Workation Demand Booms in Germany, But Employers Risk Double Taxes and Wrongful Dismissal Claims
10.06.2026 - 12:38:38 | boerse-global.de
Roughly 52% of all global Google searches for "workation" originate in Germany, according to the Workation Atlas published in June by DataPulse. The concept of blending work with holiday abroad is surging in popularity, yet many German companies remain hesitant to embrace it. Their reluctance stems from a thicket of legal pitfalls spanning international labour law, social insurance, and tax codes.
Take the A1 certificate. Within the EU, the "place of employment" principle usually applies. If a company wants to keep an employee enrolled in the German social security system while they work from another EU country, it must obtain this document. Without it, the employer could face dual social contributions or even fines in the host nation. And the problem deepens with longer stays: if an employee’s activity abroad is substantial enough, it can create a permanent establishment for the company, exposing a portion of its profits to taxation in the host country.
Even termination of employment becomes a legal minefield. German law, under § 623 of the Civil Code (BGB), requires written form for a dismissal — an email is invalid. The dismissal letter must also be properly received by the employee, as per § 130 BGB. When an employee hops between locations abroad, serving that notice becomes a logistical and legal headache. Employees who embark on a workation without explicit approval risk being fired for violating company instructions. A recent Spanish court ruling underscores the seriousness: a court there upheld the dismissal of an employee for repeatedly ignoring shift directives. Such breaches of operational instructions are treated strictly, even across borders.
The application of foreign law is another trap. While the Rome I Regulation allows parties to choose the governing law in an employment contract, once an employee works abroad for several weeks, compulsory local protections kick in. Employers must then comply with host-country standards on minimum wage, working hours, holiday entitlements, and protection against unfair dismissal.
Accident insurance also raises red flags. German statutory accident insurance only covers activities directly linked to the employer’s business. Pure leisure activities during the workation are not covered, which can lead to disputes if an employee is injured outside work hours.
IT security compounds the risk. Unsecured hotel or café Wi-Fi networks and the absence of physical access controls expose sensitive company data. A Retarus study from June adds that 50% of European companies depend on non-European IT providers, making compliance with regulations such as NIS2 or DORA even more challenging.
Instead of handling workation requests case by case, experts advise companies to draw up a clear policy. Recommended limits include a maximum of 30 days per year per country, along with a predefined list of approved destinations. Employment contracts should be supplemented with addenda that define the workplace precisely, and clauses covering IT security, intellectual property rights, and responsibility for equipment costs should be included. Since the employer remains liable for occupational health and safety even during mobile work, training employees on compliance with the Working Hours Act is essential.
The situation is especially tricky for international freelancers. If a freelancer is heavily integrated into a company’s organizational structure, they risk being classified as a bogus self-employed worker — a designation that brings its own set of legal and financial consequences.
