether you are just getting started or are already an established exporterto the region, our objective is to o er services that will directly impact your international sales growth. Wehave witnessed the most signi icant results when we work together with clients to ensure that they get thevital process o international recruitment right irst time.

Giles O’NeillRegional Director – Germany, Central & Eastern Europe, Russia & CIS

» Your company is judged not only by theproducts and services you o er but by thepeople who are o ering them. «



Setting Up a Sales Presence in Germany – A Guide to Recruiting 2008/2009by Ann Frances Kelly, Partner, Signium International

Frances Kelly is a native o Ireland and has worked in the German retained Executive Search market since thelate eighties. She is bilingual in German and English.

She began her recruiting career with one o the global top three recruiting companies and has been withSignium International since 1990.

She has done extensive work or multinational companies across a variety o segments and unctional areaswith a strong ocus on industrial and consumer branded goods, healthcare and services. Her clients range romstart-ups to multi-billion dollar global corporations.

In recent years her ocus on multi-market senior Executive Search assignments (Cross Border Search) orinternational headquarters has grown considerably.

Prior to her Executive Search career she worked or the IIRS (Institute or Industrial Research and Standards),

Dublin, a provider o outsourced technical / commercial services to ledgling and growing businesses.

About Signium International

» Founded in New York in 19 1 by Henry Wardwell Howell (a McKinsey Consultant) and established irstinternational o ice in London in 1968 growing to 60 o ices in 0 countries by 1998 (www.signium.com)

» Established in 1978 as one o the irst executive search companies in the German market and consistentlyranked among the leading search practices ( ee volume more than € 20 Million in 2007) and representedby almost 0 people: partners, consultants and support sta in three o ices (www.signium.de)



Executive SummaryTraditionally business / economic relations betweenGermany and Ireland have always been strong.Germany is the second biggest source o oreigndirect investment into Ireland and also Ireland’s thlargest export market.

As the Irish economy strives to sustain growth,upscaling exports and international competitivenessis more crucial than ever. Germany is a lucrativeand prestigious market or Irish companies to tackleand master and poses strong challenges in termso complexity, diversity and competition despite thetraditionally strong oundation.

One o the most crucial actors or success or Irishcompanies in Germany will be hiring the right people

on the ground rom the onset which means that theo ten vastly underestimated recruiting / hiring processmay determine success or ailure, even o thesecompanies with the right product at the right time.

Getting it right irst time is crucial or any hire. For aledgling Irish business where the growth potential

in Germany can rest on the shoulders o the irst“man on board” the cost o a mistake could beimmeasurable.

As with every market Germany has its own challenges

/ rules o thumb. Recruiting outside o the domestic“com ort zone” is a challenge or any company andthe ollowing pointers dealt with in some depth inthis paper, should give a sound ramework or theissues to consider.

Status 2008Even or established companies the “war or talent”has gained unbelievable momentum since the upturnin the German economy. A structured, ocussed andwell managed recruiting process is the only way to

be perceived as an employer o choice or the rightcalibre o person.

Know what to expectDemographics

The German market is vast, decentralised andculturally diverse. Di erent states have di erent laws,school systems and other idiosyncracies creatingmobility and location issues. There is no “Dublin” inGermany.

Age versus experience

The German education system produces di erent‘end products’ than the Irish system. Educationstandards / types vary, as does duration o study.

This has an impact on a candidate’s age and

experience level which can vary greatly romcomparable Irish candidates.

Salaries

Recruiting in Germany may mean paying a highersalary than would be the case in Ireland or the samerole. There is a ine line between upsetting pay policyand ensuring attraction o the right calibre.

Notice Period

Notice periods tend to be longer in Germany. An

average wait o months between contract signingand start date must be calculated.

First step to success ul recruiting

Get the pro ile right. Sorting the “must haves” romthe “nice to haves” at the onset is crucial.

Recruiting MethodFinding the right candidate in a market the sizeo Germany may appear daunting – and it is! Astructured approach to recruiting is an investment

and ideally shouldn’t be le t to chance – getting itwrong costs money. Issues like timing, deadlines,binding internal resources as opposed to ee shouldultimately determine the recruiting strategy.

Cross Checking and Re erencingFraud is not a huge issue in the German recruitingmarket, not in the least due to the thoroughdocumentation system o the “Zeugnis” (roughlyletter o re erence) issued or every employee at theend o each term o employment.

rd party re erencing is also not uncommon butgoverned by a strict code o ethics.

BoardingThere is no guaranteed recipe or success in the endphase o the hiring process but a sensible negotiating

/ o er process can ensure that the desired candidatewill make the move.

Section 1 – Introduction6



Getting it right frst timeMore o ten than not the cost o the recruiting / hiringprocess is perceived to be a necessary evil and anexpense which should be held to a minimum comewhat may. The cost o recruiting agencies, advertisingExecutive Search can amount to 1/ o irst year’ssalary which at ace value is a lot o money.

However, making a mistake in any hiring process cancost a lot more money than is immediately obvious.It is vital to consider not the “cost o a hire”but the “potential cost o a bad hire”.

O tentimes it can take up to 6 – 12 months toultimately determine i any employee is a good hire. Atthis point the wrong decision may have incurred costsup to . times annual salary. Some o these include:

Initial Process Costs» recruiting expenses

» interviewing expenses

» relocation costs (where applicable)

» time to boarding

» integration

» management training

» salary paid

Replacement Costs» new recruiting process expenses

» additional time to boarding o replacement

» bridging costs (interim management)

Severance Costs» ollowing 6 month average probation period

giving notice to an employee may cost a lot omoney in Germany

What is immeasurable, particularly in the caseo a irst market hire is the lost revenue, missedopportunities and potential or damage to thecompany’s image.

An early stage business in a competitive marketmay do irreparable damage by selecting the wrongcandidate.

For Irish companies recruiting in alien territory, thepotential to make a mistake is much greater than on

home ground.

Setting aside the pure cost issues, good irst hiresplay an important long term role in growing thecompany in terms o quality headcount. The irstperson on the ground is not only the “businesscard” or clients but will also set the standard orhow the company is perceived as an employer ochoice locally. Regardless o the quality and cultureo the Irish headquarters the local presence will bemeasured by employees on board there

Good people ollow good people.

A strong irst hire with a quality track record will

impress those who ollow as the organisation growsand act as a magnet or other strong players.

Even i the organisation remains small in terms oheadcount, leadership and management skills willgenerate their own added value and bring positiveimpulse into the overall (international) business.A strong partner in a high potential market likeGermany will be a bench mark or other geographiesas well as a valuable source o knowledge and input

or developing a broader pan-European strategy.

Recruitment is a vital issue orany company going or growthin Germany and should begiven the attention, thought,

planning and investment itneeds to generate long termadded value or the business.Taking it too lightly can be a

atal mistake.

7Section 2 – Getting it right frst time



Recruiting in Germany 2008 / Market StatusThe year 2000 was the “boom” year or recruiting inGermany with an estimated € 1.27 billion generated inthe search and selection o managers and specialists.

The all time “low” was 200 where the market hadshrunk by almost %. Since 200 the market hasbeen growing steadily (by almost 20 % between 200and 2006) to reach a volume o € 1.1 billion.

Further growth o 1 % is expected in 2008according to the BDU – Bundesverband DeutscherUnternehmensberater (Industry Association).

In 2008 it is expected that the search andselection market or managers and specialistswill be at a record high.

The implications or any company recruiting inGermany are clear. With around one third o allpositions being illed in sales / marketing, makinggood irst hires primarily in these unctions will posea real challenge or young Irish businesses.

» With the amount o recruiting going on in themarket, competition will be ierce or companieso all origins and sizes as well as across segmentsand unctions. Engineers will be in big demandas it estimated that there are more than 20,000too ew in the market according to VDI – theindustry association o engineers. Germancompanies have begun to recruit abroad,particularly in light o the act that the numbero registered engineering students has dropped

rom 9,000 to 9,000 the past 10 years.

» The demand or candidates will lead to a scarcityo “readily available” talent and reduce thevolume o job seekers in the market. “Shortcutting” will not yield the same potential as inthe years 200 – 200 .

» More targeted and sophisticated recruitingprocesses will be necessary to identi y andattract the calibre o candidate required / desired.

» In 2006 more than % o all contractedrecruiting assignments were direct searchprocesses and more than 80 % werecomplemented by direct search. Only .8 %o the market volume was generated by singleprocess online selection and less than 10 % byprint advertisement selection.

» Choosing the right recruiting partner will becrucial. They must have the know-how, resources,image and credibility to get high calibrecandidates to the table and be in a position toadvise and support a market entry client in everystep o the process. Experience, specialisation,

standing and style o consultant must be in linewith market expectations.

» Hiring companies will not only need to beconvincing but decisive and ast. I you don’thire, the competition will.

» Hiring companies must o er competitive salarypackages. For Irish players this may meande ining alternative grading or positions inGermany where salaries are generally higher thanin Ireland.

» Good candidates are in a strong position andneed to be treated like customers. Strongcommunication / anticipating needs will bevital in generating and maintaining competitiveadvantage.

» Hiring companies must be able to communicatelong term vision and prospects or the companyand or the individual.

» Candidates are in a position to pick and choose

and may not always take the “moral highroad”. Signed contracts can be rebuked and it isrecommended to keep up active communicationand involvement with the uture incumbentbetween contract signing and start date.

Section – Recruiting in Germany 2008 / Market Status8

In summary Irish businessessetting up a sales presence inGermany over the next twoyears will be challenged by abuoyant recruiting market andmust approach the hiring andrecruiting process seriouslyand perhaps very di erently toIreland and / or other markets.



9

Section 1 – Know what to expect

1.0 Know what to expect 10

1.1 Demographics 10 State comparison 10

1.2 Education, Age and Qualifcation / The “older German Candidate” 12 University 1

Germany’s top ranked Universities 1University o Applied Science (UAS) 1Germany’s top ranked UAS 1Beru sakademie (BA) (literally career academy) 1

Verwaltungs- und Wirtscha tsakademie (VWA) (literally academy o 1administration and economics)Remote Learning 1Industrie- und Handelskammer (IHK) (Chamber o Industryand Commerce) 1

1.3 Salaries 15 Average Starting Salary 1

General Trends 16Variable Salary 16

1.4 Notice Periods 17



Know what to expect0

1.0 Know what to expectWithout knowing what the market has to o er it isnext to impossible to de ine a job speci ication whichmakes sense and is in line with what the businessneeds versus what the market can yield.

Evaluating and benchmarking candidates comingout o a di erent “system” is a challenge in itseland thus it is important to understand the mainways in which German candidates may di er romtheir Irish peers in terms o education, age, culture,background and expectations.

1.1 DemographicsGermany is a decentralised and heterogeneousmarket. There is no one major business centre but

rather a conglomeration o industry sectors aroundvarious urban centers and regions.

In terms o population the largest cities are

Berlin . million

Hamburg 1.8 million

Munich 1.8 million

Cologne 990,000

Frank urt 660,000

Düsseldor 80,000

However, there are a total o 1 cities with morethan 00,000 population and 80 with more than100,000.

The 16 states can also vary strongly in terms oculture, school systems, in rastructure, labour andthe legal system making mobility / relocation acrossstates unattractive (e. g. a secondary level teacher

is only automatically certi ied to teach in the statewhere the teaching degree was con erred. Thus,relocating amilies where one spouse is a teacher canbe next to impossible).

» As a rule o thumb it can be said that it remains

di icult to relocate candidates rom Western toEastern German states.

» There is a higher abundance o unskilled labourin the East and more unemployment.

» Salaries tend to be lower than in the West(general standard o living including cost o realestate lower). The highest starting salaries inGermany are in Hessen (Frank urt) ollowed byBayern (Munich), Baden-Würtemberg (Stuttgart)and the Rhein-/Ruhr-Region (Düsseldor ).

» In terms o rental property the West Germanurban centers also lead the market:

Most expensive cities by rent

» Munich ( 0 % higher than national average)

» Düsseldor

» Stuttgart

» Cologne

» Wiesbaden

The high rental prices in these cities are determinedless by demand than purchasing power and applynot only to the cities directly but to regional belts e.g.Frank urt – Wiesbaden – Darmstadt – Stuttgart andsurroundings, Rhein/Ruhr axis Cologne – Düsseldor ,region around Hamburg.

State comparison (E = ormer Eastern States)

State Main City Main Industries

Baden-Württemberg

Stuttgart » Innovation

» R & D

» IT and communications technology

» Bio technology

» Environmental technology

» Also traditional industries automobile, plant and equipment



Know what to expect



Bavaria Munich » High tech Service» No. 2 Banking location

» No. 1 Insurance location» Pharmaceuticals» High concentration o oreign (US) companies

Berlin Berlin » Headquarter o many economic organisations

» Young and innovative companies

» Advertising / media / IT / Communication

» Biotech

» Med-Tech

Brandenburg (E) Potsdam » Food and beverages

» Scienti ic institutions» Chemicals» Energy» Vehicle manu acturing» Door to Eastern Europe

Bremen Bremen » Aerospace / Aviation (trans ormation rom shipbuildingcapital)

» Food and Beverages

Hamburg Hamburg » Traditionally oreign trade

» New media capital

» Consumer gods» Marine industry

Hessen Wiesbaden » Largest city Frank urt is banking and inancial services capital» Largest consumer trade airs» International investors (ITT, GM, P+G, Motorola, Honeywell)» ¼ o all oreign direct investors in region

Mecklenburg-Vorpommern (E)

Schwerin » Transport and logistics

» Marine Industry

» High investment in new telecommunication in rastructures

Niedersachsen Hannover » Internet» Biotechnology» High-tech (strong state government promotion between

industry and education)

Nord-Rhein-West alia

Düsseldor » Excellent in rastructure (2 international airports)» 1/ o all oreign direct investors» Telecommunications» High-tech» Services

» Trade Fair capital

11






Rheinland-P alz Mainz » Chemicals» Pharmaceuticals

» Vehicle manu acturing» High-tech (research)

Saarland Saarbrücken » Technology and innovation – driven young companies(political environment driving “innovation”)

» Strong France / Luxembourg ties

Sachsen (E) Dresden » Machine construction

» Automobile

» Microelectronics

Sachsen-Anhalt (E) Magdeburg » Politically riendly to oreign investors (largest volume acrossEast German states)

» Chemicals» Machine construction» Automobile supplier s» Bio- and Med-tech high potential in region

Schleswig-Holstein Kiel » High-tech and services

Thüringen (E) Er urt » Attractive location or large-scale production (Lu thansaTechnik, Rolls-Royce, Bertrandt)

1.2 Education, Age andQualifcation / The “olderGerman Candidate”

The second and third level education system inGermany is complex and can vary rom state tostate. There is no single standard leaving certi icatealthough “Abitur” is the equivalent quali ication togain entry to rd level education and the only way toget a place at a ully ledged university.

