In Germany, there are approximately 30.8 million employees subject to social insurance contributions, of which 2.8 million come from abroad (Federal Statistics Office, 2015). There are many benefits to hiring foreign employees, such as an increase in skilled labour, the promotion of workplace diversity and the facilitation of business expansion abroad.
Germany is one of the OECD countries with the lowest barriers to immigration for high-skilled workers. However, with the complexity of German bureaucratic systems, hiring workers from outside of Germany is often not a piece of cake. There are many things to consider before you employ foreign workers, such as visas, residence permits and cultural integration. The recent British referendum also proposes questions regarding the employment eligibility of UK citizens in Germany.
What will happen to British citizens who live and work in Germany? How will the process of hiring British workers change?
Which arrangements will persist, disappear or become replaced is dependent on future negotiations between Great Britain and the EU. As for which regulations currently exist and what you generally need to consider when hiring foreign employees, we have outlined 5 steps to bring you more transparency to the process of recruiting workers from abroad.
1. Planning & Analysis
Before you decide to hire employees from abroad, it’s important to evaluate whether such a decision is the most suitable choice for your business. Careful analysis in advance can reveal whether investing in foreign hires will be beneficial. Narrow down the professional and personal requirements of the positions you want to fill, and ask yourself the following questions:
What types of workers do I need? What are the specific skill sets?
Once you know exactly who you are looking for, it’s easier for you to target specific countries that relate to the type of employees you demand.
For example, if your company is expanding operations to a country with a different language, such as France; it may be easier to source an employee from France, Switzerland or even Montreal, Canada – where French is the native language. If you are having a hard time finding quality IT employees, it may be worthwhile to look at candidates from Russia, Ukraine and Estonia – where IT education is more dominant, and easier to employ in Germany than candidates from India and China.
There are of course some obstacles to recruiting foreign employees that should also be considered.
What time frame do you have to find the right talents? Which networks do you have abroad? How can you secure referrals to be sure the candidate is the right candidate?
If time constraint is an issue, working with recruitment agencies may be the optimal option. Agencies have wider networks and greater sourcing ability, and can introduce a large amount of candidates in a short amount of time. Another route is to source potentials within your own circles. Referrals from trusted members also help to account for cultural and personality fits. Relationships and connections within foreign countries are particularly valuable, and should be maintained and expanded. If you choose to do your own search, make sure to take into account different working habits of foreign employees, and look for candidates that have worked in environments similar to your working culture.
Skill sets that are hard to find in Germany may be in abundance abroad. If deficiencies in talent exist for certain roles, broadening your hiring horizons may be the best option to source suitable employees, and cost-effective at the same time. Thorough planning and analysis can help prepare you for the recruitment process, and a structured approach is the best strategy to map out your hiring procedures.
2. Work Visa & Residence Permit
The first analysis and planning is complete. Your HR team has an idea of what skills are being sought, how talents with such skills will be sourced, and has found qualified candidates.
Now comes the legal tasks required to hire your dream employee.
The first step is to determine whether the potential employee requires a Visa to enter. For candidates from non-EU countries, a Visa will be necessary in most cases. Afterwards, the potential employee must sign up at the registration office and apply for residency. Only then it will be possible to obtain a work permit for a longer period. This path can be accelerated in various ways, and there are some special cases as well.
To understand the process a little better, let us familiarize you with the different residence permits in Germany.
> Visa: A work visa can grant temporary residence in Germany. Potential employees can apply for a work permit at the German Embassy in their country of origin before entry to Germany.
> Limited residence: A limited residence permit carries an expiration date, but can be extended when the expiration date nears. It is granted to people with special reasons of coming to Germany, such as employment, to study, to obtain training, to join a family member already residing in Germany and to seek asylum. The rights granted by the limited residence permit depends on the purpose for which the permit was issued, and does not automatically allow you to work in Germany.
> EU Blue Card: The Blue Card allows nationals from third-country states to stay in Germany for four years. To qualify, candidates must have a university degree or a comparable qualification, as well as a concrete job offer matching their qualification. In addition, their annual salary has to exceed € 49,600 (2016). For professional workers in scientific, technical, mathematical, medical and IT fields, the annual salary must be a minimum of € 38,688 (2016). Spouses of Blue Card holders are also granted the right to employment in Germany.
> Settlement permit: The settlement permit has no time or spatial restrictions, and grants holders the right to employment in Germany. To qualify, foreign employees must have possessed a residence permit for at least five years, and been employed for five years (including paying social contributions) and show proof of secure livelihood. Blue Card holders can apply for a settlement permit after 33 months of employment, or after 21 months if they have at least a B1 knowledge of the German language. The settlement permit can also be granted immediately for highly qualified workers in special circumstances.
