Moving to Germany: Local contract vs. expat contract

25 posts in this topic

Hello...

 

My company (German company) is talking about moving me to Germany. I'm currently on international assignment in China. My "home" country is the US.

 

So... I'm on the site trying to get a feel for what all is involved with this kind of move to Germany. I've never worked in Europe before, but I'm looking forward to it.

 

We have two teenage kids, so we're looking at school options in Frankfurt area. Also we're weighing whether to get an apartment closer to downtown or a bigger place farther on the outskirts.

 

The company is saying that they want to put me on a "local contract" from the beginning. It seems that there are advantages and disadvantages to doing that, at least on the surface. I'm trying to read up on German labor and immigration/residency laws. One big difference is that with an expat contract I'd have full medical coverage paid by the company, versus a "local contract" would provide some version of "standard" German health insurance.

 

One possible advantage is that my salary presumably would be "marked to market" based on German pay scales. But I'm getting mixed information - i.e. it seems for some jobs and at some seniority levels salaries in Germany are lower than US salaries ("junior" level programmers), while for others, salaries (more senior / exec-level people) in Germany seem in a higher range. I'm still not sure if my arbitrary classifications are correct, even heuristically. In case I can negotiate a higher salary, then losing some of the typical expat allowances (housing subsidy, for example) wouldn't be a big thing.

 

Anyway, I've posted a few questions in other threads and thought I'd come on here and introduce myself a bit. Looking forward to getting to know everybody more...

0

Share this post


Link to post
Share on other sites

I suggest that you do so research into how the health insurance system works in Germany.  The whole public vs private thing means that you need to make a decision as soon as you arrive and then if you make the wrong one then you might be stuck with it!  Generally, as you have kids then public will be cheaper for you.  Also note, that the employer pays approx. half of the contribution (private is capped so can be less, especially with kids).

 

Of course if you have been on an expat salary in China then you have been living the high-life, which you will of course lose all of these benefits!

I don't think that you can compare US vs German salaries and it is not fair to do so.  You need to look at cost of living and your lifestyle/spending habits to work out how your life would compare.  I think it is well known that in many jobs in the US you can earn more money, but other things such as work life balance in Germany, number of holidays etc. is better.  So it depends on what you want for you and your family.

 

It is always worth seeing what extras you can negotiate.  For example: moving costs for when you leave the company (back to US, if you do), German lessons for you and your wife, Tax advisor for the first 1 - 3 years, 1 -2 flights back to US a year for 1 -3 years (whole family) etc.

3

Share this post


Link to post
Share on other sites

Standard German health insurance is actually full coverage. It covers doctors visits and hospital bills as well as medication for the most part. For medication you have a 5-10€ co-pay per prescription. For hospital you have a 10€ co-pay per day but a maximum of 280 per year. For physio your co-pay is around 20€ per each 6 times or so. Dentists are also covered to some degree.  Your family is covered on your  insurance free of charge. For this you pay 8% of your wages plus your employer pays another 7.5 on your behalf.

 

However if your salary is over a certain limit, you may opt for private insurance instead if you want to.

 

Most German employers give you 30 days of vacation per year but the legal minimum would be 20 although few employers are that stingy. You generally have to use up your days within the year or at the latest before the end of March of the following year. Some employers may allow you to let it roll over indefinitely but be warned that if you do this and you end up leaving on a bad note you don't have legal rights to claim old vacation days which should already have expired.

