10 Tips for Your SAP HR Payroll Rollout to Germany

  • by Sven Ringling, Executive Director, iProCon Human Capital Management
  • October 15, 2007
10 points illustrate the complexity and nature of German payroll and help you prepare for a successful rollout.
Key Concept

Unlike some US organizations, companies in Germany and many other European countries see payroll as a part of the HR module rather than the accounting department. This usually leads to a high level of integration between payroll and the rest of HR in processes and systems, which is why German companies consider running payroll on a separate third-party system a hassle. SAP standard offers payroll solutions for more than 35 countries, which you can customize with add-ons from SAP or third-party suppliers. Germany, often high on the list for an international SAP HR rollout, has one of the most mature country versions.

Payroll is often the most challenging part of any international rollout. This is particularly true for Germany with its well-structured, but very complex tax and social security legislation. Many people make false assumptions and run into brick walls. I’m going to take you through the fun parts of German payroll and help you avoid the most common mistakes that are likely to happen if you approach German payroll with little or no special expertise. To be fair, even people who know German payroll walk into some of these traps occasionally.

False Assumption 1: It’s just another payroll schema — it can’t be a big deal.

If this is the first international rollout you do, you’ll certainly be surprised at the myriad details you have to consider. I will not go into the details of global templates and local customization in this article, but my experience shows that workload and possible problems are usually underestimated (as are the potential benefits when it’s done properly, by the way).

However, even if this isn’t your first rollout, you may be surprised by the complexity of German payroll. Germany has more than 2,000 technical wage types, which is about double the number for the US. Most countries have between 300 and 600. Fully expanded, the German standard payroll schema D000 is more than 50,000 lines long, dwarfing all other schemas, such as Austria (6,000 lines), Canada (3,000 lines), and US (2,000 lines).

Although this may be due in part to the maturity of the German payroll solution in SAP, much of this complex solution can be attributed to the complexity of the matter itself. It is said that more than half of all the tax literature in the world is written in the German language and I am afraid that this might be the truth.

Sven Ringling

Sven Ringling is executive director at iProCon (www.iprocon.de) and iProCon Human Capital Management (www.iproconhcm.co.uk). He started working as an SAP HCM consultant in 1996 and also works in strategic HR and change management. He is one of the authors of the books Mastering HR Management with SAP and HR Personnel Planning and Development Using SAP.

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