English is the (un)official corporate language in most young startups. Employment contracts and other agreements with employees can also be fully drafted in English. There is no obligation to draw-up employment contracts in German. However, a German translation will need to be provided in case of litigation or if an authority requires so.
It’s not at all uncommon for the entire employment documentation to be prepared in English only at the outset, to keep the documentation lean and efforts to a minimum. If in doubt, startups should opt for English or bilingual versions. This makes it easier to attract international talent and due diligence will be much easier for VC investors from outside Germany.