 

Sick days are covered. You need a doctor's note but you are not obligated to tell your employer what is wrong with you, only to tell them how long you expect to be off and to keep getting your doctor's note extended as long as you need it and getting it to your employer in a timely manner. Your employer covers your wages for the first 6 weeks of each illness and then your health insurance takes over if you are still sick but they only pay 70-80%

 

For a 6 to 9 hour work day you must get at least a 30 min (or two 15 min) breaks. For over 9 hrs, its 45 min. Breaks tend to be unpaid so if you work 9-5 and get a 30 min break you are working 7.5 hrs per day. Under EU law you can not work more than 10 hrs per day. You should get at least one day off per week, more specific, over a two week period you should get two days so you may not work more than 12 days in a stretch, then at least 2 off. On average you shouldn't work more than 48 hrs a week. You should also have at least an 11 hr rest period between shifts. Some employers follow these rules in detail while others are more relaxed. I know of ppl being threatened a write up if they worked even a minute over 10 hrs.  Understandably as if the employer allows it and there's a complaint the employer is the one with the problem.

 

Overtime is paid at straight rates but normally with some degree of banking. Overtime banking might have a limit in your contract where after earning a certain number of hrs you start to get them paid every month. For your banked hrs you can also take time off. Depends on the employer.

 

If you quit or get laid off, your employer must pay you unused vacation and banked overtime.

 

 

2

Share this post


Link to post
Share on other sites

Leon gave a very thorough overview but just wanted to add: because "standard" public health insurance is so comprehensive already, there are only minor differences between providers, and none of them relate to quality of care.

 

Also, the premium contribution is capped at about 350 euros.

 

eta, if you want to have cover for a private room or visits from a head doctor (really not all it's cracked up to be ime) which is a perk with private cover, you can add this to your public insurance via a supplement. 

 

 

1

Share this post


Link to post
Share on other sites

On an expat delegation contract the employer will pay the international school of your children. This can be €10,000-20,000 per year per child. On a local contract....ouch.

 

Also, if you have a management position, the working times mentioned by LeonG don't apply: you are paid to get the job done, can also mean you work 60 hours per week.

3

Share this post


Link to post
Share on other sites

Hello folks...

 

I've posted on a few other threads, and have been reading a lot of threads about moving to Germany.

 

I'd like to ask for your opinion on a question that's in front of me. And before RedMidge tells me to use the search function in the upper right hand corner of the page, let me say that I've made extensive use of the search function and the many articles and wikis on TT. ;)

 

My company (a German company) is offering me a job at their HQ in Frankfurt on a local "plus" contract, or take another expat assignment in China. I'm an American on an expat assignment right now in China. The "plus" means that they'd pay for my two teenage kids to go to international school. The job in Frankfurt is more interesting and will do more for my career. It's at the same "grade" level as the expat job. Life in China is definitely interesting and I've learned a lot, but I think working and living in Germany and making contacts at "corporate level" would be a good thing.

 

Obviously there are a bunch of differences between a local contract in Germany and an expat contract somewhere else. The cost of living, believe it or not is not very different between the bigger cities in Germany and the bigger cities in China. I don't have a house in the US, so not getting the standard expat housing allowance on the local contract in Germany isn't going to hurt. The way I see it, I'd be losing out on 10-15k Euro of net income. Transportation costs won't be a problem because the company would provide a car in either case.

 

Which basically brings me to: how do Germans senior-manager / executives salaries compare to other countries for people with 20+ years of experience (BSc + MSc + MBA)? Depending on German salaries and housing costs (I've been looking on immobilienscout to get some ideas about sizes and prices, etc.), I'd like to try negotiate a higher salary which would cover at least part of this higher housing cost.

 

There are other allowances that a local contract wouldn't provide which I have now on my expat contract, like an allowance which is supposed to help me and my family go back "home" once or twice a year, and an allowance which is supposed to cover everything else that comes with living away from home. These, in total, amount to about 5-10k Euro per year (net). I also understand that I'll have to pay for insurance, which is fully covered under an expat contract. But, just because all medical costs are covered it does mean that the actual care is anything to write home about.

 

Are there benefits to a local contract in Germany that I don't see? Company takes care of dealing with visa paperwork (same as expat contract)? Applying for a Blue card after a few years? Work mobility within the EU that comes with being a resident of Germany?

