Hire foreign employees

Skills shortage

Germany is one of the most important business locations in the world. Nevertheless, the German economy is currently suffering greatly from one problem: the shortage of skilled workers.

The existing shortage of personnel can be countered by various measures. One of these is the recruitment and hiring of foreign specialists. But what does it mean for a company to hire a foreign employee and how does it work?

Due to the European ban on discrimination and the freedom of movement within the EU, EU citizens have the same status as German citizens and can work in Germany without restrictions. The situation is different with so-called EU foreigners from third countries outside the EU. Here it is necessary to observe some special features.

Legal framework: What companies need to consider

Residence permit

Probably one of the first questions employers ask themselves before employing a foreign employee in Germany is what legal options exist for employing a foreign skilled worker. In order to work as an EU foreigner in Germany, a residence title is required. The German Residence Act (AufenthG) regulates the following residence titles for foreigners in particular - which are relevant for skilled workers:

Temporary residence permits:

Permanent residence permits:

These residence permits differ primarily in terms of their requirements, e.g. language level, qualifications, professional experience, job offer, salary, approval from the employment agency, etc.

The selection of the correct residence title must be made individually in each case after examining the circumstances.

Social security and taxes

The question of social security and taxation of the foreigner is also unclear for many employers. Are there tax differences for foreign employees and in which social security system should the employee be insured? This is easy to answer, at least in standard cases. Taxation and social insurance are determined by the law of the country in which the foreign employee has his place of work and residence, i.e. Germany if applicable. However, deviations may arise, for example, if the foreign employee regularly works from his home office in his home country, or if the foreign employee works completely remotely from abroad.

Equal treatment and protection against discrimination

In Germany, the principle of equal treatment and the prohibition of discrimination are enshrined in the Basic Law. Foreign employees must therefore be treated in the same way as domestic employees.

Following this, approval is usually required from the Federal Employment Agency. Before granting approval, the agency checks whether the working conditions of the job offer for the foreigner correspond to those customary in the industry.

Special challenges in the recruitment of foreign employees

The qualifications acquired abroad by the foreign skilled worker and their recognition in Germany often represent a first hurdle in the immigration process. However, this can be checked in advance via the Anabin database. If the qualification is not listed in this database, recognition must be applied for on a case-by-case basis.

The complete procurement of all necessary documents can often be difficult. Here it is advisable to know in advance the requirements to be met for the respective residence titles. Overall, the duration from the application for a residence title to the decision of the competent authority is uncertain.

To prevent this, the legislator introduced so-called recognition partnerships into the Residence Act at the end of 2023. These allow companies to employ workers with a foreign professional qualification even if their qualification is not yet officially recognized in Germany. They then have the opportunity to catch up on the recognition procedure together with the employee within three years, while the employment relationship is already running as normal.

Nevertheless, integrating the foreign employee into the company can be more complex than usual, especially in the initial phase. Added to this are language barriers and different cultural customs.

Advantages of foreign employees for companies

However, hiring foreign employees also brings numerous advantages. For example, the available pool of employees is already significantly larger. This makes it easier for companies to find the most suitable worker (with work experience) for open positions. Companies can find relief from the shortage of skilled workers by looking for employees on the international labor market. 

In addition, multilingualism within the company and the intercultural competence that grows through diversity can increase competitiveness, particularly on international markets, but also on national markets in the context of globalization. Employing foreign workers can increase creative potential by bringing in new perspectives and expands a company's international network.

Sensible approach to hiring foreign employees

The faster bureaucratic hurdles can be overcome, the faster the foreign specialist can be deployed in his or her job in Germany.

Although German laws on the immigration of foreign workers are now geared towards facilitating the gainful employment migration of skilled professionals. However, the legal provisions and official procedures in Germany are extremely confusing and complicated, which can often lead to delays and, in the worst case, even to the rejection of the application when the application process is carried out by a layperson. It is therefore advisable to enlist the help of experts as early as the recruitment stage for the EU foreigner. Active involvement of the employer in the immigration process, e.g. by carrying out the accelerated skilled worker procedure, also speeds up the entire process.

As experienced attorneys in the field of migration law, we will be happy to assist you with our expertise.

The integration of the foreign employee should also be kept in mind. For example, it may be advisable to offer language and cultural training for employees and also to provide appropriate training for managers in order to facilitate the integration of foreign employees into the company.

Conclusion

Overall, hiring foreign employees represents an opportunity for companies to create a competitive advantage over their competitors by improving their human capital.

In the age of globalization and the shortage of skilled workers in Germany, especially in view of the aging society and the resulting imminent departure of a large proportion of the currently still employed workforce, hiring foreign specialists is a trend that is only likely to increase in the near future.

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