How to Hire Employees in Germany

Complete Step-by-Step Guide

Direct Answer (first 80 words):

Hiring in Germany via EOR takes 8–10 days. You identify the candidate and define salary/role. The EOR drafts a German-compliant employment contract, runs compliance checks, registers the employee with tax and social security authorities, and activates payroll. You manage onboarding to your team. The process is straightforward but requires strict adherence to German labour law (trial periods, notice periods, mandatory benefits, GDPR compliance). This guide walks through each stage with timelines, checklists, and common mistakes to avoid.

Quick Navigation

Pre-Hire: Planning & Preparation
Stage 1: Defining the Role & Salary
Stage 2: Candidate Selection
Stage 3: EOR Agreement & Scoping
Stage 4: Employment Contract Drafting
Stage 5: Compliance Checks & Verification
Stage 6: Employee Onboarding & Documentation
Stage 7: Payroll Activation & First Day
Stage 8: First 30 Days Management
Complete Hiring Timeline & Checklist
Common Hiring Mistakes in Germany
FAQ

1. Pre-Hire: Planning & Preparation

Before you identify a candidate, clarify your hiring needs.

Step 1A: Define the Role

What you need:

Job title: E.g., “Senior Backend Engineer,” “Product Manager,” “Sales Development Rep”
Job description: Key responsibilities, required skills, experience level
Reporting structure: Who will they report to? Which team?
Working arrangement: Full-time on-site, remote, hybrid?
Working hours: Full-time (typically 40 hours/week in Germany), part-time (specify hours)?

German considerations:

Working hours: Germany typically uses 40 hours/week as standard. Part-time is possible but must be clearly specified in contract.
Remote work: Legal and common. Must be specified in contract (how many days remote vs. in-office, if applicable).
Travel requirements: If the role involves travel, specify frequency and expectations.

Step 1B: Define Compensation & Benefits

What you need:

Base salary: In EUR (not USD/GBP). E.g., €60,000/year or €5,000/month.
Bonus/variable pay: If applicable. E.g., “Up to 15% annual bonus based on company performance.”
Benefits beyond statutory minimum: E.g., “Extra 5 days vacation (25 total vs. 20 minimum),” gym membership, etc. (optional)
Signing bonus: If applicable (rare in Germany, but possible for senior hires).
Stock/equity: If applicable; note that stock options are complex in Germany (tax implications).

German considerations:

Minimum wage: Currently €12–13/hour. Cannot go below.
Statutory benefits are mandatory: You cannot opt out. Health insurance, pension, unemployment, care insurance are built-in (21% employer contribution).
13th month salary: Some industries/companies in Germany pay a 13th month bonus in December. Decide upfront if you will offer this.
Holiday pay: German employees receive paid holiday (minimum 20 days). This is mandatory, not optional.

Real example:

Base salary: €55,000/year
No bonus
Extra 5 days vacation (total 25 days)
No signing bonus
No stock (not typical for Germany unless senior/startup context)
Total cost to employer: €55,000 + 21% contributions + EOR fee = ~€73,000/year

Step 1C: Establish Hiring Timeline & Budget Approval

Timeline question: When do you need this person to start?

Next 2 weeks: Tight timeline. Must act fast.
Next month: Standard timeline (gives you time to vet candidates).
Next quarter: Flexible. You can be selective.

Budget approval: Confirm budget with finance/leadership. Include:

Salary (gross)
Employer contributions (~21%)
EOR fee (~€5–6K/year)
One-time costs (background check, visa support, if applicable)

Approval template:

Role: Senior Backend Engineer
Salary: €60,000/year
Total annual cost: €79,500 (salary + contributions + EOR fee)
Start date: July 1, 2026
Approved by: [CFO/CEO name]

2. Stage 1: Defining the Role & Salary (Your Responsibility)

This is entirely on you. The EOR does not help here.

Step 2A: Market Research

What to do:

Research salary benchmarks for the role in Germany
Use tools: Glassdoor (Germany), Kununu, PayScale, LinkedIn Salary
Factor in: Experience level, city (Munich & Berlin command premium), industry

Example:

Backend Engineer (3 years experience) in Munich: €55–70K
Backend Engineer (3 years experience) in Hamburg: €50–65K
Backend Engineer (3 years experience) in smaller cities: €45–60K

German salary norms:

Salaries are typically quoted as gross annual or monthly
13th month salary is negotiable (common in some industries, rare in tech)
Bonuses are discretionary (not standard)
Benefits negotiation is common (extra vacation, work-from-home days, etc.)

