Evidence Submission on the Cost of a First Formal Hire in Germany

Subject: Evidence for TM-001, Fair Hiring Cost Standard

1. Purpose and scope

1.This submission places before the Team Council a consented, anonymized set of evidence from six members in Germany. It concerns the cost and administrative uncertainty that these members encountered when considering a first or early formal hire. The submission does not identify any member’s business, customers, workers, advisers, or counterparties. It does not name or accuse any company.

2.The evidence is a small, qualitative submission. It is not a representative survey of German employers, an audit of payroll records, or an estimate of the effect of a particular law. The Secretariat has reviewed the materials as described by the submitting members; it has not independently verified the underlying records. The accounts are presented to help identify a recurring problem and to inform the Council’s draft, not to establish a universal cost figure.

3.The members consented to publication of a grouped account and to the use of non-identifying labels A to F. They did not consent to publication of business names, locations below country level, worker identities, or documents that could identify them. The Secretariat has therefore summarized the documents and figures rather than reproducing them.

4.The submission is considered alongside the Team Council’s evidence base as of 26 July 2026: 79 members in 32 countries; 83 reports from 28 countries; all 83 reports classified as hiring-cost situations; a median amount at stake of approximately US$4,115; and 30 reports filed in the preceding 30 days. Those are Council-wide figures, not findings about this six-member group. The Council’s reports are not a probability sample and should not be treated as one.

2. The submitting members and evidence received

5.The group comprises six members operating in Germany. Their work spans small professional services, food preparation, repair, design, and local distribution. These descriptions are broad by design. The members report employing between zero and eight people at the time relevant to their accounts. Four were considering a first or next hire; two had recently made an early hire and submitted records of the decision process.

6.The group submitted 27 items for Secretariat review: dated notes of hiring decisions, draft budgets, payroll or employment-cost estimates, registration checklists, correspondence with service providers, and records of revised or deferred plans. In several cases, members supplied more than one version of a cost estimate. The documents vary in completeness. Some show the date and assumptions used; others are personal working notes. The Secretariat has not treated estimates as actual payments unless the member described them as paid.

7.Members reported the following sequence. In January and February 2026, three began planning a hire and sought an estimate of total employment cost. In March, two compared a part-time arrangement with a longer-hours arrangement and recorded that the total cost was difficult to predict before confirming hours and payroll treatment. In April, one member obtained a written estimate and revised the proposed start date while clarifying registration steps. In May, two

members reported that they had deferred a planned hire; one cited the expected total cost, while the other cited the combination of cost uncertainty and the time required to complete steps across different processes. In June, one member who had proceeded with a hire submitted a first-month payroll record and a note comparing it with the earlier estimate. This chronology reflects the six accounts; it is not a national chronology of hiring conditions.

8.The members described three kinds of cost information. First were estimated gross pay and employer-side contributions, expressed in euros. Second were one-time or recurring administrative charges, including assistance with payroll setup where used. Third were the members’ own estimates of time spent finding, checking, and entering information. The records do not provide a consistent basis for valuing owner time, and the Secretariat does not combine that time with cash costs.

9.The monetary cases below are rounded summaries of member-supplied figures. US-dollar equivalents are approximate equivalents stated by the members or in their submitted working materials. The members did not state a single conversion date and rate for all figures. The equivalents are consequently included for orientation only; they are not Secretariat foreign-exchange conversions and should not be used as comparable price quotes.

10.These cases are not six comparable offers for identical workers or hours. They differ in proposed pay, work time, assumptions, services used, and the stage of the hiring process. In particular, the figures should not be read as a standard cost of hiring in Germany. Their relevance is that members recorded uncertainty, repeated estimation, and decisions made before the full process was settled.

3. Evidence and its limits

11.The documents described above include contemporaneous notes and records, rather than accounts reconstructed solely from memory. That feature supports their use as evidence of what the members understood and did at the time. It does not establish that every estimate was correct, that the same steps apply to every employer, or that the costs arose from one policy or institution.