There are “back doors” to quali ication or third

level education at the more practice-oriented“Fachhochschule” (university o applied sciences)which can be gained in steps.

In general, children start school later (at least six years old), males still have 9 months obligatorymilitary service (or alternative). It is not uncommon

or Abitur graduates to do a two year apprenticeshipbe ore going to university and a ull university degreetakes an average o 10 semesters (and sometimesmuch longer).

It is there ore not uncommon that a male

graduate may be in his late twenties whenentering the work orce.

Females tend to be in their mid twenties.

This is important to remember when de ining ageand experience levels required or a position inparticular when benchmarking against Ireland.

There are currently over 100 universities and 17universities o applied sciences in Germany romwhich graduates receive a degree e.g.

Diplom-Ingenieur(Dipl.-Ing.)

= Engineering Degree rom(technical) university

Diplom-Ingenieur(Dipl.-Ing. FH)

= Engineering Degree romUAS

Over the past ew years additional third levelquali ications with a stronger “learning on the job”element have become somewhat more commonplaceand accepted although the “status” o a universitydegree remains strongest.



Know what to expect

Potential candidates with third level quali ication willtypically have gone through one o the ollowing.

UniversityHigh image academic degree whereby candidates

may command a higher starting salary than thosewith alternative quali ications e.g. starting salaries orengineers.

University UASx .000 - x .000 x .000 - x 1.000

Most German universities are public state owned,currently complemented by 12 private universitieswhich have a limited number o places and demanda top “Abitur” and guarantee an above averagestudent / lecturer ratio. These graduates generallyenjoy high demand in the market but less than 1 %o graduates come rom the private segment.

A university degree is a prequali ication or PhD.

Most universities have begun to o er “Bachelor”degree courses in alignment with Europeanharmonisation but it is still quite uncommon.

Germany’s top ranked UniversitiesEconomics

» European Business School, Oestrich-Winkel(private university)

» WHU Otto Beisheim School o Management,

Vallendar (private university)» University o Bayreuth» University o Münster» University o Cologne» University o Frank urt/Oder (Viadrina)» HH Leipzig (private university)» Technical University Munich» Ludwig-Maximilian-university, Munich

IT

» Technical University Karlsruhe» Technical University Munich» Technical University Darmstadt» Freie Universität Berlin» University o Potsdam

Law

» Albert-Ludwigs-University Freiburg» University o Passau» University o Konstanz» University o Osnabrück » Julius-Maximilian-University Würzburg

» University o Heidelberg

Engineering / Industrial Engineering / Process Technology

» Rheinisch-West älische Technische Hochschule(RWTH) Aachen

» Technical University Karlsruhe

» Technical University Darmstadt

» Technical University Braunschweig» Technical University Munich» University o Mannheim

Commercial In ormation Technology

» Technical University Karlsruhe

» West älische Wilhelms-University Münster

» University o Paderborn

» University o Osnabrück

Work orce in Germany by level oEducation (does not include

unemployed)

1

Universitygradates

Skilled cra tsmen(apprentice) andtechnicians

Graduates romhigher vocationalcolleges

In-training orskilled

56%

15%

9%

20%



Private Universities in Germany» Bucerius Law School Hamburg» European Business School (EBS) Oestrich-Winkel» ESCP-EAP Europäische Wirtscha tshochschule

Berlin

» Frank urt School o Finance & Management» Gustav-Siewerth-Akademie Weilheim-Beierbronn» Handelshochschule Leipzig (HHL)» International University o Germany Bruchsal» Jacobs University Bremen (JUB)» Steinbeis Hochschule Berlin» Universität Witten/Herdecke

» WHU Otto Beisheim School o ManagementVallendar

» Wissenscha tliche Hochschule Lahr

» Zeppelin University Friedrichsha en

University o Applied Science (UAS) / FachhochschuleGenerally a more practice oriented degree takingat least 8 semesters. Obligatory internships / work experience are part o the curriculum – the numbero which may vary rom state to state.

Many UAS o er international degree courses in themeantime in cooperation with partners in othercountries, most graduates o which will speak oneother oreign language in addition to English.

The “FH” degree is not an automatic quali ication orPhD ( ew exceptions).

Graduates must declare the status UAS.

Business Graduate = Diplom-Betriebswirt (FH).

Germany’s top ranked UASEconomics» HS Albstadt / Sigmaringen» FH Amberg» FH Ansbach» FH Bergisch-Gladbach (private)» FH Bonn» FH Deggendor» Nordakademie Elsmhorn (private)

» FH Ingolstadt

» RFH Cologne (private)» FH Neu-Ulm» FH Nürnberg» HS Reutlingen» FH Stralsund

In ormation Technology

» HS Bremen

» HS Darmstadt

» FH Dortmund» HAW Hamburg» HAWK Hildesheim / Göttingen» FH Ingolstadt» HDM Stuttgart» FH Wedel

Engineering / Industrial Engineering / Process Technology

» FH Amberg

» FH Braunschweig / Wol enbüttel

» FH Deggendor

» HS Esslingen

» FH Gelsenkirchen

» FH Ingolstadt

» HS P orzheim

Commercial In ormation Technology

» FH Bergisch-Gladbach (private)» Nordakademie Elmshorn (private)

» HS Karlsruhe

» FH Wedel (private)

Beru sakademie (BA) (literally careeracademy)

Students o the BA do a three year combined courseo study and work experience and have a workingcontract with a partner company. Practice andtheory rotate in three month blocks (dual system)and courses are o ered with technical, business andsocial science ocus. The BA course graduates have ahigh level o work experience at a younger age butthe diploma “BA” is not a state recognised academicdegree. Graduates must declare BA status.

Business Graduate = Betriebswirt (BA).

Know what to expect



Know what to expect 1

Verwaltungs- und Wirtscha tsakademie(VWA) (literally academy oadministration and economics)These are independent institutes o ering urthereducation or skilled / trained students and managers.

Prerequisite is at least a year apprenticeship orequivalent and more than one year work experience.The graduate must declare the “VWA” quali icationand it is not a state recognised academic degree.

Business Graduate = Betriebswirt (VWA).

Remote LearningThere is only one ully ledged remote university (Fern-Universität Hagen) in Germany o ering remote degree

courses in the main part to mature and workingstudents. Several UASs o er the same opportunity andthe two best known remote learning academies areSGD and ILS (not ull academic degree).

Industrie- und Handelskammer (IHK)(Chamber o Industry and Commerce)The IHK o ers urther education in some technicaland business areas or students with at least 2 yearsexperience as well as apprenticeship. It is not a staterecognised degree but roughly diploma equivalent, e.g.Business Diploma -= Staatlich geprü ter Betriebswirt.

The “Meister” diploma is the highest cra tsmanquali ication (IHK).

1.3 SalariesIn general salaries tend to be higher in Germany thanin Ireland and are expected to rise by an average o2.7 % in 2008 (in Ireland by .7 %). A comparisono typical starting salaries across unctions will give arough indication o how the two markets compare.

Starting Salary Average Starting Salary3rd Level Graduates

Ireland Germany*

Engineers z 2 .000 z 7.000

Industrial Engineers z 28.000 z 9.000

Business z 28.000 z 6.000

IT z 27.000 z 7.000

* These are average values. Top companies can payup to 0 % more or young talent.

Taking annual increases o % – % intoconsideration and / or a jump o 10 % – 1 % i theincumbent changes company a rough calculation osalary expectations at speci ic experience levels canbe calculated.

A lot does depend however on the ollowing actorsso that an exact prediction is di icult.

Size o company » Big pay better (up to 2 %)

Location » West pays better than East,» City better than country» South better than North (e.g. Hessen, Bavaria, Baden-Württemberg)

Degree / quali ication » University graduates and those with urther quali ications PhD, MBA earn more

Function » Cross unctional comparison (Average starting salaries z 0.000) • R&D • IT • Manu acturing • Sales

(Average starting salaries z 0.000)

• Finance • HR • Controlling

(- %)

• Marketing

(- %)

Industry » These segments pay more than others (average starting salaries z .000)

• Chemicals / Pharmaceuticals • IT

• Financial Services • High-tech• Energy • Electronics



6

General TrendsStarting salaries or academics ( rd level education)remain high. In particular salaries or engineers willbe pushed up by the scarcity o talent in the market(VDI – Industry Association calculates that there areroughly 20,000 too ew engineers in the market).

Variable Salary

It is becoming ever more common to o erper ormance-based variable components on basesalary. Around 7 % o all graduates starting inbusiness (in particular sales) unctions have bonussystems which may depend on

» Reaching personal targets (turnover)» Overall company per ormance» So t skill development

In general, good candidates are happy to accept a

per ormance-related element in pay but it should be

» Ideally in the ratio 70 % ixed : 0 % variable(maximum) depending on unction

» Clearly documented / measurable

» Reachable

Other Fringe BeneftsCompany Car

Status symbol in Germany and standard in almost allsales related unctions.

Pre erredModels

» Audi

» VW

» BMW

» MercedesOccasionally » FordSeldom » Volvo

» Other non-German brands

O ering a higher model / better accessories andextras can o ten be a more convincing argumentto “win over” a inal candidate than incrementalincreases in the monetary o er.

» Laptop and Handy» Company Pension Scheme» Direktversicherung (pension insurance policy)» Shares / Stock Options» Pro it Sharing

» Company loans» Further training / education» Not common in Germany – Health insurance

An attractive “salary package” should contain at leastsome o the above ringes. In general, candidates havestarted to put a higher value on long term bene its asopposed to immediate monetary grati ication.

Starting Salaries per industry sector

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

C o n s t

r u c t i o n

C h e m

i c a l / P h a r

m a S e r

v i c e E D P

E l e c t r o n

i c s

F i n a n c e

T r a d e

A u t o m

o b i l e

C o n s u

m e r

L o g i s t i c s

M a c h i n e r

y M e

d i a

P u b l i c S

e c t o r

C o n s u

l t i n g U t i l i t i e s

36,649

43,169

33,191

38,552 38,745

41,384

36,850

40,09038,235

39,40038,321

34,434

31,715

37,859

42,150

Know what to expect



Know what to expect 17

1.4 Notice PeriodsIn general, there are two types o notice periods– statutory and individual. The shortest notice periodo 2 – weeks to month end in both cases is duringthe (generally) 6 month probation period, otherwise

uture employers may have to wait considerablylonger be ore a candidate becomes available.

Statutory notice period

The statutory notice period o an employee who hasbeen with the same employer or

» 2 years is one month to the end o a calendar month» years is 2 months to the end o a calendar month» 8 years is months to the end o a calendar month» 10 years is months to the end o a calendar month

» 1 years is 6 months to the end o a calendar month» 20 years is 7 months to the end o a calendar month

Individual Agreement

It is not uncommon (or illegal) or companiesto negotiate individual notice periods with theiremployees as long as they are not shorter than thestatutory regulations. These may di er rom companyto company, across industries and hierarchies butmost common are

» months to end o calendar month» 6 months to end o calendar month

» 6 weeks to quarter end

» months to quarter end

» 6 months to hal year end (seldom / only or verysenior managers)

Earlier release may however be negotiated.

On average the uture employerwill probably have to bridgea gap o about three monthsbetween contract signing andstart date o incumbent.



19

Section 2 – First step to success ulrecruiting - Job specifcation

2.1 Education 20

2.2 Language Skills 20

2.3 Key Account Contacts 20

2.4 Specifc Product Knowledge 20

2.5 Home o fce versus local presence 21

2.6 Leadership experience 21

2.7 Seniority 21

2.8 Salary 21

2.9 Summary 21

2.10 Sample Job Specifcation 22



0 First step to success ul recruiting – Job specifcation

First step to success ul Recruiting– Job specifcationIn general terms it is easy to de ine what type ocandidate would be most promising or an Irishcompany starting a young business in Germany

“good salesman, someone who canget the business up and runningquickly, not too expensive”

However, this is only the outer packaging – the realdi iculty is deciding what needs to be inside in termso speci ic experience and contacts and this shouldbe the ultimate driver o the recruiting process. Mostcompanies know intuitively what to look or in thehome market based on past experience and indepthknowledge o what the market has to o er as well ashow to generate business in a known universe.

At a macro level the candidates will look and eel thesame but on a micro level critical ‘must haves’ needto be clearly de ined.

2.1 Education

Depending on who the decision makers in theclient companies are, third level education maybe essential. Natural sales ability and a “nose” oropportunity can open doors but i the “budgetholders” with the German customer are academics / engineers by background, acceptance and image canbe strongly in luenced by the title on the businesscard.

The status o a ull academic education or the bene ito speaking the “lingo” o the engineer in Germanyshould not be underestimated. It o ten makes asubtle but signi icant di erence.

2.2 Language skillsFluent English is a must have. Even though dailybusiness will be conducted locally, the value o luentcommunication to and rom the market shouldnot be underestimated. Valuable synergies andknowledge trans er will be lost i the candidate doesnot eel com ortable with picking up the phone, notto mention participation in business and strategymeetings and / or acting as a benchmark andre erence or the market.

It may seem obvious and barely worth mentioningbut a surprising number o Germans – young andold, academic or not – do not actually master thelanguage particularly well or else grossly overestimatetheir level o luency and com ort.

Candidates should be in a position to apply or the roleand conduct interviews in English easily ( irst test).

2.3 Key Account ContactsShould the candidate actually know and havedealt with decision makers within the customerenvironment he/she must have worked or a directcompetitor and/or a company selling products orservices to the same target.

This may mean that the candidate can only be oundin a hand ul o companies and/or speci ic region. Thenarrower the target group the more ocussed therecruiting method must be and the more advice andsupport the hiring company will require in identi yingand attracting the limited potential.