Step 2B: Create the Job Description

What to include:

Role title
Team & reporting line
Key responsibilities (3–5 bullet points)
Required qualifications (skills, experience, education)
Nice-to-have qualifications
Compensation range (optional; many companies list, some don’t)
Working arrangement (remote, on-site, hybrid)
Application instructions

German tip: Avoid age discrimination language. Do NOT write “energetic,” “digital native,” “young,” “fast-paced.” These can trigger AGG (Anti-Discrimination Law) complaints. Stick to objective qualifications.

3. Stage 2: Candidate Selection (Your Responsibility)

This is your hiring process. The EOR does not source candidates.

Step 3A: Recruit & Vet Candidates

How to find candidates:

LinkedIn recruiting
German job boards (StepStone, Indeed Germany, Xing)
Referrals (employee networks)
Recruiters / staffing agencies (if budget allows)
Direct outreach (if you know the person)

Vetting process:

Resume screen (qualifications, experience)
Phone/video interview (culture fit, role fit, questions)
Technical interview (if applicable; coding test, case study, etc.)
Reference checks (optional but recommended)
Final round (conversation with hiring manager or CEO)

German context:

Candidates in Germany often have CV (Lebenslauf) with photo and personal details (age, marital status). This is normal in Germany but do NOT use this info in hiring decisions (GDPR & AGG).
Salary expectations: German candidates are often direct about salary expectations upfront. Be prepared to discuss.
Notice period: Many German employees have 4 weeks notice at their current job, so timeline is 4 weeks from their acceptance to availability.

Step 3B: Make an Offer

What to communicate:

Role & title
Start date
Salary (gross, in EUR)
Benefits (if any beyond statutory)
Reporting line
Conditional on: Background check, right-to-work verification, standard onboarding (implied)

Offer format:

Email or formal offer letter (informal offer is fine; formal contract comes later from EOR)
Keep it simple; detailed contract will follow from EOR

Example offer email: “We are excited to offer you the position of Senior Backend Engineer at [Company]. Your start date will be July 1, 2026. Your gross salary will be €60,000/year (€5,000/month), paid monthly. Your benefits include: health insurance, pension contributions, 20 days annual leave (statutory minimum), and 5 additional vacation days (total 25 days). You will report to our VP Engineering, Jane Chen. This offer is conditional on successful background verification and right-to-work confirmation. Welcome to the team!”

Candidate’s response:

Acceptance (verbal or email)
May negotiate: salary, vacation, start date, benefits
Typically: Candidate accepts as-is or requests minor adjustments

4. Stage 3: EOR Agreement & Scoping (EOR-Led, You Approve)

Once candidate accepts, you engage the EOR.

Step 4A: Contact Your EOR Provider

Information to provide:

Candidate name, email, phone
Candidate nationality & residency (important for work permits)
Role title & description
Salary (gross, in EUR)
Start date
Working hours (typically 40/week full-time)
Any special arrangements (remote, part-time, etc.)
Benefits you offered (extra vacation, etc.)

EOR’s response (within 1 business day):

Confirmation of coverage in Germany
Service fee quotation (e.g., €500/month or X% of salary)
Timeline & next steps
Client services agreement (for you to sign)

Step 4B: Sign the EOR Client Services Agreement

What this is:

Contract between you and the EOR
Specifies: Service scope, fees, payment terms, liability, termination rights
Typically 5–10 pages

Key terms to review:

Service scope: What is included? (Payroll, compliance, HR support, etc.)
Fees: Monthly fee amount & what’s included
Payment terms: When do you pay the EOR? (Typically 5 days before payday)
Liability: What happens if there’s an error?
Termination: Can you terminate the agreement? Notice period?
Data protection: Is there a Data Processing Agreement (DPA)? (Legally required in Germany)

GDPR requirement: Ensure the agreement includes a Data Processing Agreement (DPA) or a reference to it. This is non-negotiable for Germany.

5. Stage 4: Employment Contract Drafting (EOR-Led, You Review)

The EOR now drafts the employment contract. This is a critical legal document.