12.The submission identifies a practical information problem. Members reported that they needed to bring together pay assumptions, employer-side costs, registration steps, and payroll requirements to decide whether a proposed hire was affordable. Several records show an estimate changing after hours or assumptions changed. The records do not establish that the underlying rules themselves changed. They show that members did not regard the cost and process as sufficiently settled at the point when they had to make a hiring decision.

13.The Council should distinguish uncertainty from the existence of a cost. A social contribution or payroll cost may be clear to an experienced adviser and still be difficult for a small employer to forecast without assistance. Conversely, a member’s estimate may be incomplete or based on a mistaken assumption. The draft should therefore address access to a usable, predictable calculation and a coherent registration route, while avoiding a promise that every employer will face the same amount.

14.External context is consistent with treating the issue as material, but does not prove the members’ specific accounts. The OECD reports an average tax wedge of 35.1 per cent across OECD countries for 2025 and reports 49.3 per cent for Germany. These are comparative indicators, not the cost of the particular hires described here and not a measure of the members’ administrative time.¹ The ILO describes micro, small and medium-sized enterprises as accounting for about 70 per cent of employment worldwide and reports that about 80 per cent operate in the informal economy. Those worldwide figures give context to the importance of formalization, but they do not establish that hiring costs caused informality in this German sample.²

15.The evidence before the Council does not contain a specific description of German statutory provisions governing the members’ registration, contributions, payroll, or hiring arrangements. The draft should receive jurisdiction-specific legal review before it is presented as guidance or a legal standard. This submission’s recommendations concern the design of an accessible process and a predictable cost estimate, not a proposed legal interpretation.

4. Assessment against the five-part pattern test

Volume

16.The submission adds six member accounts, 27 described documents, and a range of reported hiring decisions to the evidence before the Team Council. It does not, by itself, demonstrate national prevalence. The Council-wide record as of 26 July contains 83 reports from 28 countries, all categorized as hiring-cost situations. That volume is sufficient to justify continued examination of the issue within the Council’s process, but not to conclude that the German cases represent employers generally or that any one cost component dominates across countries.

Frequency

17.Within this group, uncertainty or repeated checking appears in several accounts, and the timeline extends from January through June 2026. Three members described seeking or revising estimates; two described a postponed or deferred hire; and the member who proceeded supplied a comparison between an initial budget and a first-month record. These are overlapping observations, not a count of independent incidents in a wider population. They show recurrence within the submitted set, while leaving frequency among all small employers unknown.

Consistency

18.The accounts share a recognizable sequence: a member considers a hire, seeks to understand total cost and required steps, revises an assumption or obtains further information, and then changes the proposed hours, date, or decision. The specific amounts and outcomes differ. The evidence is therefore more consistent about the type of difficulty—forecasting and navigating an early hire—than about its size, its precise cause, or a uniform remedy.

Spread

19.This submission is geographically narrow. All six members are in Germany. The Council-wide Team Council evidence comes from 28 countries, and its membership spans 32 countries, but those totals do not show that the same process or cause applies in each jurisdiction. The evidence supports a cross-country Council inquiry into the general problem of first-hire costs; it does not support exporting a Germany-specific cost assumption or a single administrative design without local adaptation.

Corroboration

20.The accounts are supported by varied records: dated budgets, written estimates, checklists, correspondence, time logs, and a first-month payroll record. The presence of different document types provides some corroboration that the members encountered the described sequence, rather than merely sharing a general opinion. The material is not independently audited, and the Secretariat has not tested calculations with employers, payroll providers, or public authorities. External OECD and ILO data provide broad context only; neither corroborates the individual transactions.

21.On this evidence, the submission strengthens the case for a draft that is testable and practical. It does not ask the Assembly to infer that a single contribution rate, threshold, or legal change would resolve all cases. Nor does it claim that all six members would have hired under a different arrangement. The reported outcomes support asking whether a simpler and more predictable first-hire process could reduce avoidable delay and uncertainty.

5. Recommendations for the TM-001 draft

22.The submitting members ask the Team Council to develop the Fair Hiring Cost Standard around three linked outcomes already within TM-001: lower and simpler employment costs for a business’s first ten hires; phased social contributions; and one-stop payroll registration

with predictable rules. The standard should make clear that its purpose is to help small employers hire formally, not to weaken workers’ protections or transfer ordinary business risk to workers.