I prepared to do without irst hand contactknowledge the hiring company may have a simplerrecruiting process but a signi icantly longer lead timeto winning business.

2.4 Specifc Product knowledgeDepending on the complexity o the product

/ service, indepth technical know-how may benecessary to understand and sell the business.

Once again this will determine the current workingenvironment o the uture incumbent and ultimatelythe size and location o the target group.

The trade-o between existing and trainable productknowledge should be care ully weighed up in

deciding between must have / nice to have skills.



First step to success ul recruiting – Job specifcation 21

2.5 Home o fce versus localpresenceAllowing the candidate to work rom home will helpcircumvent regional / mobility issues and / or the costo location. The hiring company pays a relocation

package as a rule o thumb. However in terms oprestige and image a sales o ice will probably makemore impact. The closer this is to the hub o themarket the better the Irish company can positionitsel as a serious player and investor in the market.

Serious cost / bene it analysis should provide the beststrategic business decision and ideally an “available”candidate should not determine location.

2.6 Leadership experienceGood sales people don’t necessarily make goodmanagers – o people or businesses.

On the one hand candidates who have alreadyheaded up a team may be harder to attract to aninitial one-man-show and cost more money.

On the other hand and depending on how thebusiness is planning to grow locally in terms oheadcount, the irst hire may quickly need additionalpeople, commercial and management skills.

2.7 SeniorityIn speci ic segments young, dynamic, modernexecutives are a recipe or success whereas moretraditional industries may demand greying templesand membership in an “old boys network”.

Needless to say, one won’t be success ul in the otherand thus some considerable thought must be givento the ideal “out it and seniority” o the candidate.

Observing and analysis at industry events may helpsolve the problem and in general a good recruitingconsultant who knows the segment should be ableto give valuable input into weighting this criteria.

2.8 SalaryAll o the above actors in luence salary but so dobudgets, internal structures and grades.

On the one hand the “market price” has to be paidand the requirements o the speci ication ul illed butinternal issues need to be taken into consideration.

Ultimately however the sum and weight o variousrequirements should determine the salary rangewhich, as indicated, will probably tend to be higherthan local salaries at the same level.

2.9 SummaryPacking too many wishes into the job speci icationmay lead to chaos. The 100 % candidate may not

exist or not be motivated and in the hiring panicsuddenly all criteria are orgotten.

It is important to rank requirements and put mostemphasis on the most important priority in directingand managing the recruiting process.

Projected results and not salary alone should notdictate the pro ile.



2 First step to success ul recruiting – Job specifcation

2.10 Sample Job Specifcation

1. POSITION NEW BUSINESS MANAGER GERMANY

2. COMPANY Overview

The company is part o an international group ounded in the United States almost0 years ago. Known as a leading edge supplier o disposal personal care and medical

products or world renowned brands and retailers, the company has grown to becomea global leader in its ield. Today more than 1, 00 people are employed at locations inUSA and Europe generating a turnover o more than € 00 Mio.

The international division based in Ireland is responsible or growing the businessoutside North America. Expansion in Europe has been rapid and the current production

acility in the UK will soon be complemented by a brand new show-case productionunit in Germany, with state-o -the-art manu acturing and packaging technology, toprovide a wide range o innovative products or the European market.

The German market is a core and primary target or the company, not in the leastbecause o the huge domestic potential but also due to the signi icance o this centralgeography and culture in developing urther Western (German speaking) and EasternEuropean markets within the broader international expansion strategy.

Legal Form The German company is a GmbH

SpecialCharacteristics

» Technology leader; strong commitment to innovation» Ambitious growth targets based on impressive track record (quadrupled in size in

Europe past 6 years)» Strong presence in growing segment» Strong corporate culture based on characteristics such as integrity, airness,

pragmatism and ambition

Location Production acility in East Germany

3. POSITION

Aim To develop and grow business with major retail accounts in alignment with theinternational group’s objectives, plans and budgets through pro essional managemento all necessary and relevant strategic and operational initiatives.

CEOInternational Operations Ireland

Sales & Marketing DirectorInternational

New Business Manager GermanyGrocery/Discount Channels

Other international and Ireland-based Sales/Marketing Operations



First step to success ul recruiting – Job specifcation

Main Tasks » Development o tailor-made business plans or individual accounts» Manage business relationship with all relevant contacts within said accounts,

ensuring that the company becomes known and respected as pre erred supplier ordisposable personal and household products

» Presentation o product ranges as well as initiation o innovations per customer

demand and negotiating terms o supply or all products» Regular (monthly) reporting and liaison with Sales & Marketing Director at HQ

to ensure optimal market and personal progress measurement as well as timelyidenti ication and exploitation o market opportunities

» Monthly orecasting to enable accurate production and supply volumes» “Champion” Account Speci ic Projects

» Liaison with colleague in local market as well as cross unctional contactsthroughout the company to ensure customer satis action targets are met andexceeded

» Act as key contact or the company in Europe identi ying, reporting and actingon any development within the local market which could be o bene it to overallcompany development

» Develop business outside German market (German speaking countries, EasternEurope) as overall progress and resources allow

» Constant monitoring o competitor developments in market and initiation oreactionary measures as appropriate

4. FUTURE INCUMBENT

Education University / College graduate (or equivalent standard) in relevant discipline.

Pro essionalExperience

The ideal candidate should have gained experience in a consumer goods environmentwhere pro essional Key Account management is general practice.

He/she should ideally have irst hand “private label” selling experience and a proventrack record. He/she must have up to date contacts with senior decision makers in theGerman Grocery / Discount channels.

A relevant business experience o at least 6 – 8 years is necessary.

Personality » Entrepreneur with hands-on approach / sel -starter and passion or business» Able to develop business rom small base» Ability and presence to command attention and make impact at top decision

making level in trade» Strong sales orientation coupled with well developed strategic and business

management skills» Good head or numbers i.e. ability to adapt to and operate in cost / price conscious

environment

» Happy to take initiative and drive business

» Able o adapting to and managing cultural diversity» Excellent communication skills

Age » mid 0`s upwards

Nationality » German

Languages » German native, English luent

Location » Open

2



First step to success ul recruiting – Job specifcation

5. CONTRACTUAL DATA (not given to the candidate)

Probation Period » 6 months

PersonnelResponsibility

» initially none

CareerOpportunity

» As the company is a subsidiary o an international group there are alwayspossibilities to develop urther.

Nature o contract » Standard contract, open end

Compensation » The total remuneration is subject to an annual per ormance evaluation.

Salary » The annual salary will be in a range up to € 100,000 plus bonus. A company car isincluded in the package

Costs oRelocation

» probably not necessary (home o ice possible)

Terms o NoticePeriod

» months to quarter

Availability » as soon as possible



Section 3 – Choosing the Recruitment Method

3.1 Networking 26

3.2 Going it alone –Advertised Selection /Own Label 28

3.3 Advertised Selection / Consultants Label 29

3.4 Executive Search / Direct Approach 30

3.5 Interns / Students / Temporary Employees 32

2



6 Choosing the Recruiting Method

Choosing the Recruiting MethodArmed with a clearly de ined job speci ication thenext step in the process is arguably the most di icult– how to

a) Identi y

b) Approach

c) Evaluate

d) Attract

e) Board

the right candidate. Irish companies will not be theonly ones aced with this challenge in the highlycompetitive market in 2008 but it is important toremember that a newcomer will be aced with someadditional handicaps:

» Even highly success ul Irish companies willprobably not carry a “magnet brand” toautomatically attract top talent.

» “New ventures” are o ten perceived as risky,particularly in the a termath o the “dotbombers”, regardless o the industry.

» Even though Ireland’s image in Germany tendsto be very positive, associations with the country

tend to be more related to Guinness, green ieldsand red hair than a centre or economic growth,innovation and business excellence.

» Well-established indigenous German companiesand other internationals will be trying to attractexactly the same talent.

Cost is usually the deciding actor in choosing how torecruit. However or a business setting up a presencein what has been prede ined as a high potentialmarket the job speci ication should drive the process,not orgetting that timing is also o the essence.

What is the latest start date by which the“right” candidate needs to be on board andsuccess ully operating be ore opportunitiesand money are lost.

This puts the recruiting issue into a somewhatdi erent light. Bad hires and missed deadlines willprobably cost the hiring company more in the longrun and thus puts the investment in the recruitmentprocess into perspective.

The return on money spent wisely onsuccess ul recruiting will ar outweigh the paino initial spend.

The ollowing choices with all their merits andshortcomings will be available.

3.1 NetworkingNetworking at various levels is wise and should be parto the process. Using what is available will help hiringcompanies get a eel or the market, identi y sourcesand leads and may even lead to a lucky break.

» Use an industry-related event / trade air to“mingle” and establish primary contacts withrelevant players; ask about potential candidatesand recommended recruiters.

» Check with the German Employment Bureau(Bundesagentur ür Arbeit) in the regionor its division ZAV (Zentrale Auslands- undFachvermittlung) in Bonn (www.bundesagentur.de) to see i by chance a candidate who is “onthe beach” can be generated.

» Germany is a maze o industry associations(Verbände) which may be able to give pointers oreven have a ( ree / low price) online marketplace.Some o the most relevant are listed on the

ollowing page.

Advantages

» Low cost

» Good and easy way to get irst hand in ormation

Disadvantages» Unreliable / no guarantees» Even i a candidate is generated no market

benchmarking takes place; people recommendpeople known to them as opposed to “top”candidates

» The temptation is big to take the irst “available”contact

» It can waste time. Bearing crucial startingdeadlines in mind ollowing leads that may notlead to a hire is risky

Networking can be an ongoing process during theentire recruiting phase. There is no rule that sayscandidates generated out o networking cannot beincluded in the process with those coming rom othersources but beware o timing and reliability issues.



Choosing the Recruiting Method 27

Industry Associations – Verbände

BDI(www.bdi-online.de)

Bundesverband der deutschen Industrie e.V. (general industry)

ZVEI(www.zvei.org)

Zentralverband Elektrotechnik- und Elektronik-industrie e.V. (electrotechnical and electronics)

BITKOM(www.bitkom.org)

Bundesverband In ormationswirtscha t, Tele-kommunikation und neueMedien (information technology, telecommunications and new media)

BREKO(www.breko.de)

Bundesverband Breitbandkommunikation (broadband communication)

VDE(www.vde.de)

Verband der Elektrotechnik, Elektronik, In ormationstechnik (electrotechnical, electronics and IT)

VDMA(www.vdma.de)

Verband Deutscher Maschinen- und Anlagenbau e.V. (plant and equipement)

VDA(www.vda.de)

Verband der Automobilindustrie e.V. (automotive)

BDLI(www.bdli.de)

Bundesverband der Deutschen Lu t- und Raum ahrt-Industrie e.V. (aviationand aerospace)

F + O(www.spectaris.de)

Verband der deutschen einmechanischen und optischen Industrie e.V. (finemechanical and optical)

VCI(www.vci.de)

Verband der chemischen Industrie e.V. (chemical)

MWV(www.mwv.de)

MWV Mineralölwirtscha tsverband e.V. (mineral oil)

BPI(www.bpi.de)

Bundesverband der Pharmazeutischen Industrie e.V. (pharmaceuticals)

GKV(www.gkv.de)

Gesamtverband kunststo verarbeitende Industrie e.V. (plastic)

BVE(www.bve-online.de)

Bundesvereinigung der Deutschen Ernährungs-industrie e.V. (food)

BDSI(www.bdsi.de)

Bundesverband der Deutschen Süßwarenindustrie e.V. (confectionery)

DBB(www.brauer-bund.de)

Deutscher Brauer-Bund e.V. (brewing)

BSI(www.bsi-bonn.de)

Bundesverband der Deutschen Spirituosen-Industrie und Importeure e.V.(spirits and imports)

VdC(www.verband-der-cigarettenindustrie.de)

Verband der Cigarettenindustrie e.V. (cigarettes)

VDI(www.vdi.de)

Verband Deutscher Ingenieure (engineers)

For an overview o all industry (sub)associations see www.verbaende.de



3.2 Going it alone – AdvertisedSelection / Own LabelPlacing a job advertisement in a selected mediumwithout enlisting the services o a recruiting partneris one way o “going public” with the job o er. Some

o the routes available include:

Internet job sitesThere are masses o generalist and specialist internetsites available. An exact ranking / quali ication owhich is next to (i not) impossible. Some o the mostcommon (international) sites with an establishedpresence include:

www.jobpilot.de / www.monster.de

Generalist

www.jobware.de Generalist

www.jobscout2 .de Generalist

www.stepstone.de Generalist

www.stellenanzeigen.de Generalist

www.experteer.de Generalist

www.gulp.de IT

www.pharmajob.eu Pharmaceuticals

www.rekruter.de Generalist

www.xing.com (Market Place) Generalistwww.health-job.net Healthcare

www.juve.de Legal

www.newjob.de SAP jobs

www.ingenieurkarriere.de Engineers

www.ingenieur1.de Engineers

www.jobkurier.de Engineers

Cost

Depending on the ormat, design, duration,regionality o the advertisement costs start at around€ 00 up to around € 2,000.

Classic print mediaPrint media can provide a nationwide establishedplat orm or reaching potential candidates.Particularly the FAZ – Frank urter Allgemeine Zeitung– was once the established medium or high-end

job recruiting. In the meantime almost all provide acombination o print and online services. Some o thebest known include:

Print Online

FAZ – Frank urterAllgemeine Zeitung(national)

www. az.net

Süddeutsche Zeitung(more oriented towardsSouthern Germany)

www.sueddeutsche.de

LZ – Lebensmittelzeitung(national / all typeso consumer jobs / particularly ood / beverages)

www.lz-net.de

VDI Nachrichten(national / all types o

jobs or engineers)

www.ingenieurkarriere.dewww.vdi-nachrichten.com

Cost

With the above print / online media combination is

possible. Prices or online advertisements are airlymuch in line with standard internet websites. Printremains however a relatively expensive alternative anddepending on size can cost several thousand euros.FAZ is the price leader in the market and be ore theonset o internet alternatives was considered the mostprestigious posting medium or high level positions.

Advantages» Good cost control option (online)» Quick turnaround – within 2 weeks o posting

results should be obvious

Disadvantages

» As with all advertised selection target group islimited to candidates actively looking or a newposition. A huge portion o market potential willthus not be reached.