 

Sorry for the long post. I've done a fair amount of research. Still a lot more to do. Much more to read and learn about public v private insurance, taxes (I've been using http://www.parmentier.de/steuer/steuer.htm?wagetax.htm to estimate tax payments and take-home pay), been in touch with a few different international schools (some of which for years and years don't seem to have any openings, maybe due to Brexit fears), etc.

 

Any advice, feedback, scolding, opinions, etc. would be welcome. I promise not to let my feathers get ruffled at the obligatory initial burst of "DON'T DO IT!!!!" and "WHAT ARE YOU, CRAZY?" or "YOU DON'T UNDERSTAND HOW ANY OF THIS GERMANY STUFF WORKS!" or "YOU'RE TOTALLY SCREWED!!!" responses. Just kidding about the responses. Looking forward to the feedback...

0

Share this post


Link to post
Share on other sites

Thanks for the feedback Jay.

 

Yes, expat life is nice, but life (and work) in China can get, umm, let's say a bit "on the edge" sometimes. So, yes, lots of hardhship allowances, but after a while you start wondering if you wouldn't prefer the stability of something more familiar.

 

You're also right about work-life-balance. Complete out of whack in the US and in China. That's something I'm always a little envious of about my German colleagues who work in Germany. That's definitely a perk of living in Europe.

 

There are a lot of extras. You're right. And companies typically offer lump sum payments for those just to avoid the hassle of counting every nickle and dime. In my case the company would pay the relocation costs in either case (local or expat) since they have to move me from China. One difference with an expat contract is that your relocation agent also spends a few days showing you schools and shopping centers, gets you a mobile phone, sets up a bank account, etc.

 

The German lessons and tax preparation are definitely something I will insist on with a local contract.

 

Again... thanks for sharing your ideas.

1

Share this post


Link to post
Share on other sites

man, you're really all over the place

 

I don't know what your concerns are about health care in Germany.  IME it's much better than in the US, full stop.  And I "merely" have public insurance.  What exactly are you worried about?

 

there is no inherent EU work mobility that comes with being a resident of Germany.  Whether your company takes care of visa paperwork or not under either scenario is something you need to ask your company.  If you were on a local contract you would ideally be applying for a blue card from the start.

 

differences in net income are also something you need to evaluate for yourself as it's your life, your priorities, your choices.  If you want to put your kids in an international school this seems to be a large factor in your decision but again, it's up to you to evaluate that.  German salaries are on paper definitely lower than US salaries for comparable work but as described elsewhere there are quality of life and cost of living perks about living here that change the equation IF you value quality of life over sheer cash flow.

 

I also don't understand why you expect people to say "you're crazy, don't do it" - almost everyone here did it and continues to do it!

 

I think you should be asking yourself "do I really want to live in Germany, specifically"  I don't get the sense that you do, just that you're trying to evaluate one opportunity of many.  That's totally fine but we can't answer that question for you.     

 

 

2

Share this post


Link to post
Share on other sites

Certainly you will be worse off financially on a "local contract".  But Expat contracts are designed for people on short-term assignments to incentive them to work in that location.  And when compared to China (where you currently are) then they might think that Germany needs no additional incentive.  

 

Also, bear in mind that any benefits that company gives you on an expat contract, such as paying for additional insurance, housing etc, would be taxable in Germany which might not be the case in all countries.  It is then up to the company if they pay this tax additionally or let you take the burden.  

 

In the end you have a worth to the company, so they will decide if you are worth this extra cost or not.

 

And you have to decide if you want to take the opportunity of living in Germany for a while, forever, or never.

 

3

Share this post


Link to post
Share on other sites
40 minutes ago, lisa13 said:

man, you're really all over the place

 Yes. Thank you. ;)

 

40 minutes ago, lisa13 said:

I don't know what your concerns are about health care in Germany.  IME it's much better than in the US, full stop.  And I "merely" have public insurance.  What exactly are you worried about?

I don't think I said I have any concerns about health care if Germany, or made any comparison with the US system. Sorry for any confusion.

