Requirement for Foreign Employees to Work
In principle, every employee who would like to work in Germany requires a residence title and a work permit before entering Germany. This does not apply to persons who are: 1) of German nationality; 2) a European Union national; 3) a national of a European Economic Area (EEA) member state (Iceland, Liechtenstein, Norway); or 4) a national of Switzerland.
Residence title and work permit are granted together as a “residence title for the purpose of employment”. This title is generally only granted if the employment agency agrees or such consent is not required due to statutory regulations. The consent of the employment agency will be obtained in an internal procedure from the German embassy abroad in the country of origin (visa centre) or the responsible local immigration authority in Germany. The employment agency examines whether a concrete job offer with usual working conditions exists. The permit for taking up employment is awarded together with the residence title. The employment agency examines, in cases involving access to vocational training only, whether the job offer cannot be filled by an individual in the German market, including EU and EEA nationals or foreign nationals with an unrestricted residence permit (“job market test”). For skilled employment, such an assessment is no longer necessary.
Several types of employees are exempt from the consent requirement of the employment agency, including: 1) highly qualified persons (e.g. scientists with specific professional knowledge as well as people with qualified vocational training); 2) executives (e.g. board members, managing directors); and 3) employees on a short-term deployment of up to 90 days within a period of 180 days. In such cases, a residence title for the purpose of employment can be obtained more quickly than in cases where the employment agency must be involved.
Highly educated or trained employees may also apply for a Blue Card EU allowing them to stay and work in Germany for up to four years (with the possibility of a prolongation). The Blue Card EU is a residence title only granted to employees who graduated from university (or have a comparable degree or have completed a vocational training) and have a concrete job offer with an annual gross salary of at least 58,400 EUR. This amount applies for 2023 and usually rises slightly each year (in 2022, the minimum annual gross salary was 56,400 EUR gross). A lower salary threshold of 45,552 EUR (2023) applies for jobs where there is a shortage such as scientists, mathematicians and engineers, as well as doctors and IT specialists.
With the implementation of the European ICT Directive through German legislation, intra-group transfers have been facilitated. As of 1 August 2017, non-EU citizens may, under certain circumstances, be entitled to a new residence title “ICT-Card”, which allows them to work for a German group entity for up to three years. This is possible if they have been posted by another group entity from outside the EU.
Moreover, third-country nationals already residing and working in another EU member state, based on the ICT Directive, can apply for a “Mobile ICT-Card” if they need to be posted to Germany for a period longer than 90 days. In case of a short-term assignment (i.e. no more than 90 days within a 180-day period) no residence title will be necessary at all; the competent authority (i.e. the Federal Office for Migration and Refugees) just needs to be notified. Hence, third-country nationals can work in different EU member states under a single permit.
Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?
No. The employer will, however, be obliged under the statutory social security system to appoint a contact person in Germany, which can be an employee.
Limitations on Background Checks
There are no specific statutory regulations on the legitimacy of background checks carried out by a private employer. However, there is complex case law on the question of which information an employer may legitimately request from a job applicant during the course of a job interview, which can be considered as a benchmark for the legitimacy of background checks, using other sources than the applicant. In essence, employers may only request such information that has a direct relation to the applicant’s future tasks and responsibilities in the particular job in question.
Therefore, the employer’s right to carry out background checks without the employee’s consent is very limited:
- A private employer has no right of access to an applicant’s criminal record. The employer may, if at all, only request the applicant to submit a copy of their criminal record. It is controversial to which extent such a request is legitimate, as the document may also contain information on offences that are not relevant for the job in question.
- An employer generally has a legitimate interest in verifying the statements an applicant makes in the application, e.g. on academic credentials or employment history. The employer may therefore, e.g., require the applicant to present the original copies of their diploma (or other academic certificates) or the original copies of their reference letters. The employer is however not allowed to contact prior employers without the applicant’s consent.
- A check on an applicant’s credit history or status will only be justified where the applicant’s future tasks involve a special position of trust or fiduciary duty, as only in such case the employer may require the employee to give information on their economical/financial situation in a job interview.
- Due to data protection law, background checks in social networks are only allowed in professional networks that are intended to present professional qualifications, such as LinkedIn. The employer is not allowed to use information based on background checks in private networks, such as Facebook.
Restrictions on Application/Interview Questions
Nearly every employment relationship requires an application process. The employer has a significant interest in receiving as much information as possible about the future employee. Especially due to the protection of the privacy of the employee, there are, however, a lot of restrictions for the employer during the hiring process in Germany.
a. Job Interviews
Job interviews are a typical step in the hiring process. However, as the applicant is usually in a weaker position compared to the employer, certain questions regarding the situation of the applicant are prohibited. The employer is only entitled to ask for information, which is necessary for entering into the employment relationship, e.g. qualifications that are required for employment. Questions concerning pregnancy, age, race/ethnic origin, sexual identity, religion, trade union affiliation or severe disability are generally not allowed in a job interview.
b. Discrimination Issues
The General Equal Treatment Act is of special significance during the hiring process. The law aims to abolish unequal and unjustified treatment of employees based on certain criteria: race and ethnic origin, gender, religion or belief, disability, age or sexual orientation. This regulation is already applicable during the hiring process and especially restricts job advertisements and applicant selection. For instance, the advertisement for a “young team member” might indicate discrimination based on age.
To avoid possible discrimination issues the employer should always base the rejection of an applicant on objective hiring criteria, such as job profile and required qualifications rather than on personal characteristics of the applicant. In rejection letters, the employer should always be careful when giving individual reasons for rejection because of the German anti-discrimination law. Furthermore, during the period of claims for damages due to discrimination, the employer should be able to prove his selection process and therefore should keep all documents.
c. Data Privacy
The protection of data privacy of the applicant is of special interest during the hiring process. In accordance with Sec. 26 of the Federal Data Protection Act, Art. 6 para. 1 lit. b General Data Protection Regulation, personal data may only be processed for employment-related purposes where necessary for hiring decisions or, after hiring, for carrying out or terminating the employment contract.
Due to potential discrimination claims, the employer is only entitled to store personal data of the rejected applicant for 6 months after the end of the recruitment process; only in cases wherein explicit permission is granted, may the employer store personal data of the applicant beyond this period.