Step 5A: EOR Drafts Contract (Days 2–5)

What the EOR does:

Research applicable German labour law
Draft contract in German (legally required)
Include mandatory clauses:
- Job title, salary, working hours
- Start date, trial period (Probezeit), notice period
- Annual leave entitlement (minimum 20 days)
- Confidentiality, IP assignment (if relevant)
- Remote work terms (if applicable)
- Compliance with Arbeitsgesetzbuch (Labour Code)

Typical contract structure (in German, with English translation):

Parteien (Parties) — EOR entity, employee, your company as client
Tätigkeit (Activity) — Job title and responsibilities
Vergütung (Compensation) — Salary, payment terms, taxes/deductions
Arbeitszeit (Working Hours) — Hours per week, schedule
Probezeit (Trial Period) — 2 weeks; either party can terminate with 1 day notice
Kündigung (Termination) — 4-week notice period after trial
Urlaub (Leave) — Minimum 20 days/year
Geheimhaltung (Confidentiality) — NDA if applicable
Geistiges Eigentum (IP) — Work product ownership
Schlussbestimmungen (Final Terms) — Governing law (Germany), dispute resolution

Step 5B: You Review Contract (Days 5–7)

What to check:

Salary is correct
Start date is correct
Trial period is 2 weeks (standard)
Notice period is 4 weeks (standard, or longer if you negotiated)
Any special terms (remote work, benefits, part-time hours) are included
Confidentiality & IP clauses are appropriate for your company

Red flags:

❌ Trial period longer than 6 months (unusual and legally risky)
❌ Notice period shorter than 4 weeks (illegal)
❌ No mention of annual leave (illegal — minimum 20 days required)
❌ Discriminatory language (age, gender, religion — violates AGG)

If changes needed:

Mark them up in the contract
Send to EOR with explanations
EOR confirms changes are legal under German law
Revised contract sent back to you

Once approved:

You sign as “Client/Employer’s Representative”
EOR signs as legal employer
Both copies are ready to send to candidate

6. Stage 5: Compliance Checks & Verification (EOR-Led)

While contract is being finalized, EOR runs compliance checks.

Step 6A: Right-to-Work Verification

What it checks:

Candidate has legal right to work in Germany
For EU/EEA citizens: Straightforward (free movement within EU)
For non-EU citizens: Must have valid residence permit, work visa, or other legal status

Documents needed:

Copy of passport (front & back)
Residence permit (if non-EU, Aufenthaltserlaubnis or equivalent)
For EU citizens: ID card or passport sufficient

Timeline: 1–2 days

Step 6B: Background Check (Optional)

What it checks:

Criminal history (varies by country and role sensitivity)
Employment verification (previous employers confirm employment dates)
Education verification (degrees are authentic)

Cost: €50–€200 (you pay; optional)

Timeline: 3–7 days (depends on countries involved)

German consideration: Criminal checks are more restricted in Germany than in US/UK. GDPR limits what background checks can reveal. Most tech companies do not require background checks unless role involves security or financial access.

Step 6C: Compliance Summary

EOR confirms:

Candidate has right to work in Germany ✓
No legal barriers to employment ✓
Background check (if done) clear ✓
Ready to proceed to onboarding ✓

7. Stage 6: Employee Onboarding & Documentation (EOR + You)

Now the employee is formally brought into the system.

Step 7A: Employee Signs Contract (Days 6–8)

What happens:

EOR sends contract to employee (in German + English translation)
Candidate reviews contract
Candidate signs and returns to EOR (digital signature is fine in Germany)
EOR countersigns and keeps on file

Timeline: 1–2 days (depends on candidate responsiveness)

Step 7B: Collect Onboarding Documentation (Days 7–9)

EOR collects from employee:

Tax declaration (Steuererklärung / Lohnsteuerkarte details)
- Tax class (Steuerklasse): Usually Class 1 (single, no dependents); Class 3 if married and spouse not working
- Identify number (Identifikationsnummer)
- Church tax status (if applicable)
Bank account details (for salary transfer)
Health insurance choice (public or private; EOR will register)
Emergency contact information
Beneficiary information (for pension, if applicable)

You collect from employee:

Proof of employment start authorization (if they are current employee with notice period)
Any company IP or confidentiality agreement signature (if different from employment contract)
Workstyle/communication preferences (remote, on-site, flexible hours, etc.)
Equipment needs (laptop, monitor, peripherals)