> Permanent EU residence: Qualifications for the permanent EU residence permit are similar to the settlement permit. It is also an unlimited residence title, but additionally grants the holder free movement within the EU and the right to obtain a limited residence permit in member EU states.
The necessary procedures in obtaining a residence permit depend on several factors, such as the candidate’s citizenship, qualifications and purpose of stay.
A potential employee’s nationality is arguably the largest factor in determining whether he/she has to apply for a residence permit, and consequently obtain a work permit. Candidates from abroad require different legal provisions to gain the right to work in Germany. These legal provisions divide foreign employees into the following three groups:
Case 1: EU, EEA (Iceland, Norway, Liechtenstein) and Switzerland
Due to the right of free movement, nationals from a Member State of the European Union and the European Economic Area can enjoy unrestricted access to employment in Germany. They do not require a residence or work permit, and are treated on equal footing with German citizens. Thus, the hiring procedure for such employees are also carried out in the same way. The only requirement is they must register with their local registration office (Einwohnermeldeamt).
Case 2: Third countries
Countries that do not belong to the EU and the EEA (and Switzerland) are referred to as third countries. Citizens from these countries are obliged to apply for a visa and residence permit in their home country before entering Germany. The approval process can range from a few weeks to a few months. Depending on the purpose for the applied permit, often multiple authorities are involved in the decision process. For candidates seeking the right of employment in Germany, the approval of the Federal Employment Agency and the Foreigner’s Registration Office is required.
Case 3: Third countries with special arrangements (USA, CA, AUS, NZ, Israel, Japan and the Republic of Korea)
Unlike nationals from other third countries, citizens of Canada, Australia, New Zealand, Israel, Japan, the Republic of Korea and the United States are able to enter Germany without a visa in advance and stay for up to three months. However, they must also apply for a residence permit in order to stay beyond three months and work in Germany. The application of a residence permit for work purposes can be done within Germany, and the processing time for these foreign workers is usually faster than for other third country workers.
Irrespective of nationality, a potential employee’s qualifications can also determine the likelihood of acquiring a work permit. Consider the following questions:
Does the potential employee have specialized skills? Are the qualifications of the potential employee recognized in Germany? Does he/she have the legal requirements to work in Germany?
In Germany, there is a shortage of qualified professionals in certain regions and job sectors. Experts in the fields of engineering, IT, health care, mathematics and science are particularly high in demand. To attract more skilled workers, the government has drastically reduced legal barriers to the employment of foreign workers in recent years. High-skilled immigrants can thus easily obtain a German residence permit.
Qualified professionals who earn more than € 84,600 annually can directly apply for a settlement permit, which allows them and their family members to live and work in Germany indefinitely.
University graduates also have an easier access to Germany’s labor market. Candidates who graduated from a German university can extend their existing residence permits and work in Germany without restriction for up to 18 months – as long as they have proof of their degree, have health insurance and are able to support themselves financially. Candidates who graduated from a non-German university can easily secure a limited residence permit, given they hold an university degree recognized in Germany and have sufficient finances to support their stay.
In addition, Germany has a bilateral Working Holiday visa agreement with Australia, Canada, New Zealand, Japan, Hong Kong, South Korea and Taiwan. This visa allows citizens from these countries to live and work in Germany for up to 12 months.
⊗ Purpose of stay
A potential employee’s purpose of stay in Germany also influences the application procedure of the residence permit.
What type of employment is the candidate looking for? How long will the candidate be employed? What duties or activities will the candidate partake in?
Candidates who are interested in setting up a business in Germany can apply for a residence permit for self-employment.
Residence permit for the purpose of freelance or self-employment can be issued to candidates who are interested in working as freelancers or setting up business in Germany. In order to qualify, an applicant must have relevant experience, sufficient finances, and be able to prove the business satisfies an economic or regional need in Germany. This permit is valid for three years, and can be extended if the self-employment is successful.
Candidates who wish to gain professional or vocational training in Germany may also be granted a residence permit with the approval of the Federal Employment Agency. Once the training is concluded, candidates may extend the permit for up to 18 months to seek work that matches their qualifications.
For academic researchers, a residence permit may be granted by the German embassy or consulate general in their home country. To qualify, candidates must obtain a signed hosting agreement with a research organization accredited by the Federal Office for Migration and Refugees. The organization will also have to confirm the details of the intended research and declare liability for all associated costs. Residence permits for researchers are valid for at least one year, or for the entire duration of the research if less, and allow candidates to work in the same field while undertaking the research.
To be continued…
Further information on the recognition of foreign professional qualifications can be found here.
More information on visa requirements can be found here.