I made a general statement about full coverage as a part of an expat contract (here in China) to say that even though everything is covered it doesn't necessarily mean that the quality of coverage is good.

 

40 minutes ago, lisa13 said:

there is no inherent EU work mobility that comes with being a resident of Germany.  Whether your company takes care of visa paperwork or not under either scenario is something you need to ask your company.  If you were on a local contract you would ideally be applying for a blue card from the start.

Yes. This is what I'd be hoping to do because getting a blue card would be an advantage of taking a local contract (for me).

 

40 minutes ago, lisa13 said:

differences in net income are also something you need to evaluate for yourself as it's your life, your priorities, your choices.  If you want to put your kids in an international school this seems to be a large factor in your decision but again, it's up to you to evaluate that.  German salaries are on paper definitely lower than US salaries for comparable work but as described elsewhere there are quality of life and cost of living perks about living here that change the equation IF you value quality of life over sheer cash flow

Exactly. Everybody is different, of course, but my opinion is that (for me and my family) quality life would be higher in Germany. Additional cash flow doesn't buy anything more for us than what we already have, hence my willingness to give up expat extras to take a local contract in Germany (so long as the kids can be in international school because I think it'd be almost impossible for them to adjust to German schools at their age).

 

40 minutes ago, lisa13 said:

I also don't understand why you expect people to say "you're crazy, don't do it" - almost everyone here did it and continues to do it!

I was making a joke after reading 9 pages of posts in the "newcomer" thread, where there were an abundance of quixotic ideas. Sorry if it ruffled some feathers.

 

40 minutes ago, lisa13 said:

I think you should be asking yourself "do I really want to live in Germany, specifically"  I don't get the sense that you do, just that you're trying to evaluate one opportunity of many.  That's totally fine but we can't answer that question for you.    

Strange conclusion that I don't want to live in Germany. I'm not sure where this sense came from, but okay... I'll take this point.

 

To be clear, yes, I do value the opportunity to work and live in Germany. I've worked for a German company for almost a decade. I "fit" in with the culture and really enjoy my colleagues. I've travelled to Germany a few dozen times, sometimes on extended trips, so I have some idea what I'm stepping into. For sure Germany is not a utopia, but I think it has a unique culutre with distinctly positive traits and traditions that I am open to getting more exposure to.

 

Your points and pokes are appreciated Lisa. Thank you for your feedback. I think the questions you are raising are important.

1

Share this post


Link to post
Share on other sites

Thanks for the detailed breakdown Leon.

 

I'm looking forward to the holidays, which actually get taken, unlike what I'm used to in the US or in China.

 

I'm still researching and scratching my head over the insurance thing. My income will qualify (I don't know if that's the right word) for private insurance, but I need to read a lot more about that to understand what additional services go with that. I'm a bit in the dark with that right now, but I've been reading up the last few days.

0

Share this post


Link to post
Share on other sites
2 hours ago, dj_jay_smith said:

Certainly you will be worse off financially on a "local contract".  But Expat contracts are designed for people on short-term assignments to incentive them to work in that location.  And when compared to China (where you currently are) then they might think that Germany needs no additional incentive.  

 

Also, bear in mind that any benefits that company gives you on an expat contract, such as paying for additional insurance, housing etc, would be taxable in Germany which might not be the case in all countries.  It is then up to the company if they pay this tax additionally or let you take the burden.  

 

In the end you have a worth to the company, so they will decide if you are worth this extra cost or not.

 

And you have to decide if you want to take the opportunity of living in Germany for a while, forever, or never.

 

Agreed, on all points.

 

You'd be surprised, though, that there are people who are on expat contracts for 5, 10, 15 years. Seems crazy much to me, but there are people like that out there. Their main objective is to retire before the age of 50 or 55 so they're socking all that extra money away.

 

I mentioned somewhere else, though expat life has been fun and rewarding, what my family and I are looking for in the next 5-10 years is not focused on cash accumulation. The chance to experience life in Europe, working a stable job (if there's even such a thing these days) where quality of life is high is an important factor for us.