Step 7C: Register with German Authorities (Days 8–10)

EOR registers employee with:

Finanzamt (Tax Office) — Employee’s income tax registration
Deutsche Rentenversicherung (German Pension Insurance) — Pension contributions registration
Health insurance fund — Health insurance enrollment (public fund like AOK, TK, or private insurer)
Arbeitsagentur (Employment Agency) — Unemployment insurance
Local municipal office — Residency registration (usually the employee does this themselves, not EOR)

Timeline: 2–5 days (government processing varies)

8. Stage 7: Payroll Activation & First Day (EOR + You)

Step 8A: Payroll System Setup (Day 9–10)

EOR does:

Creates employee record in payroll system
Inputs salary, tax class, deductions
Generates first month’s payslip (draft, ready for processing)
Confirms payment method & amount owed

You do:

Provision IT access (email, Slack, GitHub, internal systems)
Assign workspace/desk (if on-site)
Send welcome email to team
Brief manager on new hire (start date, role, background)

Step 8B: First Day Logistics

Morning of start date:

Employee has email & system access
Manager is available for greeting
Team is informed of new hire
First assignment/onboarding task is ready

During first week:

Introduce to team
Walk through company handbook
Set up 1:1 with manager
Get feedback on first impressions

EOR does:

Confirms employee received login credentials
Checks employee has access to self-service portal (where they can view payslips, request leave, update personal info)
Sends welcome email with support contact info

9. Stage 8: First 30 Days Management (You Manage)

This is where the employee integrates into your team.

Step 9A: Trial Period (First 2 Weeks)

Purpose: Test fit. Either party can terminate with 1 day notice.

What to do:

Clear expectations: role, projects, success criteria
Frequent feedback (daily or every other day)
Check in on onboarding: Do they have tools? Understand role? Feel welcomed?
Document performance (good or concerns)

Red flags to watch:

❌ Not meeting basic job requirements (can write code, speak English, understand role)
❌ Cultural misfit (conflicts with team, abrasive communication, etc.)
❌ Integrity issues (dishonesty, taking credit for others’ work)
❌ Availability issues (late frequently, unavailable during core hours)

Decision at end of trial period:

Keep: Employee passes trial. Move forward with normal employment.
Terminate: Issues exist; easier to exit now (1 day notice, no grounds needed, no documentation).

If terminating during trial:

Notify EOR: “We are terminating John’s employment, effective [date + 1 day]”
EOR processes final payroll
Employee leaves cleanly

Step 9B: Days 15–30 (Post-Trial Period)

Once trial period ends (Day 15+):

Employee now has full German labour law protections
Termination requires 4-week notice + grounds
You cannot terminate easily
Continue frequent feedback & integration

Focus areas:

Role clarity: Is the employee clear on responsibilities and expectations?
Team integration: Is the employee building relationships with team members?
Onboarding completion: Is the employee through all onboarding steps?
Performance: Is performance meeting expectations?

Manager 1:1s:

Weekly during first month (not standard for established employees)
Focus on support, not evaluation
Listen to employee’s experience, concerns, questions

10. Complete Hiring Timeline & Checklist

Timeline Overview

Day	Stage	Owner	Key Action
Day 0	Pre-hire	You	Define role, salary, budget approval
Day 1–5	Recruitment	You	Recruit, vet, make offer, receive acceptance
Day 2–3	EOR engagement	EOR	Send agreement, discuss coverage, fees
Day 3–4	Scoping	You + EOR	Provide candidate details, EOR confirms
Day 4–6	Contract draft	EOR	Draft German-compliant contract
Day 5–7	Contract review	You	Review, approve, request changes if needed
Day 6–9	Compliance checks	EOR	Right-to-work, background check (if applicable)
Day 7–8	Employee signs	EOR + Employee	Contract signature, documentation collection
Day 8–10	Authorities registration	EOR	Tax, pension, health insurance, unemployment registration
Day 9–10	Payroll setup	EOR + You	Payroll activation, IT access provisioning
Day 11	Start date	You + EOR	Employee’s first day; you manage onboarding
Day 11–15	Trial period	You	Assessment; you or employee can terminate with 1 day notice
Day 15+	Normal employment	You	Employee has full labour law protection; 4-week notice to terminate