» Even those looking or a job may not ind theadvertisement. Speci ic “key word” searchmechanisms may limit access. I advertisementis placed in English (which is advisable ascandidates must speak English) the German jobtitle should ideally be included to acilitate hits.

Choosing the Recruiting Method8



» Applicant handling / selection will swallowinternal HR capacity. It takes more timeto evaluate applications rom a oreignenvironment.

» Without the routine o evaluating pro iles rom anew market potential may be overlooked or weak

CV’s not instantly recognised.» Some candidates may not eel com ortable

applying to an unknown brand / start up ventureand “sell” is limited in a short advertisement.

» The hiring company has no control over howcandidates interpret the written word.

» Print advertising is relatively expensive.

3.3 Advertised selection / Consultants labelThere are two ways to use an established consultantslabel in advertised selection, each with merits andshortcomings.

Consultant as P.O.BoxIn this case the consulting company is the “brandcarrier” and the client / hiring company may or maynot be named in the advertisement. The choice omedia (print / online) is mutually de ined and theconsultant acts a clearing agent. CV’s are gatheredand orwarded, without evaluation or ranking tohiring company

Cost» Cost o advertisement plus “handling ee” o

€ ,000 - € ,000 i going with establishedconsultant.

Advantages» I the consultant company is one o the big

names in the industry and consistently appears

in media the “unknown” element is taken out othe advertisement. Candidates who know andrecognise the consultant brand will perceive moresecurity in venture / trust in the known brand.

» Within 2 – weeks results will be known.

Disadvantages

» All the previously listed apply – target grouplimited to job seekers, risk o not inding candidate,binding o internal resources, evaluation di iculties.

» There is no additional “service” or the ee paid in

terms o genuine consulting support.

Consultant Full ServiceThe consultant o ers additional services to support thehiring company such as design and texting, candidateinterview and appraisal, negotiation support.

Cost

» Consulting ee (one o below)

20 % - 2 % o salary

Approx. € 1 ,000 - € 20,000

Consultant man day rate o ≈ € 2,000

plus cost o advertisement (paid by hiringcompany) plus expenses

» In the meantime many consultants o erextended support to complement the quantity

/ quality o candidates generated rom the

advertisement i.e. additional internet / databaseresearch up to and including ull “headhunting”or direct search service. Each additional servicehas its price and depending on the consultantsthe combination advertisement / direct searchcan cost up to the standard minimum ee o€ .000.

Advantages

» The consultant manages the evaluation processand can be expected to provide the hiringcompany with A, B, C shortlist o candidatesbench marked against job speci ication and eachother

» The consultant handles correspondence,scheduling, general administration leaving hiringcompany resources ree

» The hiring company has a “trusted advisor” whowill help to make sure that good candidatesare treated accordingly and support in thenegotiation / boarding process

» Additional candidate sources (i requested)upgrade the quantity / quality o choice or hiringcompany.

Disadvantages

» Without extra services the risk o all advertisedselection – target group limited to active jobseekers and risk o not having the right applicantin candidate pool.

» The quality and quantity o work put intogenerating candidate rom other sources is verydi icult to control and thus the hiring companymay pay a lot more or extra work which is not

done.

Choosing the Recruiting Method 29




» Direct search (headhunting) is a business whichrequires know-how, dedicated research, extensivenetworks and pro essional processes andmethodology. The advertised selection consultantmay not be in the possession o these resources.

» Depending on the ee structure o the consultant

plus the cost o the advertisement it could be ahigh investment low return venture or the hiringcompany.

Important questions to ask

» Does the consultant have the name / image / reach to attract more and better candidates thancompetitors

» For what level positions is the company known(salary, hierarchy)

» Who will interview candidates (seniority,

experience o individual)» What is the exact scope / nature o additional

services to be invoiced? How will this beinvoiced? How will this be documented or thehiring company? Who will be doing this work

» What counts as “expenses”? Are expensesinvoiced as accrued or at a nominal rate?

» What are key milestones / timing?

» What guarantee does the company give

a) That they can ind the right candidate

b) I the candidate leaves the company within aspeci ied period

Key Players

The ollowing consultants have the strongesttradition o advertised selection in the Germanmarket and also o er additional sourcing services upto and including direct search.

» Kienbaum Executive Consultants» Baumann Unternehmensberatung

» Mercuri Urval GmbH» Steinbach und Partner» Dr. Heimeier + Partner» Mummert + Partner

3.4 Executive Search / Direct ApproachExecutive Search is the most comprehensiverecruiting method in terms o market / target group

penetration / process control or the hiring company.

The consultant provides ull support

» Help to de ine job speci ication relative to marketpotential

» Advises hiring company on de inition otarget group and identi ies / contacts relevant

potential by means o sophisticated research andnetworking as well as internet utilisation

» Interviews / evaluates / presents A B C ocandidates (including longlist, shortlist)

» Support during negotiation / boarding / integration o candidate

More than 0 % o all recruiting in the market isdone via the direct search method and more than 80% o projects include direct search in combinationwith another method.

Most o the highest ranked direct search companiescan o er advertised selection service on top o directapproach and have separate brand or the selectionbusiness.

Cost

As a rule o thumb, one third o irst year’s annualsalary o hired candidate (incl. bonus) or minimum

ee o € ,000. The ee is usually billed in threeinstalments, 1st instalment at the beginning o thesearch and remaining a ter de ined time deadlines

or according to progress e.g. presentation ocandidates, completion (signing o contract) oassignment. On average an assignment should takenot more than months to complete.

Note

The market is vast and not controlled. There arethousands o consultants in Germany (one manshows through to research companies and non-ranked specialists / smaller generalists). Thesecompanies may o er lower ees or reduced servicelevels. As they do not appear in the o icial rankings

/ listings it is di icult to quali y them and the marketin its entirety. One o the ew ways to identi y andevaluate these operations is by personal networking / recommendation.

Advantages

» The hiring company has ull support o apro essional consultant in all phases o therecruiting process

» The hiring company controls the process; canand should de ine timelines or reporting withconsultant



Choosing the Recruiting Method

» Candidate generation is not le t to chance. Bothactive job seekers (internet, consultant database)and identi ied talent are incorporated into theprocess. The process attracts candidates whowould not think o applying themselves. They donot eel like an “applicant” but an invited guest

and thus enhance the candidate pool by a wholenew dimension. The consultant controls whatdata is given to candidates, has the opportunityto “sell” the position rom stage to stage in theprocess

» Target group process ensures that relevantcompanies employing candidates with the rightcontacts / experience are thoroughly analysed

» Top consultants give guarantees

- That they will search until the position is illed

- That they will “replace” candidates who leave / have to leave in the irst 6 months

- That they will not approach employees o hiringcompany over speci ied time

» At the end o the process the hiring companyknows to have ound the best possible candidatea targeted segment o the market has to o er

Disadvantages

» Most expensive recruiting method» Candidate turnover slower – usually – 6 weeks

or consultant to provide shortlist» It takes more e ort to attract / motivate

candidates who are not actively looking or a job» Research can “miss” candidates how have moved

outside core target» Some o the key market players may not be

interested in representing “small” companies / illing positions under € 100,000 salary

» Some o the larger players have partners “sell”position but delegate the work back to juniors,who have not met the client

Important questions to ask» Has the company the image /size to attract

“A”talent

» What is the competence level / seniority ohandling consultant (is it the person who sold it?)

» Has the consultant specialist knowledge inspeci ic

- Industry

- Functional area

» What competitors / market players are o limits

» Is the consultant willing to “show” re erencein ormation

- Clients

- Assignments» Who will be conducting the work (research /

interviewing)» What is the level o ocus / interest o the

consultant (salary / hierarchy)

» How are candidates ound» Does the company give guarantees

- To ind candidates; i not is there a eereduction

- To “replace” candidates who leave

- Not to “hunt” employees o hiring company» What is the company’s role in candidate

negotiating / boarding / integration» How are expenses invoiced – as accrued or

nominal percentage o ee

» What are timing / key milestones

» What documentation is provided to hiringcompany (longlist / shortlist / candidate reports)

Key Players

The ollowing are the highest ranked ExecutiveSearch companies (by turnover) – most o which havea separate “label” under which advertisements can

be placed i requested by hiring company. (Source:BDU-Industry Association – excluding top rankedadvertising players already listed)

» Egon Zehnder International GmbH

» Ray & Berndtson GmbH

» Heidrick & Struggles UnternehmensberatungGmbH & Co. KG

» Russel Reynolds Associates, Inc.

» Signium International GmbH & Co. KG» Deininger Unternehmensberatung» Delta Management Consultants GmbH» Korn/Ferry International GmbH» Gemini Executive Search GmbH» Heads GmbH & Co. KG» Civitas International Management Consultants

GmbH» Interconsilium GmbH & Co. KG» Edward W. Kelley GmbH» LAB Lachner Aden Beyer & Company GmbH

1




3.5 Interns / Students / TemporaryEmployeesTo recruit interns / students posting in the ollowingis recommended:

» University / UAS job board» www.karriere.unicum.de

» www.praktika.de

For temporary employees the ollowing represent thelargest temp agencies:

» Randstad Deutschland GmbH & Co. KG, Eschborn» Manpower GmbH & Co. KG, Frank urt am Main» Persona service Verwaltungs AG & Co. KG,

Lüdenscheid» Adecco Personaldienstleistungen GmbH, Fulda» DIS Deutscher Industrie Service AG, Düsseldor» Tuja Zeitarbeit Holding GmbH, Ingolstadt» Hays AG, Mannheim

» Auto Vision GmbH, Wol sburg

» ZAG Zeitarbeitsgesellscha t GmbH, Hannover

» Bindan-Gruppe, Stuhr/Bremen



Section 4 – Getting the most rom the interview

5.1 Arbeitszeugnis (letter o re erence) 36

5.2 Re erencing 36

Section 5 – Cross Checking and Re erencing



Getting the most rom the interview

Getting the Most rom theInterviewInterviewing is a much documented science backedby various schools o thought and theory, the relativemerits o which go ar beyond the scope o this

recruiting guide. Still the aim o any interview is toevaluate whether there can be mutual longer termbene it rom a working relationship, regardless o thepersonal style o the interviewing partner.

A couple o basics can help to maximise the outputo the interview

» I possible irst interviews should take place ata hiring company location (i it already existslocally). This will give candidates a eel or thesolidity o the business and quite simply most

people want to know how their uture place owork will look. I the local presence is still to beset up and it is not easible to ly all candidates toIreland at the initial stage the location should atleast be conducive to and acilitate a pro essionaland discrete discussion. Candidates may becautious o being “seen” interviewing so it is bestto have the irst discussion in a ormal businesssetting. Break ast / Lunch / Dinner meetings areusually not a good idea or irst interviews

» Even i the working style / out it o the company

is casual it is common practice that interviewdress code is ormal business ( or all parties)

» Ideally the candidate should have been in ormedup ront on the roles and responsibilities o allinterview partners. “Surprise Guests” or missingdiscussion partners can throw a candidate. Ideallythe uture superior should be involved in theinitial interview o all candidates

» Good preparation is important. Speci ically wheninterviewing in a oreign environment evensimple things like remembering / pronouncinga name play a part in making the candidate eelhe / she is being taken seriously. Also rememberthat German candidates may not be used tocommunicating on a irst name basis ( ormaladdress is “Herr / Frau X” and “Sie”) and it isadvisable to ask irst

» The interview will be in a oreign language oreither the candidate or the hiring company.Usually the language will be English so a degreeo sensitivity (speaking reasonably slowly,distinctly, no slang) to the language barrier isnecessary

» Ideally the CV will be pre-analysed by the hiringcompany and / or recruiting consultant. Theinterviewer should have understood prior tothe meeting where the candidate could be on / o spec and make sure that relevant points areaddressed during the course o discussion

» To acilitate an open discussion it is advisableto give be ore taking i.e. the interviewer shouldintroduce himsel / hersel , pitch and positionthe company and the role, strategy and vision.This “sell” is necessary not only to engage thecandidate but also to give him / her a chance toget used to the nuances o language / accent etc.Jumping in with the question “Why do you wantto work or us” would probably be consideredpresumptuous and irritating. In a competitivemarket candidates like and need to be “courted”

» Be ore launching into the discussion it is best tocommunicate scheduling or timing plans (“We

have allotted roughly one and a hal hours”) sothat the candidate can better assess how muchdepth is required and be sensitive to inishing ontime etc.

» At some point in the process the candidateshould be given the loor to ask questions whichshould be answered as openly as possible. Thiscan happen a ter the introduction or perhapsat the end o the meeting but is best notoverlooked, orgotten or postponed because timehas run out. Good time management is o theessence

» Once the candidate takes the stage he / sheshould be in ormed exactly what the hiringcompany is looking or

• Full chronological description o education andcareer

• “Relevant” experience / highlights only

• Q & A session

» It is legitimate to ask questions. Should the

interviewer eel in ormation is important heshould make sure he gets the answers. There isno harm in asking or urther explanation i orwhatever reason things are not clear

» O particular relevance is whether the candidateis an active / passive “job seeker”. Is he / shein other processes? Is there time pressure? Isthe candidate “ready” to make a career move?Getting behind the motivation or actuallycoming to the interview will help to evaluate howserious / opportunistic the candidate actually isand how ast the decision making process mayhave to be



Getting the most rom the interview

» The simple question o what candidateexpectations are may seem obvious but can berevealing. What does he / she think the role will / should entail in terms o reedom and limitations,travel, reporting, style, what it could be likeworking or an Irish company / this speci ic Irish

company. Preconceptions and alse hopes needto be identi ied and addressed» By the same token, clearly stating hiring company

expectations is just as important to make sure thecandidate understands what and how he / sheneeds to deliver to be success ul

» I relocation is necessary it is important toind out what potential hindrances there are

– di erent state / school going children / workingwi e -and when the candidate would plan tomove i.e. immediately, a ter probation period, at

end o school year etc.The hiring company should watch out or clearcommitment and a realistic plan on how to bridgethe gap (weekday apartment, travel arrangements).I the candidate is vague, chances are he / she maynot even have discussed it with those a ected. It isthe most common excuse or dropping out o theprocess at a later date – “My wi e didn’t support themove” – and it is quite legitimate (and advisable) thatthe hiring company explore this issue

» The candidate should leave the interviewknowing exactly what to expect – when willhe / she receive eedback, rom whom, howdo next steps look, who else will be involved inthe decision making process and what will thesecond interviews entail and more importantlywhere will it be (Ireland?)