0

Share this post


Link to post
Share on other sites
On 8/14/2019, 1:36:31, lisa13 said:

Leon gave a very thorough overview but just wanted to add: because "standard" public health insurance is so comprehensive already, there are only minor differences between providers, and none of them relate to quality of care.

 

Also, the premium contribution is capped at about 350 euros.

 

eta, if you want to have cover for a private room or visits from a head doctor (really not all it's cracked up to be ime) which is a perk with private cover, you can add this to your public insurance via a supplement. 

 

 

Yep. Fully agree.

 

I read somewhere that the cap is more like 400 euros, but directionally it's the same. I have to check with my company what portion they will pay.

 

I didn't know that public insurance could be supplemented. Makes a lot of sense. Thanks for pointing this out.

1

Share this post


Link to post
Share on other sites
On 8/14/2019, 3:01:57, LukeSkywalker said:

On an expat delegation contract the employer will pay the international school of your children. This can be €10,000-20,000 per year per child. On a local contract...ouch.

 

Also, if you have a management position, the working times mentioned by LeonG don't apply: you are paid to get the job done, can also mean you work 60 hours per week.

Even more of an ouch because I have 2 kids! It's a huge benefit they're willing to pay, so I know they're now trying to scam me out of not paying the other allowances. I'd imagine there will be others (Germans) on local contracts crying foul that the company is paying my kids international school fees, but the company will have to figure out how to answer that.

 

Yes, I would be exempt from most of what Leon outlined because of my level. 60 hours a week, teleconferences and webex meetings at all hours with people you don't even know with unusual accents, trips to parts unknown at the drop of a hat 3 or 4 times a year. It's all there. But, it's still fun (usually)! ;)

0

Share this post


Link to post
Share on other sites
11 minutes ago, fredchatel said:

 

I'm still researching and scratching my head over the insurance thing. My income will qualify (I don't know if that's the right word) for private insurance, but I need to read a lot more about that to understand what additional services go with that. I'm a bit in the dark with that right now, but I've been reading up the last few days.

 

We have a couple of insurance brokers on the forum that you could ask about the advantages / disadvantages of going private. They are johng and starshollow. 

2

Share this post


Link to post
Share on other sites

Yes, I've seen their names. I still have a few "need German insurance... please help" threads to get through first, then I'll reach out to them! ;)

 

Thanks Leon.

0

Share this post


Link to post
Share on other sites
2 hours ago, fredchatel said:

I made a general statement about full coverage as a part of an expat contract (here in China) to say that even though everything is covered it doesn't necessarily mean that the quality of coverage is good.

 

It was not at all clear to me that this was based on your chinese experience but the key takeaway over several posts was your apparent doubt that the quality of cover is good. You've expressed what seems to be doubt several times now, so I was responding to that.  I mentioned the US as a comparison as (at least some) Americans tend use that as a benchmark.

 

 

2 hours ago, fredchatel said:

I read somewhere that the cap is more like 400 euros, but directionally it's the same. I have to check with my company what portion they will pay.

 

I am maxed out and I pay 347 per month.  You are probably adding pflegeversicherung into the cost which does bring it a bit above 400.

 

Has anyone mentioned kindergeld yet?  

 

eta:  and here is a basic explanation of the basics of public cover:  https://www.krankenversicherung.net/gesetzliche-krankenversicherung

 

1

Share this post


Link to post
Share on other sites
11 hours ago, lisa13 said:

 

11 hours ago, lisa13 said:

It was not at all clear to me that this was based on your chinese experience but the key takeaway over several posts was your apparent doubt that the quality of cover is good. You've expressed what seems to be doubt several times now, so I was responding to that.  I mentioned the US as a comparison as (at least some) Americans tend use that as a benchmark.