1. Provide a first-ten-hires cost pathway. The draft should call for a clearly stated method by which an eligible small employer can estimate total employment cost before agreeing a start date. The estimate should distinguish gross pay, employer-side contributions, mandatory charges, and optional paid services. It should state the assumptions used, including hours and pay period, and identify which items can change with those assumptions.

2. Recommend phased contributions for early hires. The standard should invite competent authorities to assess a staged contribution approach for a business’s first ten hires, with the phase and eligibility rules stated in advance. Any model should be designed to avoid abrupt cliffs at the tenth hire, artificial splitting of businesses, substitution of contractors for employees, or discrimination among workers doing equivalent work. The submission does not propose a rate or a legal mechanism; those require evidence and jurisdiction-specific review.

3. Set a one-stop registration objective. An employer should be able to identify the required steps, submit the information once where practicable, and see which institution or process is responsible for each next action. Where a fully integrated system is not feasible, the standard should call for a single, maintained checklist and a clear route to the relevant services.

4. Require predictable guidance and change notices. Public-facing guidance should explain what an estimate includes, what it excludes, and when a change in hours, pay, or other assumptions affects the result. Material changes to requirements should be communicated in plain language and with reasonable notice where possible. A simple worked case should be illustrative, not represented as a quotation for every employer.

5. Protect workers and preserve formal employment. Any cost-reduction proposal should maintain applicable worker rights, clear employment records, timely payment, and access to relevant protections. The standard should reject reductions achieved by misclassification, unpaid work, concealed hours, or shifting employer obligations onto a worker.

6. Make the process measurable. Authorities or participating institutions should be encouraged to track completion time, repeated submissions, requests for correction, employer comprehension, and early-hire formalization, with privacy safeguards. Evaluation should distinguish between a lower direct cost, a shorter administrative process, and greater certainty; these are related but different outcomes.

7. Offer a route for small employers to correct mistakes. The standard should encourage clear contact points and proportionate correction procedures for good-faith errors during an early hire. This recommendation is about accessible process design and does not prescribe a legal exemption, penalty rule, or entitlement.

23.The members also recommend that the Council test a draft cost worksheet against cases like those summarized here. The worksheet should allow a user to change hours and pay assumptions without restarting the entire process. It should show which inputs are estimates and which are confirmed. It should not present a single number as definitive if required information is missing.

24.A consultation draft should invite feedback from small employers, workers, payroll practitioners, and relevant public bodies. Questions should include whether the proposed steps can be completed without specialist assistance, which assumptions are most commonly misunderstood, and what safeguards are needed to prevent misuse of a first-ten-hires arrangement. Any responses should be assessed and reported in aggregate, with identifying details withheld unless the contributor chooses otherwise.

6. Requested treatment and conclusion

25.The Secretariat submits this material to the Team Council as member evidence for TM-001. The members ask that the Council preserve the distinction between their personal records and Council-wide findings; cite the figures as reported, rounded cases rather than standard costs; and carry the limitations stated in this submission into any subsequent public document.

26.The evidence is modest in scale but concrete in form. It records the practical sequence by which small employers try to understand a first or early hire: estimate, check, revise, and decide whether or when to proceed. The shared difficulty is not demonstrated to be one particular charge. It is the challenge of reaching a reliable, usable view of total cost and required steps early enough to make a hiring decision.

27.The Council should use this submission to test whether a draft standard can make that sequence simpler and more predictable while maintaining worker protections. It should not treat the submission as proof that a particular rate or statutory change is required. The next step is a draft that can be examined publicly, compared across jurisdictions, and revised in light of evidence from both employers and workers.

Sources

[1] OECD, Taxing Wages 2026, country note figures for 2025.

[2] International Labour Organization, Micro, small and medium-sized enterprises.

Notes and sources

Sources

1. OECD, Taxing Wages 2026 — Germany country note

2. International Labour Organization, Micro, small and medium-sized enterprises