Total time: 8–10 business days from offer to first day

Hiring Checklist: Pre-Hire to Day 30

PRE-HIRE (You)

Define role, responsibilities, reporting line
Research market salary for role & location in Germany
Set compensation (gross salary in EUR, any bonus/benefits)
Get budget approval (salary + contributions + EOR fee)
Create job description (avoid age/gender/status language)

RECRUITMENT (You)

Post job / recruit candidates
Screen resumes, conduct interviews
Vet references (optional but recommended)
Make offer (verbal or informal email)
Receive acceptance from candidate

EOR ENGAGEMENT (EOR + You)

Contact EOR; provide candidate details
Receive EOR agreement and fee quotation
Review and sign EOR client services agreement
Confirm Data Processing Agreement (DPA) is included (GDPR required)

CONTRACT & COMPLIANCE (EOR-Led)

EOR drafts employment contract (in German)
You review contract for accuracy & legal compliance
Request any changes; EOR confirms legality
EOR sends contract to employee for signature
Employee signs and returns contract
EOR runs right-to-work verification
EOR runs background check (if required)
EOR confirms compliance checks passed

ONBOARDING DOCUMENTATION (EOR + You)

Collect employee tax declaration
Collect employee bank account details
Collect emergency contact info
EOR registers with Finanzamt (tax office)
EOR registers with Deutsche Rentenversicherung (pension)
EOR registers with health insurance fund
EOR registers with Arbeitsagentur (unemployment)

PAYROLL & IT (EOR + You)

EOR confirms payroll system setup
You provision email, Slack, GitHub, internal systems
You prepare onboarding materials (handbook, org chart, etc.)
You brief manager & team on new hire
Confirm employee has access to self-service portal

FIRST DAY (You)

Employee arrives / starts remotely
Manager greets employee & clarifies first project
Employee has all IT access & tools
Employee receives welcome email from CEO or Head of People (nice to have)

FIRST WEEK (You)

Daily check-ins with employee
Introduction to team / 1:1 with manager
Company handbook review
Role & expectations clarity
Feedback on first impressions (is this a good fit?)

FIRST 30 DAYS (You)

Weekly 1:1s with employee (ongoing feedback, support)
Assess trial period (by Day 15): decision to keep or exit
Integrate into team (socials, team rituals, etc.)
Monitor performance against role expectations
Address any issues early (performance, culture fit, etc.)

11. Common Hiring Mistakes in Germany

Mistake 1: Delaying Right-to-Work Verification

The error: You hire a non-EU candidate, then discover visa issues mid-onboarding.

Consequence: Start date delayed, employee and company frustrated, compliance risk.

Solution: Confirm right-to-work upfront with the EOR (before finalizing offer). If candidate needs visa sponsorship, factor in 4–8 weeks additional timeline.

Mistake 2: Not Including Trial Period in Contract

The error: Contract drafted without a trial period clause.

Consequence: If employee is a poor fit, you cannot easily terminate. You are locked in with 4-week notice requirement immediately.

Solution: Always include trial period (2 weeks standard) in the contract. This is your safety net.

Mistake 3: Agreeing to Impossible Salary Expectations

The error: Candidate negotiates salary beyond your budget, and you agree.

Consequence: You are locked in (changing salary mid-employment requires contract amendment & consent). Resentment if you later cannot meet expectations.

Solution: Be clear on salary range upfront. Negotiate before offer. Once offer is made, salary is fixed.

Mistake 4: Not Documenting Trial Period Concerns

The error: Employee underperforms during trial period. You want to terminate. But you have no documentation of poor performance.

Consequence: If you terminate and employee sues, you have no evidence of legitimate grounds. Wrongful termination claim.

Solution: Document daily. If performance is concerning, note specifics: what was expected vs. what was delivered. Document feedback given to employee. Then terminate during trial period (1 day notice, no grounds needed) or provide written warnings if terminating post-trial.

Mistake 5: Hiring Without Clear Job Description

The error: Hire someone for a “flexible role” without clear expectations.

Consequence: Employee is confused about role. Manager is frustrated with performance. Misalignment from day 1.

Solution: Be specific in job description, offer, and contract. What are the core responsibilities? What does success look like in Month 1, Month 3, Month 6?