» There is no harm in showing interest (in actit can do a lot o good) i it is there. Telling acandidate that the interview went well and thata mutual uture could work will not weaken the“bargaining” position but help to cement theinterest o genuinely interested candidates and

lush out those who are still just playing along

» I nothing else the hiring company should alsouse the interview to ind out more about themarket. Candidates should know and be able totell what is happening in the competitive arena,what developments are expected and whatcustomers are expecting. This does not constitute“abusing” the process but is a legitimate meansto gain valuable market in ormation romcandidates who should in any case know and

impart with this knowledge



6 Cross checking and re erencing

Cross Checking and Re erencingDouble checking in ormation / con irmingimpressions is a simple process which may help touncover issues to tackle be ore a candidate is takenon board.

With the help o the “Arbeitszeugnis” (roughlyequivalent in content to letter o re erence) andre erencing, the uture employer can gain bettergeneral and speci ic in ormation on per ormance andpersonality

5.1 Arbeitszeugnis(letter o re erence)Following a term or period (promotion, cross

unctional move) employees in Germany have a rightto a Zwischen(=between)-Zeugnis or Arbeitszeugnisby law.

Employers have to describe the nature / content othe role as well as various aspects o the candidate’sper ormance, personality and development withinthe company and this document should be madeavailable to any uture employer as elementary parto a standard ull application.

However the “Zeugnis” may not be derogatory

or limit the individual’s chance to develop hiscareer and thus a type o code evolved wherebyspeci ic ormulations could say one thing but meansomething quite di erent.

Although the art o writing and understanding thiscode is complex (and not mastered by all who use it)it remains a use ul tool or checking track record.

The ollowing areas will be covered:

» Detailed description o roles and responsibilities

» Evaluation o per ormance» Evaluation o way o working» Evaluation o behaviour towards superiors,

subordinates (contribution to company,popularity)

» Evaluation o leadership skills» Evaluation o behaviour to external partners as

relevant» Declaration o by whom contract was terminated» Closing ormula – o ten the most telling part o

the Zeugnis. Good employee will be thanked or

contribution to company and regret expressed ondeparture and wished all the best or the uture.

Even though non German speakers may havedi iculty understanding the intricacies o the“Zeugnis” it may be advisable to enlist the help o

someone “in the know” as valuable in ormation maybe gleaned rom it, even i only to highlight potentialweak points or discussion.

5.2 Re erencingCandidates must not automatically provide names,contact details o potential re erees as part o anoriginal application. However a uture employer hasthe right to ask or re erees who have worked with

/ or the candidate, been customers, pro essionaladvisors etc.

Generally, rom an ethical perspective, candidatesshould be given the opportunity to orewarn thesere erees that a call may come rom a uture employeror their recruitment partner.

It is generally rowned upon when hiring companiestry to “sni around” and use network contactsor riends o riends to gain in ormation on anindividual.

Germans have strong belie s about data protectionand the right to privacy and trying to gainin ormation, especially rom non-nominated sources,can back ire in that

a) People will be generally reluctant to part withcritical in ormation especially i they suspect thatthey could damage reputation.

b) A candidate who discovers such practices mayeel his/her rights have been violated and drop

out o the process.

In addition a good rapport needs to be established toacilitate an open discussion with the re eree and a

mix o open and closed questions is recommendableto veri y known data and expand on knowledge othe candidate.

Quality reference checking can generate huge addedvalue to the evaluation process but ideally should bedone by a practiced professional (recruiting partner)with the sophistication and sensitivity to get to thecore issues and correctly interpret statements and facts.



Section 6 – Boarding

7



8 Boarding

BoardingEven when the inal short list o candidates hasbeen de ined and the hiring company goes into theinterview stage it is not necessarily a given that any oneo the candidates will actually accept the job. In 2007recruiters and hiring companies alike have experienceda widespread phenomenon in Germany which speaks

or a high level o opportunism and certainly parallelprocessing in the market. It is di icult to say i thistrend will become more extreme but as it stands, hiringcompanies need to watch out or mistakes, be awarethat applicants may go several interview rounds tothe o er stage and then withdraw and in the currentenvironment it is not unheard o that even signedcontracts are rebuked shortly be ore start date.

Even candidates who are genuinely interested may be

snapped up by others i the process takes too long orthe hiring company doesn’t “treat them right”.

The ollowing pointers are important to ensurea luent and pro essional selection and boardingprocess.

» Keep boarding process as short as possible;ideally not more than 2 rounds o interviews overa short space o time. Too many decision makersis not advisable

» German candidates will want to meet their

superior irst; even i HR is coordinating pre-selection it is a question o status and signals that“important” candidates are interviewed by their

uture superior

» I working with a recruiter have him / heraccompany interviews (this should be part o theservice and not incur extra ees!). The consultanthas the opportunity to see the candidate asecond time, observe the interaction and maypick up on nuances that would otherwise bemissed. A good consultant will know when to

intervene and can advise the hiring company onquestions o style and orm» Applicants have to be treated like customers in

a competitive market. Direct search candidatesdo not even perceive themselves as applicantsbut o ten as potential business partners. Thehiring company will need to “sell” and notpresume that the candidate is interested justbecause he is there. Hard and so t actors mustclearly be communicated i.e. product excellence,competitive advantage, track record but alsodevelopment prospects, corporate culture andvision, people ocus etc.

» I psychometric testing is desired by the hiringcompany this should be communicated tocandidates at the onset. Many have a genuineproblem with concept o being tested and canre use to participate. It is still a conscientiousissue or (senior) German candidates

» I candidates are requested to do a case study itis advisable to do so within the ramework o ascheduled meeting ( 0 minutes preparation time

/ 10 minutes presentation). Asking / expectingcandidates to do extensive preparation “pre-meeting” may not be received well and noteverybody is willing / has the time to pull out allthe stops and give away too much or ree

» Timely eedback is critical a ter every stage in theprocess. This can be handled by the consultantbut a quick mail or call rom the uture superior

can make a big di erence» It is legitimate, acceptable and advisable to

check re erences o inal candidates. Ideally, asexplained earlier, this should be done by theconsultant (as part o the service at no extra cost)i it is to bring the added value it should

» Be ore making an o er the candidate shouldhave provided details o current package i.e. basesalary and bonus and all ringe bene its. This isthe basis or making an o er and even though10 – 1 % plus has been airly standard overthe past couple o years this may get pushedupwards in the coming environment

» It is not good practice to make a very lowo er irst. The hiring company may insult thecandidate to the degree that he withdraws

rom the process. In any case it is considereda sign o genuine interest and respect to makea competitive o er, even i elements are open

or discussion and there is still some “room orimprovement”

» It can be a good idea to use the consultantas a mediator in this part o the process, whocommunicates the proposed o er verbally to“sound out the reaction. Once something isin writing it is hard to take it back. In any casethe consultant should also have done somepre-checking with the candidate and be able toadvise the hiring company on what will work best”

» The contract should be pro essional and havebeen drawn up by a local legal to avoid pit alls

» It is advisable to put a time limit on a contractsigned by the hiring company i.e. validity 1

days rom signature to avoid losing time i the



Boarding 9

incumbent is not going to sign or using it toleverage other o ers

» Depending on the length o time betweensigning and start date it is advisable to keepup the dialogue with the candidate; regularin ormation on business development, invitations

to events or meetings o major relevance. Thiscan be a critical phase where the candidatereceives and is tempted by counter o ers i not“emotionally” boarded

» Ideally this should be complemented by visit(s)to Ireland to meet the team but especially in theearly integration phase ollowing start date, itis advisable to have incumbents spend up to acouple o weeks in the Irish HQ, getting to knowthe people, culture, way o working, customermanagement, local customers, etc.



Boarding0



Section 7 – Recruiting Do’s and Don’ts

1



2 Recruitment Do’s and Don’ts

Recruiting Do’s» Pick location care ully – make sure the region can

o er the right candidates» Design the job speci ication irst – must haves

should drive process, timing, recruiting method

» Be realistic in assessing the likelihood o successor ailure o working without a recruiting partner

» Consider all the recruiting alternatives and therelative cost / bene it o each

» Consider the recruiting ee as part o theinvestment in the business

» Ask potential recruiting partners anything youeel you should need to know and especially

exactly what you can expect or your ee» Closely manage the process insist on reporting

timelines and make sure the consultant isworking on the assignment

» Plan and run a tight interviewing and boardingprocess

» Be honest with candidates; make sure theyunderstand the opportunities but also thelimitations o the role

» Ask candidates who turn down the o er (or therecruiting partner) or open eedback on reasonswhy – constructive criticism can help to identi ywhere adjustments need to be made

» Check re erences» Make sure the candidate is integrated between

signing and start date

Recruiting Don’ts» Design the speci ication against the irst available

candidate» Waste too much time on hal -hearted networking» Choose the recruiting method based on ee alone

– consider all the other costs (internal resources,getting it wrong...)

» Brie the recruiting partner on “a need to know”basis. Give all the in ormation on plans, targets,vision and culture and let him ilter

» Hide bad press / mistakes (position constructively)

» Presume the process will be like “any other” inIreland o other new markets

» Believe everything you’re told – check re erencesand use your recruiting partner to veri y data(Zeugnis/re erence checking)

» Forget to in orm your recruiting partner onstrategy changes / developments during thecourse o the search

» “Hide” networked candidates rom the recruitingconsultant; let them be benchmarked against allothers generated through selection or search

» Take orever to make decision / include too manydecision makers in the process. Think and actquickly.

» Presume that candidates are interested just

because they come to interview. “Puttingout eelers” and testing market value is notuncommon in today’s market.

» Forget to “sell” the company» Promise too much (or too little)» “low ball” o er a candidate you are interested in



A Guide to German Employment Lawby CMS Hasche Sigle

Irish Companies in Germany - A Brie Overview o German Employment Law 44

Introduction 45

Applicability o German Employment Law 45

Commencement o Employment 30

Issues Which Arise During the Course o Employment 47

Termination o Employment 48

Industrial Relations 53

Social Security 56

Conclusion 56



Irish Companies in Germany - A Brie Overview o German Employment LawCMS is a partnership o major European law irms providing clients with a ull range o legal and tax servicesbased on a thorough understanding o their business. All CMS law irms are ull service irms o eringclients an integrated, seamless service beyond the boundaries o national jurisdictions. Covering 2 di erent

jurisdictions and operating in 7 o ices mainly in Europe, CMS has over 7 partners, more than 2,000quali ied lawyers and a total support sta o over ,200 worldwide.

In Germany, CMS Hasche Sigle has more than 0 lawyers working rom nine o ices located in Berlin,Cologne, Dresden, Düsseldor , Frank urt, Hamburg, Leipzig, Munich and Stuttgart. Our German employmentteam consists o 70 lawyers, specializing exclusively in all areas o contentious and non-contentiousemployment law work. It is by ar the largest employment team in the German market and has been awarded“Best Employment Law Team” by leading German law journal, JUVE magazine, in 200 /200 and 200 /2006.

Pro . Dr. Björn Gaul isCerti ied Labour Lawyerat CMS Hasche Sigle. Hisextensive experience includesadvising German andinternational companieson all kinds o transitions,especially mergers, saleo business units andoutsourcing including cross-border trans ers o business.

Björn leads negotiations with unions, European aswell as German works councils on tari agreements,

shop agreements and social (compensation) plans.Björn has in-depth expertise in the privatisation oenergy and public transport as well as dealing withpension schemes as a consequence o corporaterestructuring (including due diligence procedures,dra ting and negotiating service and employmentagreements, handling mass redundancies,monitoring the post-merger / restructuringintegration o di erent business units, advisingon stock option plans and variable remunerationsystems and handling discrimination issues as wellas compliance and ethic codes). Björn is chairman

o the “Study Group Employment Law” (a regularcon erence on current developments in Germanemployment law) and a member o the EuropeanEmployment Lawyers Association (EELA) and theInternational Bar Association (IBA). In addition tohis career as a lawyer Björn is a pro essor o law atCologne

Dr. Björn Otto is Certi iedLabour Lawyer at CMS HascheSigle. He advises nationaland international clients onall aspects o both individualand collective employmentlaw. Apart rom giving adviceon day-to-day labour lawissues a main ocus o Björn’spractice is on outsourcingand restructuring as well as

privatisation including harmonization o employmentconditions and conducting negotiations with unions

and other employee representatives on collectivetari agreements, social plans and reconciliations ointerests. Björn has particular expertise in regardsto boardroom codetermination and EuropeanWorks Councils. As a member o the InternationalBar Association (IBA) as well as the EuropeanEmployment Lawyers Association (EELA) Björn is aregular speaker at employment law seminars and hasbeen publishing articles or many years on a broadspectrum o employment law matters.

Irish Companies in Germany - A Brie Overview o German Employment Law




IntroductionAs an Irish company operating a business inGermany, not only do you have to pay attention tolocal economic and cultural issues, but also have toconsider the speci ics o the national legal system.With regard to employment law, you will ind thateven though both Irish and German statutes areincreasingly guided by European legislation, someGerman peculiarities still remain which di er romthe employment practice you are amiliar within Ireland. This applies not only to the issue oindustrial relations, but also to rights and obligationsarising on termination o employment. Thus, to easeyour market entry into Germany, this memorandumgives you a brie overview on the principalemployment legislation in Germany. Nevertheless,please note that the material contained in this

document is provided or general purposes only anddoes not constitute legal or other pro essional advice.Appropriate legal guidance should be sought orspeci ic circumstances and be ore action is taken.

Applicability o GermanEmployment LawGerman employment law, in principle, is applicablewhere the regular place o work o the employee issituated in Germany. Thus, where an Irish company

runs a business in Germany and the employee– irrespective o his/her nationality – carries out his/ her duties permanently or at least predominantly inGermany, the terms and conditions o employmentare subject to German employment law. In thisregard, it is irrelevant whether the Irish companyitsel is the employer, i.e. it employs the employeein a local branch or a iliated o ice, or whether theemployee is employed by a subsidiary or a iliatedcompany o the Irish company.

