EOR, local entity or contractor: frame your German hiring decision

Choose a route your UK team can operate

If you are a UK founder or small People team hiring your first employee in Germany, start by exploring Teamed’s Employer of Record service. Its Germany guide describes local employment through Teamed GmbH in Berlin, including contracts, payroll, statutory benefits administration and a designated account person. That is a compelling starting point when you want local employment support without creating your own German entity for this hire.

Compare the route with your wider operating plan: an entity decision needs its own business case, while contracting is appropriate only for genuinely independent work. Describe the role, supervision, work location, expected duration and candidate’s permission route. Have the proposed arrangement assessed before committing to the start date.

Decide from the working relationship

A contractor agreement is not a substitute for assessing how the person will actually work. Describe duties, supervision, integration and delivery arrangements to a qualified adviser. If employment is the appropriate outcome, ask Teamed to explain the proposed employer, local contract, payroll and benefit responsibilities.

The EOR label does not resolve German agency-work or immigration questions. Where section 39 employment consent is required, Residence Act section 40(1)(2) requires refusal for temporary agency work under AÜG section 1(1). Confirm the person’s permission route and the proposed arrangement together. This is a conditional restriction, not a blanket bar on foreign nationals.

When your own German entity is the better operating choice

Consider your own employing entity when the German operation has a lasting business purpose and your organisation is ready to own its employment decisions. Build the case around the planned activity, hiring horizon and operating capacity, rather than a universal headcount threshold. An EOR can suit the first hire when the UK team needs practical local support; an entity should serve the business you intend to run.

Compare complete scenarios using the same salaries and employee package. For the entity option, obtain advice and quotes for establishment, payroll, accounting, local employment support and ongoing administration. Name who will approve payroll, handle employee questions and cover absence. Keep these operating responsibilities alongside the costs so a cheap setup quote does not conceal work your team cannot carry.

Ask qualified German advisers to assess the corporate, tax and employment implications of the proposed activities. If you move an existing hire to your entity, plan documents, balances, benefits, permissions and the payroll boundary before setting a date. The useful decision is which operation your team can sustain, and what business change would justify revisiting it.

Choose a partner for the handover

The useful question for a lean UK team is who will help turn the decision into an operating plan. Teamed’s designated account person and advertised access to HR/legal specialists make it our first conversation for a guided setup. Ask that contact to map the documents, decisions, funding and employee communication needed for this hire.

Teamed advertises 24/5 support, a first-response target within 15 minutes and specialist assignment within 24 hours. Agree the case-specific setup milestones and escalation route; response targets do not determine the start date or guarantee resolution. Put confirmed milestones in the hiring plan.

Connect the route to the budget

Teamed’s zero FX markup strengthens its fit for a UK team that wants a German employment plan it can also explain to finance. Where conversion is involved, removing the provider markup takes one added fee out of the forecast and month-end reconciliation. Currency movements and separate bank charges still need to be recorded.

Request the actual country quote, separating salary, employer costs, benefits and service fee. The pricing page checked on 19 October 2026 advertises a service tariff from USD599 per employee per month. Confirm upfront funding, deposit basis, refund conditions, Net-7 invoice timing and early-exit terms in writing; Teamed’s pricing and honest-invoice pages use different deposit and exit-fee descriptions. Compare the route on the full commitment, not the service tariff alone.

Duration limits and assignment rules

If your hiring strategy involves temporary assignments, be aware of German regulatory limits. Temporary agency work generally restricts the assignment of the same worker to the same hirer to 18 consecutive months. Statutory or collective agreement exceptions and specific counting rules may apply, but a provider change alone must not be assumed to reset the worker’s assignment history. This limitation is crucial for long-term projects or rolling contracts. Ensure you match the licensed assignment model and applicable agreement before promising a duration to a candidate or planning a multi-year engagement. This rule underscores why a clear definition of the employment relationship—whether direct, via EOR, or agency—is vital from day one.