 

Ok. Understood. It's not so far-fetched to think that I, as an "American" would do what a lot of Americans (or British or German or Chinese or whatever) tend to do, which is to confuse "familiarity" with "benchmark". "Not invented here" syndrome, as they say.

 

To be fair, I have zero experience with German healthcare, so I really can't make any statements about the quality of coverage.

 

I put "American" in quotes because by this point in my life I've lived (for extended periods of 1 year or more each time) in at least 5 other countries. The most difficult question anybody can ask me is: Where are you from?

 

11 hours ago, lisa13 said:

I am maxed out and I pay 347 per month.  You are probably adding pflegeversicherung into the cost which does bring it a bit above 400.

 

Has anyone mentioned kindergeld yet?  

 

eta:  and here is a basic explanation of the basics of public cover:  https://www.krankenversicherung.net/gesetzliche-krankenversicherung

 

To be honest, I didn't look for a breakdown of the amount. 300 or 400 euro are directionally the same for me. But it's important, as you note, to understand what's in/behind the number. For sure this is a homework for me.

 

Thanks for the krankenversicherung link. I'll read it. I think I also got some basic info from https://allaboutberlin.com/guides/german-health-insurance. Maybe Berlin is different.

 

Just curious about your specific case... have you considered taking private insurance? I, for one, am over 45, so the rates start to really climb and I'm not so sure I couldn't get the same "premium" coverage by paying a supplement on a case-by-case basis using public cover as a base (which is a smart piece of advice you raised in an earlier post).

0

Share this post


Link to post
Share on other sites
5 hours ago, fredchatel said:

...

 

Just curious about your specific case... have you considered taking private insurance? I, for one, am over 45, so the rates start to really climb and I'm not so sure I couldn't get the same "premium" coverage by paying a supplement on a case-by-case basis using public cover as a base (which is a smart piece of advice you raised in an earlier post).

 

I suggest you reach out to one of the insurance brokers on here for a quote.

 

 

But to put it into perspective:  I have private insurance for which I pay for myself and 1 child and I already pay more than what you would have to pay in you went public.  And you would also have to add your wife and another child onto the policy.

 

Public health care has a maximum that you pay no matter how much you earn.  Private however doesn't but the maximum the employer has to contribute is capped at ~350 Euros/month.  Therefore, if the costs go up then you end up paying all the extra.  And my policy has double in the 12+ years that I have had it!

 

Also, once you go the private route then you will not be able to go back to public (unless under some very strict circumstances such as losing your job or taking a massive pay cut).  Whereas if you go public then you are able to change and go private later.

 

And at the end of the day, the doctors treating you, the facilities, and the care they provide is the same.  The main benefit is a private room in a hospital (if you get the premium cover).

 

 

 

2

Share this post


Link to post
Share on other sites
35 minutes ago, dj_jay_smith said:

 

I suggest you reach out to one of the insurance brokers on here for a quote.

 

 

But to put it into perspective:  I have private insurance for which I pay for myself and 1 child and I already pay more than what you would have to pay in you went public.  And you would also have to add your wife and another child onto the policy.

 

Public health care has a maximum that you pay no matter how much you earn.  Private however doesn't but the maximum the employer has to contribute is capped at ~350 Euros/month.  Therefore, if the costs go up then you end up paying all the extra.  And my policy has double in the 12+ years that I have had it!

 

Also, once you go the private route then you will not be able to go back to public (unless under some very strict circumstances such as losing your job or taking a massive pay cut).  Whereas if you go public then you are able to change and go private later.

 

And at the end of the day, the doctors treating you, the facilities, and the care they provide is the same.  The main benefit is a private room in a hospital (if you get the premium cover).

 

 

 

 

Thanks for sharing your experience. It's all in line with what I've read and heard from others (expats and Germans).

 

Presumably, if one paid more, one could get a private room even with public insurance. The question then becomes how many hospital stays one expects and whether the math says that it would have been cheaper to make higher monthly payments to private insurance.

 

But, to your point, it makes sense to get quotes. I will do this.

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now