Commencement o EmploymentI. Advertising or Prospective Employees

When advertising or prospective employees,the employer must comply with the relevantantidiscrimination legislation; e.g. the employer maynot discriminate against employees or job applicantson account o their racial or ethnic origin, gender,religion or belie , disability, age, sexual identity. Thismeans, or example, that the employer may notadvertise a vacancy publicly (e.g. in a newspaper oron the Internet) or within the workplace (e.g. on the

intranet or the notice board) as being available only

or women or only or men. Moreover, announcing avacancy to be or ‘young pro essionals’ could also beseen as an unlaw ul discrimination on the grounds oage. In the event o a violation o antidiscriminationregulations, the employee or rejected candidateis entitled to claim inancial compensation. Since

European law stipulates ‘e ective, proportionateand dissuasive sanctions in case o breaches o theseobligations’, it will become increasingly importantto care ully dra t vacancy advertisements and, inparticular, letters o re usal in order to avoid liability.

II. Interviewing and Selecting ProspectiveEmployees

When interviewing job applicants, the employermay ask any question which is in its legitimateinterest and relates to the prospective employmentrelationship. As a consequence, the employer mayask, in principle, about the pro essional skills andcompetence o the candidate, his/her knowledgeand previous job experience, as well as the resultso his/her examinations. On the other hand, theemployer is not allowed to ask the interviewee aboutprivate issues o no relevance to the job o ered. Forexample, emale candidates may not be questionedabout issues such as pregnancy, marriage etc. Thesame goes or questions on union membershipor religious a iliation. Where the question posedis discriminating or where the employer requestsin ormation without any relevance to the envisagedemployment relationship, the job applicant is entitledto lie to sa eguard his/her privacy rights. Moreover,in case o discrimination, the interviewee may alsoclaim inancial compensation. All other questionswhich, according to these principles, are allowedmust be answered truth ully and in ull. Thus,you may ind it help ul to train yoursel and yourmanagement sta on what questions may or maynot be asked during the interview process.

III. Form o the Employment Contract

The German Employment Documentation Act(Nachweisgesetz - NachwG), which is similar to theIrish Terms o Employment (In ormation) Act 199 ,speci ies that certain particulars o an employee’sterms and conditions o employment must besupplied in writing to the employee not later thanone month a ter the beginning o the employment.The statement must contain, inter alia, in ormationon the names o the employer and employee, thedate on which the employment began, the scale orrate o remuneration, the hours o work, entitlementto holidays, length o notice, job title and place owork, as well as a general re erence to any collective



bargaining agreements that may apply to theemployment relationship.

To that end, it is strongly advisable to summarisethe main characteristics o the agreed terms andconditions o employment in a written employment

contract. Otherwise, the employer runs the risk o having to pay a compensation to its employeei the employment contract does not contain oronly partially contains the necessary statement oparticulars. Moreover, where no express term hasbeen agreed, an employment court may imply a terma ter considering all the acts and circumstances othe relationship between employer and employee.Thus, the statement o particulars initially regulatesthe burden o proo , but does not decide on thevalidity o the employment contract. Accordingly, theparties can also agree on the terms and conditions o

their employment by word o mouth.

IV. Fixed-Term Contracts

Employment contracts can either be concludedor an inde inite period with a provision making

them terminable on notice, or can be agreedor a ixed term. In this regard, it is important

to know that in order to be e ective, the ixedterm must be stipulated in writing. To complywith this prerequisite, the relevant employmentcontract must be signed be ore the employee startsworking. Subsequent written con irmation o a

ixed term on which the parties have only orallyagreed be orehand is not su icient but results in anemployment contract concluded or an inde initeperiod o time. Furthermore, the ixed term is onlyvalid where it is justi ied on objective grounds (e.g.

ixed-term contract to cover an employee on parentalor sick leave) or where statutory provisions (Part-time and Fixed-term Employment Act (Teilzeit- und Befristungsgesetz - TzBfG)) speci ically allow or a

ixed term to be agreed (e.g. ixed term contractconcluded with a company within the irst our years

ollowing its oundation). Such allowance – whichdoes not require an additional objective justi ication– is provided or by law i the ixed-term agreement,or a maximum o three renewals, does not exceeda total o two years. Otherwise, the employmentcontract runs or an inde inite period o time andmay only be terminated by serving notice (beingsubject to the provisions o the Protection AgainstUn air Dismissals Act – Kündigungsschutzgesetz

– KSchG). The same applies where the employeecontinues to work beyond the date o expiration andthe employer does not object without undue delay.

In respect o employment conditions, it is unlaw ul

to treat a ixed-term employee less avourably thana comparable non- ixed-term employee engaged insimilar work.

V. Part-Time Work

Part-time employees enjoy the same rights as do ixed-

term employees and ull-time employees. Thus, part-time employees may not be treated in a less avourablemanner than comparable ull-time workers solelybecause they work part time, unless di erent treatmentis justi ied on objective grounds. Furthermore, anemployee’s re usal to trans er rom ull-time to part-time work or vice-versa does not in itsel constitute avalid reason or termination o employment. On thecontrary, under German law, every employee is, inprinciple, entitled to reduce his/her working time anddecide on the distribution o working time over theweek. The employer may only reject the employee’srequest i there are operational reasons preventing theemployer rom employing the employee on a part-time-basis. The act alone that part-time-work requiresa certain co-ordination between the employees and– as a consequence – is more cost-intensive, does notconstitute a legally accepted ground to turn down theemployee’s wish or part-time-work. I the employerdoes not reject the employee’s demand in writingwithin one month be ore the proposed start o thepart-time employment, the employer automaticallyhas to comply with the employee’s request or part-time-work.

6. Restrictive Covenants, Con identiality

As long as the employment relationship lasts,the employee must not compete against his/heremployer. This means – even where there is noexpress clause in the employment contract – thathe/she must well respect the business interests o theemployer and may not abuse business opportunities

or him-/hersel . Furthermore, the employee may notreveal any con idential in ormation to third partiesoutside the irm.

A restrictive covenant intended to prevent theemployee rom competing with his/her employer a terthe employment has ended can only be en orcedi it meets certain legal requirements to be valid,namely those o sections 7 – 7 d o the GermanCommercial Code (Handelsgesetzbuch – HGB). Thus,restrictive covenants have to be dra ted in writing,and the employee needs to receive a signed copy othe contract containing the restraint. Moreover, therestrictive covenant will only be binding i it serves toprotect legitimate business interests o the companyand does not hinder the employee’s career in a

Irish Companies in Germany - A Brie Overview o German Employment Law6



disproportionate way. Restrictive covenants are nulland void i they are extended or a period o morethan two years a ter the employment has terminated.Furthermore, the restrictive covenant clause needsto contain a commitment o the employer topay a compensation or the duration o the non-

competition period, which must not be less than onehal o the last annual salary o the employee or eachyear o the restraint.

Thus, when dra ting a restrictive covenantpro essional advice should be sought to protect yourbusiness interests and to avoid unpleasant surprises.

Issues Which Arise During theCourse o Employment

I. Annual LeaveIn Germany, every employee is entitled to a statutoryminimum o 2 working days paid annual leave.Sundays and public holidays are not included. Witheach week consisting o six working days (Mondayto Saturday), this amounts to at least our weeks oholiday. Disabled persons are granted ive additionaldays o leave; minors, depending on their age, areentitled to an annual leave o 2 to 0 workingdays. However, in practice, employment contractsor collective bargaining agreements usually providemore days o leave, normally between 27 and 0days. During the holiday period, the employee isentitled to his/her usual remuneration.

Since holidays serve the purpose o giving theemployee the chance to recuperate, the employermay, in principle, not inancially compensate theemployee or the leave time, but has to releasehim/her rom the duty to work or this period. Onthe other hand, the employee may not carry orwardleave that was not taken rom one leave year beyond

1st March o the next. I holiday cannot be granteddue to the termination o employment or or otherreasons or which the employer is responsible, theemployee is entitled to inancial compensation

or any outstanding holidays. In this context, it isimportant to note that an employer that – a terhaving given notice – wants to release the employee

rom his/her duty to work until the end o the noticeperiod, needs to expressly state that any untakenholidays will be credited against this release period.Where the employer ails to do so, the employee mayclaim compensation or untaken holidays.

II. Working Time

Average working hours are limited by law to amaximum o 8 hours a week. In reality, however,the actual working hours or employees do not, inprinciple, exceed to 0 hours. This is warranted byvarious collective agreements and common practice.

A ter inishing the daily work, the employee must begiven at least eleven consecutive hours o continuousrest. I the rest period o eleven hours is disturbed, itmust be allowed in ull a ter the interruption. The lawalso provides or breaks between 0 and minutesthat must be granted by the employer, depending onthe daily working hours o the employee.

Employees can be obliged to work overtime i suchcommitment is expressly stated in their employmentcontract. Where no express clause is dra ted,the employer may only demand overtime wherelegitimate business interests require the extra work.Thus, a clause concerning the modalities o overtimeshould be included in every employment contract. Inthis regard, it is also advisable to regulate the detailso payment or overtime hours. Since there is nostatutory law that provides or additional overtimepay, it is, in principle, possible to compensateemployees or overtime work by the regular monthlyremuneration. This has to be expressly stated and is– depending on the particularities o the individualcase – only true or a reasonable amount o overtimehours. On the other hand, overtime hours may also,subject to the terms and conditions o employment,be compensated or by granting additional time o .

III. Maternity Leave

The Maternity Protection Act (Mutterschutzgesetz - MuSchG)provides or the protection o pregnantemployees and workers who have recently given birthor are breast eeding. The act covers all employees,irrespective o their length o service. Under theact, an employee is entitled to maternity leave o

1 to 16 consecutive weeks, six weeks prior to andeight or twelve weeks a ter the birth o the child.Furthermore, a pregnant employee may, in principle,not be validly dismissed during her pregnancy anduntil our months a ter giving birth without the priorconsent o the competent authorities. A terwards,the employee is entitled to return to her previous job.

In principle, or the time o the maternity leave,the emale employee must not su er any inancialdisadvantages as a result o her maternity. Thus,women insured with a statutory health insurance

und receive maternity allowance or the statutory




period o maternity leave, namely six weeks prior toand eight or twelve weeks a ter the birth and or theday o the birth itsel . Maternity allowance is paid bythe statutory health insurance company responsible

or the employee. An employee not covered bystatutory health insurance, e.g., because she is in

so-called minor employment, receives a maternityallowance at the expense o the ederal government.As maternity allowances o ten are less than previousearnings, the employer must, generally speaking, paya supplement to the maternity allowance toppingit up to a level equivalent to the previous averageearnings o the employee.

IV. Parental Leave

Following a 1996 European Union (EU) directive,which has been implemented into German law bythe Federal Family Allowance and Parental Leave Act(Bundeselterngeld- und Elternzeitgesetz – BEEG),parents are entitled to a state- unded monthly parentalbene it (Elterngeld) or a period o up to 1 monthsand are given the right to unpaid parental leave orup to three years. The parental bene it amounts to67 % o the average monthly income received duringthe twelve months prior to the child’s birth, up to amonthly maximum o € 1,800. Parental leave is grantedat the discretion o the employee on a ull-time or part-time basis and can be taken by the ather or motheralone or simultaneously. However, it is restricted tothree years or each child. The eight (or twelve) week period o maternity leave is included in this period. Upto twelve months o this total can be trans erred to anytime until the child reaches the age o eight. However,such a trans er requires the consent o the employer.

V. Sick Pay

I an employee has been employed with the employeror at least our weeks and is then absent rom work

due to ill health, he/she is entitled to receive sick payrom the employer or a six-week period o time in the

amount o up to 100 percent o his/her regular salary.

Nevertheless, i the illness lasts or more than threedays, the employer may re use to pay the employeeuntil the employee proves his/her incapacity or work by presenting a medical certi icate.

VI. Salary

Except or businesses in the construction andcleaning industries, there is as yet no statutoryminimum wage in Germany. However, mostcollective tari agreements provide or a minimumsalary in their respective industry sectors. Thus,employment relationships which are covered by suchcollective tari agreements (see No. VI 2 b) may not

all short o the minimum wage regulated by theseagreements. Furthermore, an agreed wage may bedeemed grossly un air i it is less than two thirds othe amount provided by the relevant trade unionagreement or i wages or ull-time work amount toless than the statutory social wel are minimum.

VII. Changing the Terms and Conditions oEmployment

Where the employer wants to change the termsand conditions o employment (e.g., relocate theemployee to another workplace, assign the employeeto a task di erent rom the one described in hisemployment contract, reduce the employee’s salary,etc.), he will at irst try to do so by way o mutualagreement. I no such agreement can be reached,the employer can only en orce the envisagedchanges by serving notice combined with an o erto continue work under altered conditions (so-called

Änderungskündigung). Nevertheless, when doing so,the employer does not only have to comply with thestatutory or contractual notice periods, but also hasto take account o the provisions o the KSchG. Thismeans that the changes intended by the employercannot be imposed on the employee at will, butneed to be socially justi ied. While the employmentcourts are more generous in accepting such ‘social

justi ication’ where the proposed changes a ect thematerial content o the employment (e.g. relocationto another workplace), the courts are very strictwhere the changes are aimed at a mere reductiono salary. Such cost-cutting is only possible wherethe employer can prove that without the envisagedreduction in wages, it will have to shut down thebusiness or at least will have to lay o sta .

Termination o EmploymentI. Un air Dismissal

Where an employer intends to lay o sta , it notonly has to consider certain ormal requirements,but also needs to pay attention to the provisions othe KSchG. This act, which substantially restrictsthe employer’s reedom to dismiss an employee,is applicable where the employee in questionis employed or more than six months and theemployer regularly employs more than ive employeesin the establishment. Where the employee started towork a ter the 1 December 200 , the threshold isincreased to 10 employees.

8 Irish Companies in Germany - A Brie Overview o German Employment Law



The basic rule is that notice, although given incompliance with the statutory or contractual noticeperiod and in writing, is legally ine ective i it is‘socially unjusti ied’. This means that it is or theemployer to show that there is a air reason or thedismissal. Such air reason is presumed where the

employer can establish that the dismissal is caused bygrounds related to (1) the person, (2) the conduct othe employee, or ( ) imperative operational demands.

