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I recently accepted a job offer at German software company. My salary in the probation period will be 3000 Euros and then afterwards 3250 Euros. I don't have experience in the industry because i'm just a fresh graduate (master in CS) from a German Uni. One of my German friends told me that my salary will be increased automatically every year because of some labor law.

My questions:

1- is there a law in Germany that forces employers to raise the salaries of employees every year?

2- If so, how much would the raise be?

3- If no such law exists, what is the criteria that I should use to estimate how much the increase should be for me? Just to give a fair estimate.

As I found from my research, the pay in this company is a little below the average. But this is for almost all employees. Mainly because it's new (~10 years) and not that big. They have a startup culture. Also I read from some employees reviews (www.kununu.com) that although the salaries are not that high, but it pays off because of the culture and working environment. I met a lot of employees and most of them told me the last time they had to work overtime was like years ago and there is minimal to almost no stress working there. The company is a very nice company and it seems very comfortable to work for. They also have very interesting projects and tasks. Thus I don't want to think about leaving the company after one or two years just because of the money. I want to be really fair in my assessments.

I found that a lot of fresh graduates earn about 4k/month at big German companies but I have no idea how boring/interesting/stressful their jobs are.

Edit:

My contract is a permanent contract.

  • "1- is there a law in Germany that forces employers to raise the salaries of employees every year?" No, there's no law, but unions that bargain the condiitons every year. If you have a job, that is under that tariff contract, you may expect to participate from these bargains. – πάντα ῥεῖ May 29 '15 at 20:14
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is there a law in Germany that forces employers to raise the salaries of employees every year

No, there is no such law. Any payment details are set in the contract. That includes potential automatic increases. The only law that governs wages is the minimum wage law "Mindestlohngesetz (MiLoG)" but if you are working as a developer, you will never come into contact with it. If you would, it would force the contract to be changed, so the simple rule remains: your payment is as written in your contract. Any change is a change to this contract and is only valid if accepted by both sides.

Now what are common terms in contracts that do trigger automatic changes?

  • It is quite common to grant an increase in payment after the probation period. That would be clearly written in the contract (for example "Nach der Probezeit beträgt das Gehalt ...").

  • The company could be following a contract with a union on how to pay certain jobs (called a Tarifvertrag). It may even be that they take this as a base and put something on top. The Tarifvertrag is a minimum though. You cannot say you are following this contract when you change any part of it to be less favorable. Such a Tarifvertrag often does include regular raises. Your contract might only read "you are paid according to the Tarifvertrag XYZ".

  • If you are working for the government as a public official, your wages will be set by the state. There are tables just like in a Tarifvertrag. Your contract will include a reference to those instead, it's called a Besoldungsgruppe.

There is no hard and fast rule what you should ask for if you want a raise. The going inflation rate is reasonable. But in the end, you should ask yourself how well is the company doing and what was your part in it? How much money would you make if you were working someplace else?

And don't use other cities as a reference if you don't want to move there. For example, I could easily make 50% to 100% more on paper if I moved to a city either 90 minutes north or 5 hours to the south. But the truth is that they pay more because the cost of living is so high in these cities. They don't actually get more money after deducting taxes and living costs, they just have higher numbers on their paychecks and all bills. Someone making 4K right out of university as a developer is probably in one of those cities.

  • can you mention some of those expensive cities in the western side of Germany? Al i know is Munich. Are (in particular) Stuttgart, Freiburg and Heidelberg considered as some of those cities? i.e. is it considered underpaid if the salary was less than 4k in those cities? – Jack Twain May 30 '15 at 8:05
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    That's hard to say. I'm not living nor looking for a job there so I have not researched it. You may want to google statistics like "Gehaltsreport", "Gehaltsspiegel" and find sites that list by profession and by city. You may also want to check Lebenshaltunskosten for the city in question. Generally speaking, your salary now is not as important as in other countries. When you switch jobs, nobody in Germany will ask for your former salary, only what you want as your next salary. – nvoigt May 30 '15 at 8:31
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nvoigts answer covers a lot of points where there are fixed increases in salary. However, in companies which do not fall under the "Tarifvertrag" or "öffentlicher Dienst" in general, it is very common to have regular (i.e. yearly) performance reviews. During those reviews not only your performance is discussed, there is also time where you can discuss things with management. One of those aspects is to revise your current contract.

  • It is your time to negotiate a pay-raise, typically at the end of the performance review, when positions are set.
  • Also negotiating more paid time off is common.
  • Or a conversion of both (i.e. less salary increase but more paid time off).
  • Negotiate the hours you work per week if you like.

Pretty much anything can be brought up. Should your review be positive, you can aim for higher goals. Definitely a pay-raise higher than inflation. The numbers you mention (from 3000€ to 3250€) translate into a pay raise of 8.33%. This number is on-par with that I experienced (a company which matches your description, possibly even the exact same company, who knows).

Companies do these reviews in order to "review" your progress, but also to give you a chance for pay-raises without having to switch companies. They are probably willing to give a pay raise.

This could be, what your friends wanted to tell you. So better make sure that your yearly performance review is happening.

Good Luck!

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As far as I know there is no such law. But in many companies it is customary to negotiate a raise yearly. The absolute minimum you should negotiate for is the current rate of inflation.

Larger companies often have a collective agreement with a trade union ("Tarifvertrag") which determines the wages for (almost) all positions and by how much they raise during the years the agreement was negotiated for, but for a small startup this would be quite unusual.

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    is there an official website where I can get the current rate of inflation for a specific city? – Jack Twain May 29 '15 at 20:21
  • @JackTwain The official rate of inflation for the whole country is calculated by the Federal Statistical Office (Statistisches Bundesamt). – Philipp May 29 '15 at 20:24
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    I can't speak for the situation in Germany, but here in the U.S., you couldn't say that the inflation rate would be the "absolute minimum". If the company is making money and you are doing well at your job, then yes, I'd expect a raise to exceed inflation. But if the company is in trouble, they are likely to have small or no pay raises. And of course if they're not happy with your work, they may give you little or no pay raise. – Jay May 29 '15 at 22:44
  • There are good, very good companies in germany. But don't expect a pay raise, even when the company makes more profit - typical in "Mittelstand". Often you will be blocked even the living costs have risen. That's a main cause that (young) developer switching jobs in germany very often.. – user1363989 May 30 '15 at 12:38
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    I'm no lawyer but as far as I know, it's illegal to write into a German contract that your salary increases with inflation. Allowing such clauses can raise inflation and we German's thought about having anti-inflations measures after our experiences with hyperinflation. – Christian May 30 '15 at 21:07

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