German vocabulary you need to know to understand work contracts in Germany

by Adriana Stein
March 8, 2021

Congrats! You landed your dream job in Germany. Now, the only thing that’s left is to sign your contract. 

Contracts are often looked at as a hassle, but they’re required (verpflichtet) by businesses, which means that they’re certainly worth reading over thoroughly. You should always fully understand your obligations and rights when signing onto your new company – even more so if you’re new to or are an expat in Germany.

Essential German contract terms and phrases to learn

When working in Germany your contract will most likely be in German, so to make this process a bit smoother for you, let’s discuss some German contract (Vertrag) vocabulary you’ll want to get familiar with. 

Quick note: if German isn’t your native language, you are legally allowed to ask for a translation of the contract. However, in the case of legal issues only the German version is valid.

Vollzeit, Teilzeit, und Mini-Jobs

Full time work (die Vollzeitarbeit) and part-time work (Teilzeitarbeit) are two types of employment agreements you’ll find in Germany. 

If your employer (der Arbeitgeber) states on your contract (Vertag) that you’re full-time, you work around 40 hours per week (or often a bit less) and access to public health insurance (gesetzliche Krankenversicherung). If you work part-time, you are also entitled to public health insurance that automatically comes out of your wages.

A third type of job known as a mini-job is a small job where you can earn up to EUR 450 per month and also pay into the public pension fund (die Rentenversicherung), but may not be obliged to pay for health insurance. How this job works is a bit of a grey area, so it’s good to double check with minijob-zentrale.de to clarify your rights and obligations for such a work contract.

die Krankenversicherung

Upon signing your employment contract or der Arbeitsvertrag, you should get in touch with your company’s Human Resources department and ask about which health insurance companies they’re partnered with. The biggest companies you’ll come across are DAK, Hansemerkur, AOK, Barmer GEK and TK. Some employers may offer additional private insurance, so be sure to clarify this before signing your contract if you’re entitled to both.

It’s important to understand what type of healthcare benefits your company is offering you so that you can be prepared and plan accordingly to select an insurance provider that fits your health needs. If you work Vollzeit or Teilzeit healthcare costs are automatically deducted from your wages when your employer does your taxes.

die Rentenversicherung

If you’re in Germany for the long haul and this is your new home, you can reap the benefits of your employee (der Arbeitnehmer) and pension (die Rentenversicherung) considering you’ve worked 60 months with the same company and are at the pensionable age

Even if you decide to leave Germany, you’ll still have rights to your pension under Public Retirement Insurance. The length at which you’re planning on staying in Germany will determine whether or not you want to dive further into the company’s different pension plans.

Quick tip from an expat: if there is a chance you might move away from Germany in the future, it’s highly worthwhile to consider looking into private pension funds, even if your employer doesn’t automatically offer this, so that you have full options for when you’re older.

Freiberufler oder selbständig

Freelance (Freiberufler) and self-employed (selbständig) are two terms you might see on your contract (Vertag) depending on how you plan to work with a company. 

These terms are often confused so let me clarify them. If you’re selbstständig, this means you operate your own business and provide multiple clients with a specific trade, such as craftsman, lawyer, architect, translator, or educator. If you’re a Freiberufler, you also operate your own business and offer services like artistry, editing, acting, journalism, or something similar for multiple clients.

If your Vertrag defines the position (die Stelle) as a Freiberufler, then you set your own rates and are responsible for (zuständig für) invoicing your clients, as well as paying for health insurance and any applicable taxes on your income. Furthermore, you have full flexibility to choose which health insurance you use and if you pay into the public pension fund (die Rentenversicherung) or a private one under your own conditions. You are not legally obliged to pay into any pension fund as a Freiberufler, but you are legally obliged to have a suitable health insurance.

Additionally, your contract may require you to sign a non-disclosure agreement (Verpflichtung auf Vertraulichkeit). This is a document that legally (gesetzlich) ensures full confidentiality between you and your clients.

Note from an experienced freelancer: I highly recommend working with a lawyer to write a contract template that you can easily share with new clients. It helps move the process forward with working together much quicker and ensures that I have the rights I need to feel comfortable with our collaboration, such as invoice payment periods, cancellation notice periods, and rights to list the client as a reference.

Kündigungsfrist

To protect both you and your Arbeitgeber or client (Klient), there are legal terms to know if the business relationship goes wrong. 

A Kündigungsfrist is a cancellation notice served to an employee, freelancer or contractor when a job isn’t being completed to the standards of the agreed upon contract. Or in the case of a freelance contract, it can just be when either party decides to cancel the contract and may have nothing to do with job performance.

It’s important to note that if you agree to a certain Kündigungsfrist, are a part or full-time employee, and your contract is cancelled due to a lack of good job performance, you will not receive unemployment benefits for up to 12 weeks. If you find yourself in this pickle, it’s a good idea to seek out a German lawyer (der Rechtsanwalt) that can assist you in this process.

der Interessenkonflikt und die Haftung

A conflict of interest (der Interessenkonflikt) may result in an amendment (der Abänderungsantrag) of a contract. Conflicts of interest could be, for instance, if one is closely related to an employer or if an employer starts a romantic relationship with an employee. 

A liability (die Haftung) is something that works to one’s disadvantage if an employer (der Arbeitgeber) hired an employee (der Arbeitnehmer) without knowing that they had a criminal background. 

If the code of conduct at a company is broken by either the employee or employer, both parties 

(die Vertragsparteien) have the constitutional right to press charges with the given period.

Befristet vs unbefristet 

Befristet refers to a contract with a limited time duration. This could be one month or five months, but it cannot surpass two years or be extended more than three times, otherwise it becomes a permanent contract (according to German law only). On the opposite end, unbefristet means unlimited or rather a permanent contract. This is applicable to employees who wish to work in Germany over the long-term.

So, once you’ve fully read through and understood the terms of your contract the only thing left to do is leave your signature (Unterschrift) at the bottom! You’ve got this!