Personal grounds or dismissal include reasonsrelated to the capability or quali ication o theemployee or per orming work o the kind he/she wasemployed to do (e.g. physical or mental impairment,long-term illness, severe drug addiction, loss orequired work permit/driving license, etc.). In principle,notice given on personal grounds is only deemed tobe valid where (1) certain acts justi y the assumption

o the employee being continuously unable to ul ilthe tasks assigned to him/her under the employmentcontract, (2) these (expected) ‘disturbances oemployment’ will substantially a ect the legitimatebusiness interests o the employer in the uture, sothat ( ) the employer can not be reasonably expected– considering all aspects o the mutual interestsinvolved (e.g. length o service, age o the employee,size and inancial resources o the employer, etc.) – toemploy the employee any longer. Nevertheless, pleasenote that poor per ormance usually does not entitlethe employer to serve notice on the basis o personalgrounds. In this regard, it is important to understandthat notice or personal grounds may only be giveni the employee cannot be employed elsewhere inthe company. This means that be ore serving notice,the employer irst has to relocate the employee tovacancies which better suit the employee’s capabilityor quali ication. Only i no such vacancies exist or theemployee re uses to accept such o er the employermay terminate the employment or personal grounds.

Reasons or dismissal related to the conduct o theemployee may be, or example, breach o contract,

elony against the employer, being late, absence romwork without appropriate excuse, assault on colleaguesor the employer, competing with the employer, etc.However, to give the employee the chance to improvehis/her behaviour, the employer may, in principle,only dismiss an employee or reasons related to theemployee’s conduct a ter having given the employeea warning irst. The warning must not only contain aconcise description o the disapproved behaviour andthe request or immediate improvement, but shouldalso make it clear that the employee is at risk o losing

his/her job in the event o recurrence. For reasons

o documentation, any warning should be given inwriting. According to rulings o German employmentcourts, prior warning is only obsolete where theemployee cannot reasonably expect the employer totolerate the behaviour or where there is a breach ocon idence. This can only be decided on a case-by-

case basis. Thus, in case o doubt, the employer shouldrather give the employee a mere warning insteado serving notice. Furthermore, notice can only begiven where the termination o the employment is a‘proportionate’ reaction to the employee’s misconduct.This means that the employer has to take into accountall circumstances o the individual case. In particular, ithas to be evaluated whether the incident put orwardto support the dismissal is likely to reoccur in the

uture or i it was just a one-o mistake which couldoccasionally happen to anyone. For example, beinglate once or twice does not justi y the termination o a

20-year employment contract. Usually, conduct thatmay result in dismissal must have occurred duringworking hours, but in certain cases an employee maybe dismissed or other behaviour, i such behaviouris likely to a ect the per ormance o his/her contract(e.g., a play group leader being convicted o anindecent assault on a child outside the hours o work may be considered to be unsuitable or carrying onhis/her employment).

The third air ground or serving notice is where thedismissal is caused by grounds related to imperativeoperational demands (redundancy). A dismissalis given by reason o redundancy i the dismissal iswholly or mainly attributable to the act that therequirements o that business or employees tocarry out work o a particular kind have ceased ordiminished or are expected to cease or diminish.Typical reasons or giving notice by reason oimperative operational demands are cutbacks,closures or relocations o the business, outsourcingmeasures, decline in sales, etc. Nevertheless, the losso a certain position/ unction alone is not su icient toconsider notice o termination to be socially justi ied.Furthermore, the employer has to show that thereare no vacancies in the company where the employeemight be employed in place o his/her ormerposition. Where several employees per orm the sameor a similar kind o work, the employer has to selectthe employee to be dismissed on the basis o ourcriteria (length o service, age, support obligationsand disability). Notice may only be given to theemployee who – as a result o these so-called ‘socialcriteria’ – is the least dependant on his/her job. Forexample, a -year-old mechanic (married, one child

entitled to support) who has been with the company




or two years is more likely to be dismissed than a -year-old mechanic (married, two children entitled tosupport) who has been employed or 20 years.

II. Consequences o Un air Dismissal

A notice o termination lacking social justi ication

will be deemed null and void. This means that theemployee is entitled to return to work. The employermust pay and employ him. Nevertheless, anemployee claiming un air dismissal must ile his claimwithin three weeks o receipt o written notice to thecompetent employment court. Where the employee

ails to comply with this time limit, the dismissal isautomatically presumed to be e ective and socially

justi ied on air grounds.

Unlike in Ireland and the UK, the employee may, inprinciple, not claim compensation. This is true despitethe act that new legislation seems to entitle employeeswho have been given notice by reason o redundancyto severance pay equivalent to hal a month’s grosssalary or every year o employment. Nevertheless, this‘entitlement’ is subject not only to the employee notmaking use o his right to sue the employer or un airdismissal within a three-week period, but also to theemployer in orming the employee o the option toclaim compensation in the notice o dismissal. Thus, inthe end it is at the discretion o the employer whetheror not the employee can claim the compensation.There is neither a statutory obligation to o er theemployee a redundancy award, nor can the employeeautomatically claim any other orm o inancial remedy.As a consequence, the employer should only o ercompensation where the employer eels the need todo so or where the employer wants to prevent theemployee rom taking legal action. In this regard, it isvital that the employer make sure that the payment othe award is subject to the employee’s written waivero his/her right to challenge the validity o the dismissalin a lawsuit iled at the employment court.

Hence, the German KSchGis based on the idea oreinstatement rather than paying compensation.However, in practice, most un air dismissal claims(about 90 percent) are settled in court by the employeeaccepting the dismissal and the employer paying acompensation award in return. As a rule o thumb,compensation or termination o employment iscalculated by re erence to a ‘ actor’, which results ina compensation amount – depending on the age othe employee and the prospects o success o his/herclaim – equivalent to between one hal a monthlysalary (gross) and three monthly salaries (gross) per

year o service. Only where the parties re use to settle

will the employment court either hold the dismissal tobe e ective or to be null and void. In the latter case,the employee will be reinstated on the same terms andconditions he/she had be ore notice was given. I thecourt considers the dismissal to be socially justi ied,the employee has to leave the company with e ect as

o the expiration o the statutory or contractual noticeperiod without receiving any compensation at all.

III. Notice Period

The basic statutory notice period is our weekse ective on the 1 th or at the end o a calendarmonth. This notice period increases gradually,depending on the length o service o the employee.The statutory notice period or an employee who hasbeen employed with the same employer or

» two years is one month to the end o a calendarmonth,

» ive years is two months to the end o a calendarmonth,

» eight years is three months to the end o acalendar month,

» ten years is our months to the end o a calendarmonth,

» twelve years is ive months to the end o acalendar month,

» i teen years is six months to the end o a

calendar month,» twenty years is seven months to the end o a

calendar month.

Please note that the statutory restriction o § 622(2) sentence 2 o the German Civil Code, which onlytakes into account the years o service spent withthe same employer a ter reaching the age o 2 ,is currently under review by the European Court oJustice (ECJ). Thus, to avoid discrimination on thegrounds o age, you should not apply this regulationuntil inal clari ication by the ECJ, but shouldconsider the ull length o service when calculatingthe individual notice periods or your employees. Incollective agreements, statutory notice periods maybe extended or shortened.

The contracting parties may agree on longer periodso notice in the employment contract. Where thecontractual notice period deviates rom the statutorynotice period, notice needs to comply with the noticeperiod which is longer and thus more avourable orthe employee. However, according to German law,the period o notice or the employer may not exceedthe notice period or the employee.




IV. Extraordinary Termination/Summary Dismissal

In principle, the contracting parties may onlyterminate the employment contract by giving notice,unless there are grounds justi ying a summarydismissal. Such extraordinary dismissal is deemedto be appropriate i ‘there are acts due to which

- taking into consideration all circumstances othe particular case and balancing the interests oboth contractual parties - the party giving noticeo termination cannot be reasonably expected tocontinue the employment relationship until expirationo the notice period or until the agreed end othe employment relationship’. The employmentcourts have held the ollowing issues to be typicalreasons or giving summary dismissal: perpetratinga crime against the employer (e.g. raud, the t, etc.),divulging business secrets to competitors, persistentand intentional re usal to work, repeatedly being late

or work or absence without leave.

To be e ective, summary dismissal needs to be givenin writing within two weeks o the date the employerlearns o the reason or the dismissal. In this regard,the employer does not automatically have to givereasons or the termination, but has only to do so inwriting on explicit request o the employee. Sincein practice it is o ten doubt ul i an issue may justi ya summary dismissal, it is strongly advisable orthe employer to not only terminate the contract oemployment by summary dismissal, but at the sametime terminate it, by way o precaution, by givingnotice. Such procedure has the advantage that– where an employment court holds the summarydismissal to be invalid – the employer can use theordinary dismissal as a back-up.

5. Formal Requirements When Giving Notice

Any notice o termination is to be given in writing.Dismissals stated orally are null and void. Nevertheless,the grounds or the dismissal should not be included inthe written notice, but should only be explained orally

on request. This avoids the risk o inaccuracies andenables the employer to speci y the reason or dismissalin court without being bound to a (deviating) writtenstatement in the notice. Written notice should begiven to the employee ace-to- ace. Where this is notpossible, the employer should have the notice deliveredby a trustworthy person who knows the content othe letter and was watching when it was put into theenvelope. In any case, or purposes o documentation,it is strongly advisable that the employee be asked tosign a duplicate o the notice indicating that it wasreceived, and when. In this regard, please be awarethat notice given by registered mail is considered to

be ‘received’ only upon delivery to the addressee. Thein ormation alone that a letter can be picked up atthe post o ice is not equivalent to the receipt o thenotice. Moreover, where the notice is delivered bymessenger the notice will only be presumed to havingbeen received by the employee on the same day i it

is dropped into the mailbox during the regular maildelivery hours, i.e., by approximately 11:00 am. I , orexample, the notice is put into the employee’s mailbox at pm on 19 July, the employee, in case o doubt,will only be deemed to have received it on 20 July. Thisneeds to be considered when calculating the relevantnotice period, as well as the two-week period that isimperative or the validity o a summary dismissal.

VI. Special Protection Against Dismissal

For certain groups o employees, the law providesspecial protection against dismissal:

Female employees who are pregnant or haverecently given birth may – in principle – not bedismissed within a our-month period o the date odelivery i the employer knows about the pregnancyon the date o termination or is in ormed about itwithin a two-week period. The same goes – withe ect as o eight weeks prior to the beginning o theparental leave – or employees on parental leave and employees who applied or parental leave.

Serving notice on disabled employees oremployees o icially recognised as the equivalento disabled persons requires the prior consent othe competent integration o ice (Integrationsamt).Where the employer does not know about theemployee’s (hidden) disability and thus gives noticewithout irst having contacted the integration o ice,the dismissal is, in principle, deemed to be null andvoid i the employee has applied or recognitiono his disability be ore having received notice andin orms the employer o his application within ourweeks o receipt o notice. However, due to new

legislation the employer may serve notice withouthaving to contact the integration o ice irst i theemployee’s disability has not been properly provenat the time o the notice or the competent authoritycould not decide on the employee’s application orrecognition as a ‘disabled person’ within a threeweek and seven week period o time, respectively,because o the employee’s ailure to co-operate.Where the employer is not sure about the need toinvolve the integration o ice, he should – parallelto serving notice – request the o icial consent othe authority as a precaution. In doing so, he will

lose no time i it turns out a terwards that notice




was invalid because o a lack o approval by theintegration o ice. On the other hand, i no approvalwas required, the authority will con irm this byissuing a so-called ‘negative attest’.

Employee representatives may only be dismissed

i there are grounds justi ying a summary dismissal,i.e., serving notice requires an extraordinary cause.Moreover, such dismissal is subject to the priorapproval o the works council. In this regard, it isimportant to understand that any activity related to theemployee’s unction as elected employee representativemay not be considered air grounds or extraordinarydismissal. Nominees and candidates or the electiono a works council enjoy the same protection within six months o the publication o the election results. Thisalso applies to deputy members o the works council ithey have covered or a member o the works council

or at least one day.

The employment contract o a trainee orapprentice may only be terminated by noticewithin the irst three months o employment. I thisprobationary period has elapsed, the employee mayonly be dismissed or extraordinary reasons.

Furthermore, please note that some collectivebargaining agreements sa eguard that employeeswho have reached a certain age (usually and older)and have been employed or a certain period o time

(usually ten years or longer), may only be dismissedor extraordinary reasons or may ‘not be made

redundant at all’. According to rulings o the GermanFederal Employment Court (Bundesarbeitsgericht

– BAG), such wording does not ully exclude theemployer’s right to lay o older sta , but limits itto serving notice or extraordinary reasons. Thus,when making employees redundant, the employer

irst has to dismiss younger employees assigned tothe same task as the relevant older employee be orehe can serve notice on older employees. However,due to antidiscrimination legislation, it needs tobe thoroughly checked i the relevant collectivebargaining agreement is discriminatory on thegrounds o age and is thus invalid.

Employees a ected by a t rans er o undertaking or a merger may not be given notice because o thetrans er or merger alone. These measures do not inthemselves constitute grounds or dismissal by thetrans eree or trans eror. Nevertheless, they do notstand in the way o dismissals that may take place

or economic, technical or organisational reasonsentailing changes in the work orce. Consequently,

the employer may not state the trans er or mergeralone as reason or the dismissal, but needs to ocuson the reorganisation o the business which goesalong with the trans er/merger and results in the losso the requirement to carry out work o a particularkind (see No. V 1).

VII. In ormation o the Works Council

The works council (see No. VI 1 a) has the right tobe in ormed and consulted prior to every dismissal.Where the employer wants to terminate theemployment contract by notice, the works councilmay comment on the dismissal within one week a ter having been properly in ormed o the envisageddismissal and the reason or dismissal (includingin ormation on the employee’s name, age, lengtho service, maintenance obligations, the kind otermination (summary dismissal or termination bynotice), notice period, date o termination, place owork, other employees rendering the same kind owork and their social data, special protection againstdismissal, etc.). Notice may not be given until theworks council has voiced its concerns or the one-week period o time has expired without any reaction

rom the works council. In the event o a summarydismissal, the works council needs to give its opinionwithin three days o receipt o the employer’snoti ication. This means that the employer shouldin orm the works council o the dismissal and thereason or it one week (termination by notice) andthree days (summary dismissal), respectively, priorto the proposed date o serving notice. Failure tocomply renders the dismissal invalid and compels theemployer to continue the employment.

