Your employees are a huge part of your company’s capital. When you enter the German market it will be crucial to build up this capital very diligently. You will face various questions such as do you prefer to work with freelancers or with employees.

The retail business is marked by a need of flexibility, but you will also face the necessity to find and keep qualified employees. Your company’s success starts with the implementation of legally correct and innovative recruitment measures and employer branding.

To meet your company’s needs with regard to flexibility you might decide on a structure of flexible staff deployment, e.g. part-time workers, temporary workers and/or mini-jobs (small-scale employment with maximum monthly income of EUR 450.00 or rather maximum annual income of EUR 5.400). Up to this earnings limit, the employment relationship is not subject to social insurance contributions. However, you might prefer store managers or other sales representatives to be permanently employed and may even provide them with incentives associated with the company’s growth.

At a certain point in time, collective bargaining agreements may become relevant regarding the relationships with your employees. You will face the decision whether your company should enter an employer’s association, with the effect that collective bargaining agreements can be binding or if it is preferable to include references to collective bargaining agreements in your employment contracts. In the retail trade, it frequently happens that the employment contract regulations are determined by collective bargaining, because the entire retail trade sector is subject to different collective bargaining agreements. Usually, these regulations are concluded regionally at the level of the federal states. In addition, it is common for some large retailers to conclude certain company collective agreements. A collective agreement is an agreement agreed between the so-called collective bargaining parties. These parties include the trade un-ions on the one hand and employers’ associations or an individual employer on the other. A trade union can regulate virtually all aspects of an employment relationship through such an agreement. The main areas covered by a collective agreement are wage issues, working hours and holidays. Issues relating to the conclusion and termination of the employment relationship as well as company and works constitution matters may also be dealt with.

An agreed collective agreement may also lay down the rules and obligations of the individual parties to the collective agreement (employers/employers’ associations and trade unions). In Germany, the legal framework for collective agreements in the retail sector is governed by the German Collective Agreement Act (Tarifvertragsgesetz – TVG). In order for the agreements to be effective, they must be set out in writing (§ 1 Para. 2 TVG). Whether the employment relationship is governed by a collective agreement depends on whether the job falls within the scope of the collective agreement. In concrete terms, this means that either the employer must belong to an employers’ association which has negotiated an agreement with the trade unions or that the employer himself has concluded a collective agreement with the trade unions. The employee must also be a member of a trade union.

In some of your stores works councils might be elected. In this case you have to involve the works council e.g. in matters of hiring and termination, reorganisations and redundancy measures as well as in day-to-day business.

Contact our employment law specialists who will help you to find and retain the right “faces” for your German business.