Employment law distinctions and pitfalls between the UK and Germany

Following our successful joint webinar with Greenfort on May 8, 2025, in which we discussed important employment law distinctions between the UK and Germany, this article summarizes some of the key employment law distinctions regarding hiring and dismissing individuals in these countries. The key to minimising risk for a business is being familiar with the employment rules that apply in the relevant jurisdiction and seeking legal advice before acting.

Employment Status

The UK recognises three categories of individuals that provide their services to a UK company, these are employees, workers and self-employed consultants. Employees have the highest level of employment protections; workers have some but not all rights and self-employed consultants have very few employment rights. Whilst it is a fact-sensitive task to distinguish between employees and workers, the common criteria for a worker is that they will occasionally do work for the business, can refuse the work offered and are usually referred to as "zero-hours" or "casual" staff. It is this middle category of a "worker" which has its own employment status in the UK, whereas in Germany this concept is not recognized.

In Germany, labour is provided by employees or self-employed persons, there is no middle "worker" status. In Germany, self-employed person would often call the contractual document between them and the company, a service agreement. It is important to flag that the phrase "service agreement" in the UK has a very different meaning. In the UK, a "service agreement" is reserved for directors, who are generally also employees and therefore have maximum employment protection. Readers must be alive to the fact that although terminology appears the same, the local meaning may be starkly different.

Contracts and Execution

In both jurisdictions, it is generally possible to conclude an employment contract orally, electronically or in writing and no matter how the contract was concluded, the employer should provide the employee with a summary of the agreed terms. In the UK, it is mandatory to provide employees with a "written statement of particulars" which is split into two elements: (1) the principal statement which must be provided on the first day of employment and (2) the wider written statement which must be provided within two months of the start of employment. In Germany, either a separate summary of the terms and conditions or a copy of the full employment contract has to be provided to the employee.  

The main distinction between these jurisdictions is the rules around the signing of employment contracts. In the UK, there is much more flexibility as the parties have discretion to choose whether wet-ink, electronic signatures or DocuSign is their preferred method – all are valid ways to conclude an employment contract. However, in Germany, certain contracts/provisions must be concluded in "written form", which means that a wet-ink signature is required. This is the case, e.g., for fixed-term provisions. In Germany, if a fixed-term provision is not signed in wet-ink, it will be regarded as invalid, and the contract will run indefinitely – which is usually not what the parties wanted.

Types of probationary periods

At the time of this article's publication, UK employers have the flexibility whether to include a probationary period in the employment contract, to minimise the notice period for short service. Generally, a three-to-six-month duration would be typical, but this could be extended within the terms of the contract. After all, unfair dismissal rights in the UK don't currently trigger until an employee has two years' service.

In Germany, the term 'probationary period' is used with two different meanings - the first is a defined legal term, which can be agreed between the parties for a maximum duration of six months at the start of an employment relationship. This is a similar concept to the UK's probationary period because it is not mandatory and allows the parties to test whether the employment relationship is successful with a shorter notice period. However, the second meaning is the colloquial understanding of the term 'probationary period' which indicates whether the Termination Protection Act applies and whether employees enjoy unfair dismissal rights. It applies automatically to employment relationships that have lasted longer than six months, in operations with more than 10 employees.

This second meaning is not something which the UK currently recognises, however, under the Employment Right Bill, the UK are proposing to shift in Germany's direction. The UK are planning to remove the two years' service requirement for unfair dismissal and instead apply those rights for employees from day one. The government proposes to supplement this change with a new statutory probationary period (a similar concept to Germany's colloquial meaning), which is likely to apply for the first nine months of employment. This change is anticipated to come into effect from 2027.

Statutory notice and Dismissals

The UK and Germany both recognise statutory minimum notice periods which differ between the employee and employer. An employer in the UK will be subject to minimum notice periods for terminating employees between 1 month and 12 years' service. The maximum bar is 12 weeks' notice after 12 years' service in the UK. The main distinction in Germany is that the statutory notice periods for employers are longer than in the UK and continue to increase beyond 12 years' service – so that the maximum bar is 7 months' notice for 20 or more years' service. In Germany. employees can resign with four weeks' notice unless extended notice periods were agreed otherwise. In the UK, employees with one month's service can resign with one weeks' notice unless extended by the parties under the employment contract.

In relation to dismissals, German laws are governed by the Termination Protection Act, triggering after employees have worked for six months in operations with more than 10 employees. UK laws are governed by the Employment Rights Act 1996, currently triggered after employees have worked for two consecutive years, which is due to change in 2027 to be a day one employment right.  Both systems have comparable requirements around 'fair reasons' for dismissals with the UK recognising five potentially fair reasons for a dismissal (incapability, misconduct, redundancy, illegality and some other substantial reason) and Germany recognising three potentially fair reasons (personal, behavioural and operational).

Under special circumstances, there is the possibility to terminate an employment contract without a notice period in Germany, under the concept of extraordinary notice of termination. However, the requirements for this to be triggered are exceptionally high and therefore it is only used successfully in exceptional cases. In contrast to the UK, where the same concept is recognised as 'gross misconduct' and is far more widely used, and successfully, by employers where there has been a fundamental breach of contract.

Non-compete covenants

The non-compete covenant (i.e. preventing employees from working for a competitor or setting up their own rival business for a set period after they leave employment with the employer) is the most onerous and difficult to enforce in both jurisdictions, however, the binding nature of them varies dramatically.

In the UK, an employee will be bound by a non-compete covenant, signed in wet-ink or electronic signature, without any financial compensation being agreed, unless it is challenged and held to be unenforceable. The maximum duration for a non-compete covenant would be twelve months, though the reality is that most are between three and six months, to ensure better chances of enforceability, if challenged. Whereas in Germany, an employee will be bound by a non-compete covenant, provided it is signed in wet ink only, and they are given sufficient financial compensation. The maximum duration of a non-compete in Germany is two years, though the reality is that most are between 12 and 24 months. The financial compensation has to be set at 50% of the last full salary and benefits, per year of the covenant. Agreeing a non-compete covenant in a German employment contract certainly requires deep pockets!

Although there are many important distinctions between how these two jurisdictions handle the employment relationship, there are also numerous similarities and upcoming proposals that will lessen the current gaps. It is a constantly changing landscape with a new Labour government pushing through radical employment changes in the UK and the government making plans in Germany. If you require employment support in either the UK or Germany, please do reach out to us directly below.