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In this article here we have explained the basic principles of German labour law, in particular the protection of employees against dismissal. German corporate lawyer Bernhard H. Schmeilzl has posted a model Employee Agreement which is typically used in Germany on the lawblog Rechthaber.com here. The contract is based on German law but drafted in English language (which is only accepted by German courts if the employee is fluent in English). For more information on German law click here

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In case you need to look into the wording of specific German legislation you can find many relevant German statutes on the website of the German Department of Justice (here). The central codification is the German Civil Code (Bürgerliches Gesetzbuch), which is available for download here: German_Civil_Code_in_English_language. The bilingual brochure “Continental Law” (free download here), published by the German Law Societies explains the basic principles of Continental Law (in particular the German and French legal systems) and argues that applying Continental Law in international contracting brings many advantages. More information is avalaible on the website: www.kontinentalesrecht.de

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For a foreign client, taking legal action in Europe is a complex issue. Each European country has its own national laws, court structures and unique legal history. Fundamental differences exist in the nature of the various national legal systems. Few countries follow a common law system. Most states have adopted a civil law jurisdiction based on codification, where statutes are the primary source of law and precedents are less important. Courts decide disputes based on a learned interpretation of relevant statutes. By contrast, common law jurisdictions use cases as a primary source of law and there is a strong adherence to the doctrine of precedent.

Procedural law also differs drastically from common law jurisdictions. Most civil law jurisdictions do not use a (pre trial) discovery procedure. Some operate by an inquisitorial procedure (which means the judges actively inquire the facts they deem relevant for a fair court ruling), other jurisdictions use an adversarial procedure (meaning the parties must provide the court with the facts of the case).

On top of the 27 different national jurisdictions within the European Union, EU laws and EU courts add an additional layer of complexity. In certain areas of law national courts must refer legal issues to EU courts to be decided on aEuropean level, so an EU wide consistent interpretation is guaranteed.

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The bilingual brochure “Continental Law” (free download here), published by the German Law Societies explains the basic principles of Continental Law (in particular the German and French legal systems) and argues that applying Continental Law in international contracting brings many advantages. More information on the website: www.kontinentalesrecht.de

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Germany Trade and Invest is the foreign trade and inward investment agency of the Federal Republic of Germany. Its mission is to promote Germany as top location for industrial and technological investments and to identify investors for the German market. The organization advises and supports foreign companies seeking to expand into the German market and assists German companies looking to enter foreign markets.

The website www.gtai.com provides comprehensive information about Germany. Particularly helpful is the “Investment Guide to Germany” with details on:

* Coming to Germany
* Establishing a Company
* Financing a Business
* Incentives
* Employees and Social Security
* The Tax System
* The Legal Framework
* Living in Germany

For more information on the business, legal and tax framework in Germany visit here

Database of Trial Lawyers (Germany & Austria)

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An easy to use new online tool helps clients and foreign lawyers find a qualified trial lawyer in Germany or Austria. Within seconds the users of this website receive a list of litigation law firms in virtually every city of Germany or Austria, free of any charge. Just type in the ZIP code of the area you need a lawyer in and browse the respective websites until you identify a law firm / litigator that you feel comfortable with. The domains are:

www.terminsvertreter.com (for Germany)
www.substitutionen.com (for Austria)

Guidelines for the Formation of a German Limited Liability Company (GmbH)

Required Documents and Appointment of its First Managing Director

The minimum share capital for a GmbH is 25,000 Euros. The formation of a German “Gesellschaft mit beschränkter Haftung” (GmbH) requires the establishment of Articles of Association before a German notary. The notarisation and the appointment of the first director (Geschäftsführer) are recorded in a Memorandum of Incorporation (MoI), to which the Articles of Association (AoA) are attached. Then, an application for registration of the company in the Commercial Register (Handelsregister) must be made to the Local Court (Amtsgericht), where the company’s registered office is located. The company becomes effective only once it has been registered, which usually takes about one to three weeks. In the period between notarial formation and registration in the Commercial Register, business activities may already be undertaken in the name of the company. However, during this phase (after formation but before registration) the individuals acting in the name of the company are personally liable. …

In case the founder does not wish to appear before a German notary in person, a German legal counsel may act under power of attorney on the (future) shareholders behalf. Such power of attorney must be signed for and on behalf of the grantor (the person or company wishing to establish the German GmbH) before a notary public. The signature and the signatory’s authority to sign on behalf of the grantor must then be certified by a notary public. The notary public’s signature must then be authenticated by Apostille in order to evidence the legalisation of the notary’s signature for use of the notarised document abroad. This procedure is based on the convention abolishing the requirement of legalisation for foreign public documents signed in The Hague on 05 October 1961. The three documents (Power of Attorney, Certificate of Notary Public and Apostille) should be inseparably bound together by e.g. ribbon and seal of the notary.

Furthermore, a Secretary’s Certificate must be completed and signed by the Company Secretary of the founding company in order to evidence the existence of the founding company (also a copy of the company’s certificate of incorporation should be attached), that it is entitled to subscribe to shares in a German GmbH and that the signatory of the Power of Attorney is entitled to sign the Power of Attorney on behalf of the founding company. The Secretary’s Certificate must also be sworn to and subscribed before a notary public, whose signature must be authenticated by Apostille. Again, these documents (Secretary’s Certificate, Notary’s Certification and Apostille) must be inseparably bound together.

The Memorandum of Incorporation (the formation document) is then signed by the German legal counsel on behalf of the founding person or company under the Power of Attorney. Articles of Association (Satzung) of the GmbH must be attached to the MoI. A basic version (in German and English language) is published here for easy reference.

Furthermore, the founding process requires a notarial instruction letter from a German notary to be addressed to the GmbH’s first director (who is appointed in the Memorandum of Incorporation). German law requires that the (first) director is advised in notarial form of certain legal provisions pursuant to which persons who have been convicted of certain bankruptcy crimes or who have been forbidden by administrative action to exercise certain trades are barred from acting as director of a German GmbH.

Finally, the newly founded GmbH must apply to the Commercial Register for registration of the incorporation of the GmbH, the appointment of its first director and a list of shareholders of the GmbH. The application includes a section in which the newly appointed director must give a specimen of his/her signature for deposit with the Commercial Register. This document must be signed by the newly appointed director personally in the presence of a notary public. It may not be signed by anyone else under power of attorney because it contains certain assurances to be given by the director personally regarding his/her eligibility to be a director of a German GmbH. The notary public should then attach a separate sheet on which he certifies that the director’s signature has been made in his presence.

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For further information and assistance please contact Graf & Partners LLP, Munich, Germany, www.grafpartner.com, attention of Mr. Bernhard Schmeilzl, Master of Laws (Leicester), mail@grafpartner.com

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Additional material on German law and the German legal system is available here

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The salary of German employees is subject to income tax and social security deductions. Employees pay income tax according to their individual tax rate (depending on their annual income). The tax is deducted directly from the salary which means that the employer is responsible for its actual payment. Germany has a linear progressive income tax rate starting at 15% and ending with the maximum tax rate of currently 42%. Compulsory social security (also deducted directly from the pay check) is borne equally by employer and employee. Social security includes health and unemployment insurance as well as state pension.

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Consiglio Nationale Forense

Ordine degli Avvocati di Roma

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Ordine degli Avvocati e Procuratori di Milano

Organismo Unitario dell’Avvocatura Italiana

Ordine degli Avvocati Bari

Consiglio degli Avvocati di Genova

Tiroler Rechtsanwaltskammer