Mistake 6: Not Mentioning Remote Work in Contract

The error: You hire a remote employee, but the contract is silent on remote work terms.

Consequence: Ambiguity on expectations. Employee thinks fully remote; you expect office days. Conflict.

Solution: If remote or hybrid, specify in contract: “Employee will work from home [3 days/week / fully remote / flexible], with in-office presence required [on Tuesdays, at team offsites, etc.].”

Mistake 7: Ignoring GDPR Compliance

The error: You hire without ensuring a Data Processing Agreement (DPA) with the EOR.

Consequence: GDPR violation. Potential fine up to €20 million or 4% of global revenue.

Solution: Require DPA from EOR before hiring. It is non-negotiable. This is a legal requirement, not optional.

12. FAQ

Q1: How long does it actually take to hire in Germany?

8–10 business days from offer acceptance to first day (assuming candidate is available immediately). If candidate has notice period (4 weeks is standard), add 4 weeks. So realistically: 4–6 weeks from offer to first day.

Q2: What if the candidate needs a work visa?

Non-EU candidates may need a residence permit (Aufenthaltserlaubnis) and work permit. Processing times vary but typically 4–8 weeks. Factor this into timeline. Germany is more open to work visas than some countries, but it adds time.

Q3: Can I hire someone who is currently employed in Germany?

Yes. They will have a 4-week notice period at their current job. So realistically: candidate accepts your offer → gives notice (4 weeks) → starts with you → ~8 weeks total.

You cannot ask them to leave current job immediately (legal risk for them; may trigger legal dispute with current employer).

Q4: What if the candidate wants more vacation than the legal minimum?

Standard in Germany is 20 days minimum. You can offer more (25–30 days is common in tech/startup world). Negotiate upfront and include in contract.

Q5: Can I require a non-compete agreement?

Yes, but with restrictions. Non-compete must be:

In writing
Limited to 2 years
Limited to reasonable geographic scope
For “legitimate business interests”

Enforcement is difficult in practice. German courts scrutinize non-competes strictly. Realistic use: for senior roles with access to trade secrets.

Q6: What if I want to hire someone part-time?

Possible. Specify in contract: e.g., “20 hours per week” or “3 days per week.” Salary adjusts accordingly. Benefits calculation may differ (part-time employees may have different insurance/pension rules).

Q7: Do I need to include stock options in the contract?

Stock options are complex in Germany (tax implications). If you want to offer equity:

Consult a tax lawyer
Specify in contract: vesting schedule, strike price, tax treatment
Document the stock option agreement separately from employment contract

Many startups avoid stock in Germany due to complexity; prefer cash bonuses instead.

Q8: What if the candidate fails the background check?

Rare, but possible. You can terminate the offer. However, in Germany, once an employment contract is signed, you have limited grounds to rescind it. Best practice: complete background checks before contract signature.

Q9: Can I have the employee sign an NDA or IP assignment separate from the employment contract?

Yes. These are often separate documents (especially IP assignment). The employment contract can reference them. EOR can include these clauses in the main contract or as attachments.

Q10: What if the candidate changes their mind before their first day?

If contract is signed, they are legally bound. Walking away may result in breach of contract claim. However, enforcement is weak in practice. You would lose the hire and have legal fees for minimal damages.

Best practice: Keep in touch post-offer. Confirm start date a few days before. But realistically, if they want to back out, you likely don’t want to force them into a relationship.

Sources & Citations

Bundesministerium für Arbeit und Soziales (BMAS) — German Labour Law & Employment Regulations, 2026. www.bmas.de
Arbeitsagentur (German Employment Agency) — Right-to-Work Verification & Registration Requirements. www.arbeitsagentur.de
Bundeszentralamt für Steuern (BZSt) — Tax Registration & Employee Onboarding Requirements, 2026. www.bzst.bund.de
Mercer Germany — Hiring Timeline & Compliance Checklist, 2025. mercer.com
EY Germany — Employment Onboarding Guide, 2025. ey.com/de

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Sibling Pages in Germany Hub:

[Cost of EOR in Germany] [internal link]
[Germany Employment Laws & Compliance] [internal link]
[Terminating Employees in Germany] [internal link]
[Germany Employment Contract Requirements] [internal link]

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[How Does an Employer of Record Work?] [global Pillar 2]

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