VIII. Collective Redundancies

Where the employer is contemplating collectiveredundancies, the competent EmploymentO ice(Agentur für Arbeit)must be noti ied inwriting – advisably on the orms provided orby the authority – o the projected collective

redundancies. Furthermore, the employer shouldbegin consultations with the works council in goodtime with a view to reaching an agreement. Theseconsultations should, at least, cover ways and meanso avoiding collective redundancies or reducing thenumber o workers a ected, and o mitigating theconsequences by recourse to accompanying socialmeasures aimed, inter alia, at aid or redeploying orretraining workers made redundant.

To enable the works council to make constructiveproposals, the employer should supply the memberswith all relevant in ormation in good time during the




course o the consultation and in any event noti ythem in writing o (1) the reasons or the projectedredundancies, (2) the number and categories oemployees to be made redundant, ( ) the numberand categories o employees normally employed, ( )the period over which the projected redundancies

are to be e ected, ( ) the criteria proposed or theselection o the employees to be made redundantand (6) the method or calculating any redundancypayments. In this context, the term ‘redundancies’means dismissals e ected by the employer or one ormore reasons not related to the individual employeeconcerned as well as terminations o an employmentcontract which occur on the employer’s initiative.

Since the ECJ has held that the event constitutinga redundancy consists o the declaration byan employer o the intention to terminate the

contract o employment (i.e. does not re er to theexpiry o the periods o notice o redundancy),the employer must noti y the Employment O icebe ore giving notice or signing a terminationagreement. Moreover, a contract o employmentmay be terminated only a ter the conclusion o thein ormation and consultation procedure with theworks council. For these purposes, redundanciesare deemed to be ‘collective’ where the employermakes redundant, over a period o 0 days, inestablishments normally employing

− 21 to 9 employees at least six employees,

− 60 to 2 0 employees at least 10% o thenumber o employees,

− 2 1 to 99 employees at least 26 employees,

− at least 00 employees at least 0 employees.

The beginning o the 0-day period is triggered bythe receipt o the irst written notice given to anemployee and the signing o the irst termination

agreement initiated by the employer, respectively.

IX. Termination o Employment and SocialSecurity Speci ics

Please be aware that the termination o employmentby a mutual termination agreement always impliesthe risk that the local Employment O ice will imposea so-called ‘Sperrzeit’ on the employee. During thecourse o this retention period, which may last up totwelve weeks, the employee would not be entitled toclaim any unemployment bene its or unemploymentassistance. Moreover, the period o entitlement to

unemployment allowances is reduced in accordancewith the length o the ‘Sperrzeit’ , but at least byone- ourth. This means that an employee who signsa mutual termination agreement and would, orexample, normally be entitled to twelve months ounemployment bene its, will, in principle, not only

receive the statutory support twelve weeks later, butwill also only receive it or nine months (instead otwelve months).

Apart rom this, paying compensation in lieu oleave or severance pay will entail a suspension o theentitlement to unemployment bene its or up to oneyear i the employment relationship ends by meanso a termination agreement prior to the end o thenotice period.

Industrial RelationsI. Employee Representative Bodies

a) Works Council The works council serves as the employeesrepresentative body on the level o the establishment/ workplace. A works council may be elected at any timei the employer regularly employs at least ive electiveemployees in the establishment. In this context, theterm ‘establishment’ re ers to an organised groupingo persons and assets acilitating the exercise o aneconomic activity which pursues a speci ic objective.

The organised grouping o persons needs to receivedirections rom a dedicated supervisor. This supervisormust be in charge o drawing up the work roster(e.g., or setting tasks and working hours), and he/shemust be responsible or exercising the right to giveinstructions on behal o the employer. He/she mustdistribute work, especially during any leave o absenceo individual employees.

Where a business consists o more than oneestablishment and has several works councils, thedi erent works councils have to establish a centralworks council (Gesamtbetriebsrat) by delegatingone or two o their members to a central workscouncil which is to co-ordinate the interests othe work orce at the level o the undertaking.I – in a group o undertakings – several centralworks councils have been established, employeerepresentation may be pooled in a group workscouncil (Konzernbetriebsrat).

The members o each o those works councilsenjoy special protection against dismissal (seeNo. V 6). The size o the works council depends




on the regular number o employees employed inthe establishment. For example, while the workscouncil o an establishment with i teen employeesconsists o only one member, the works council o anestablishment with 8,000 employees comprises members. Each works council is granted a number

o in ormation, consultation and co-determinationrights (see No. VI ).

b) Economic CommitteeWhere a company regularly employs more than100 employees, the works council is obliged toestablish an economic committee. The economiccommittee is made up o at least three and at mostseven employees o the company, o which at leastone member needs to be a member o the workscouncil. The employer has to in orm the economiccommittee in good time and comprehensively(including the submission o the relevant documents)o all economic matters o the company (e.g.,economic and inancial situation o the company, anymeasures which could substantially a ect employees’interests). Nevertheless, please note that theeconomic committee may not prevent any measuresenvisaged by the employer. The inal decision on theimplementation o the employer’s business plans lieswith the employer alone.

c) Trade Unions

Every employee is entitled to join a trade union whichrepresents his/her interests by pooling the voiceo the work orce in one organisation. The mainpurpose o trade unions is to conclude collectivebargaining agreements (see No. VI 2 b). A dismissalon the basis o trade union membership or activity isdeemed to be automatically un air.

d) Supervisory Board Under German law, the employees are not onlyrepresented by the works council on the level o theestablishment, but are also granted – dependingon the legal orm and size o the company – co-determination rights at (supervisory) board level.The supervisory board is not responsible or runningthe business, but serves the unction o supervisingthe management o the company. Nevertheless,on certain issues, which need to be de ined inthe articles o association, the supervisory board’sapproval is required.

In companies with more than 00 employees, onethird o the members o the supervisory boardconsists o representatives o the employees,i.e., employees o the company and trade union

representatives. In companies which regularlyemploy more than 2,000 employees, the supervisoryboard is made up o equal numbers o employeerepresentatives and representatives o theshareholders. Nevertheless, since the chairmano the supervisory board is a representative o the

employer and is granted additional voting rights, thelaw sa eguards that the employer can overrule theemployee representatives at any time.

The employee representatives have the same rights(voting rights, etc.) as do the representatives o theemployer. The details o the supervisory board’scompetence are regulated by company law.

II. Collective Bargaining

The term ‘collective bargaining’ under Germanlaw may re er to two kinds o agreements: eitheragreements between the employer and the workscouncil (works agreements), or agreements withtrade unions (collective bargaining agreements).

a) Works AgreementsWorks agreements are ‘contracts’ concludedbetween the employer and the works council, whichusually regulate a variety o working conditions orthe employees working in the establishment (e.g.working hours, use o technical equipment at work,etc.). Since the regulations o a works agreement

are binding or both employer and employee, theemployer may not deviate rom its provisions to thedisadvantage o the employee. Accordingly, the workscouncil as well as the individual employee may en orcethe rights granted in a works agreement by re erring aclaim to the competent employment court.

The employer may, in principle, terminate any worksagreement by serving notice with a notice periodo three months. Where the employer and workscouncil have agreed on longer notice periods (e.g.six months), notice needs to comply with these

terms. Nevertheless, where the works agreementdeals with an issue that can be en orced by verdict othe conciliation board (e.g., regulations on workingtime, IT systems, see No. VI ), the works agreement– even though notice has been given – does notautomatically end, but remains in orce until it isreplaced by a new agreement.

b) Collective Bargaining AgreementsCollective bargaining agreements are contractsconcluded between a single employer or anemployers’ association and a trade union whichusually regulate a variety o key working conditions,




such as working time, principles o remuneration,notice periods, notice restrictions, etc. Theyare legally binding between the employer andthe individual employee i one o the ollowingconditions is ul illed:

» Employer and employee are members othe contracting parties, i.e. the union andthe employers’ association which signed thecollective bargaining agreement.

» The employer and a union, o which theemployee is a member, conclude a collectivebargaining agreement speci ically or theemployer.

» The parties agree on the application oa collective bargaining agreement in theemployment contract (which can be doneexpressly or by consistent practice).

» The competent authorities declare the collectivebargaining agreement to be generally binding.

Thus, the employer may not deviate rom the termsand conditions set out in a collective tari agreementunless the deviation is to the advantage o theemployee. This means that the employer may not,

or example, decrease the salary level de ined in acollective bargaining agreement or a certain kind owork. However, a pay raise exceeding the standardso the collective bargaining agreement is – o course

– possible at any time.

Comparable to works agreements, the provisionso a collective bargaining agreement do not – eventhough notice has been given or a ixed term hasexpired – end automatically, but remain in orce untilthey are replaced by a new agreement. Accordingly,the employer cannot deviate rom the regulationso the collective bargaining agreement by justleaving the employer’s association which signed thecollective bargaining agreement. I the employercancels his membership, the current collectivebargaining agreements will remain in orce until theyare overruled by a new agreement.

III. Dealing With the Works Council

Each works council is granted a number oin ormation, consultation and co-determination rights.

Firstly, the works council has the right to be in ormedand consulted prior to every dismissal (see No. V 7).

Secondly, the works council’s approval is requiredon certain speci ic matters, such as the recruitmento sta and the relocation o employees. The works

council may withhold its approval only on certaingrounds, and it is possible or a court to override therequirement or approval. Despite such limitations,the in ormation and consultation must be taken veryseriously, because the works council has the ability todelay the implementation o the company’s decision.

Thirdly, works councils have genuine co-determination rights in certain areas. Agreementmust be reached between the employer and theworks council on issues such as working hoursschedules, overtime requests, change o pensionscheme and the implementation o technologicalchanges which might give the employer in ormationon the conduct or per ormance o employees (e.g.,updates o the IT system). I attempts to reachagreement ail, the employer may appeal to aconciliation board (Einigungsstelle). The conciliation

board is a type o arbitration tribunal which willmake a decision on the matter in question bymajority vote. This procedure usually takes betweenthree and twelve months to complete.

I the employer wants to restructure his business,the ollowing needs to be considered: Wheresuch reorganisation results in measures which maynegatively a ect employee’s interests (e.g. closure oundertakings or establishments, mergers, cutbackso undertakings or establishments, substantialorganisational changes, mass redundancies, etc.), theemployer needs to in orm the works council in goodtime and comprehensively o the envisaged changesand needs to consult with the works council aboutthe intended concept o reorganisation. In ormationhas to be given as soon as the employer ‘plans’ tomake such changes. Nevertheless, the obligationto in orm is not triggered by considerations at apreliminary stage, but only materialises when theemployer has made up his mind on certain measuresor a certain concept.

In this regard, the employer is obliged tonegotiate a so-called ‘reconciliation o interests’(Interessenausgleich)and a social plan (Sozialplan) with the competent works council.

The reconciliation o interests regulates the detailso the envisaged reorganisation (what, when, whereand how the employer will carry out the proposedmeasures). There is no statutory obligation to reachan agreement on the reconciliation o interests.However, the employer must seriously attempt to doso. This ‘attempt’ includes the employer’s obligationto contact a conciliation board i no agreement can




be reached. I the employer ignores this procedurewithout compelling reasons, the works councilmay try to stop the reorganisation by obtainingan injunction order rom the local labour court.Furthermore, employees who are made redundantor su er other material disadvantages because o

the reorganisation may claim a compensation awardwhich may amount up to 18 monthly gross salaries.

The social plan serves the purpose o compensatingor mitigating disadvantages which the employeessustain as a result o the reorganisation o thebusiness. Where employer and works council donot reach an agreement, the works council canen orce the conclusion o a social plan by decisiono the conciliation board. Usually, the social planprovides or compensation or the employees beingmade redundant, reimbursement o the costs the

employee incurs when moving to another workplace(in case o a relocation o business) or compensation

or employees incurring higher travel expenseswhen coming in or work. As a rule o thumb,compensation or termination o employment iscalculated by re erence to a ‘ actor’, which results ina compensation amount – depending on the age othe employee – equivalent to between one hal o amonthly salary (gross) and three monthly gross salaries(gross) per year o service. In this context, a recentcourt order o the BAG con irmed the decision o theconciliation board to grant the employees a ectedby restructuring measures a social plan whose totalcosts equalled the amount o money the employerexpected to save within the next two years bycontemplating the restructuring. This ruling should beconsidered when evaluating the bene it o continuingto negotiate with the works council in comparison toentering into a conciliation board procedure.

Social SecurityUnder German law, each employee is, in principle,

insured by law in the statutory health, accidentand pension, long-term care and unemploymentinsurance systems. The accident insurance is inancedby the employer alone. For the rest, social securitycontributions are paid shared equally by the employerand the employee. However, the employer is liable

or paying the total social security contributions tothe competent health insurance und as the collectingagency. He may there ore deduct the employee’sshare rom his/her monthly salary. The exact amounto the social security contributions depends on thegross income o the individual employee, with themaximum salary subject to contributions in 2008 being

€ ,600 (health insurance, long-term care insurance)and € , 00 (pension insurance, unemploymentinsurance), respectively. The total social security ratein Germany is round about 0 percent (in 2008: .percent or unemployment insurance, 19.9 percent

or pension insurance, an average o 1 .8 percent or

health insurance, 1.7 percent (insured employee withchildren) and 1.9 percent (insured employee withoutchildren), respectively, or long-term care insurance).

ConclusionIn conclusion, it can be said that despite theincreasing European in luence on domesticlegislation, German employment law provides

or a number o peculiarities which di er romemployment practices in Ireland and other Europeancountries. Nevertheless, on the basis o appropriateand timely advice, German employment law allowsan employer who makes use o the statutoryalternatives more latitude than is generally expected.

Cologne, 0 January 2008

Rechtsanwalt Pro . Dr. Björn GaulTel: + 9 (0) 221 77 16 128Fax: + 9 (0) 221 77 16 2 2

[email protected]

Rechtsanwalt Dr. Björn OttoTel: + 9 (0) 221 77 16 19Fax: + 9 (0) 221 77 16 2 2

[email protected]

Irish Companies in Germany - A Brie Overview o German Employment Law6

very useful- germany guide

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