By Jeremy Bister, Janike Tambor

Firm: Kliemt.Arbeitsrecht

How should employers manage the rules around overtime in Germany and how should it be compensated? This article provides some practical guidance.

2.2 billion hours: according to a study, that's how much overtime Germans worked in 2018. Is that allowed? Do you have to? And are all hours paid extra? One thing is clear: Not every overtime hour should be treated the same way. When it comes to providing and compensating for overtime, there is a lot to consider.

What are ‘overtime hours’?

There is no legal definition of overtime, so, in principle, organisations can make internal regulations defining the term. If this does not happen, employers can be guided by the following:

‘According to general understanding, overtime is the number of working hours that exceed the personally owed working time.’

(Federal Labour Court, judgment of 8 November 1989 - 5 AZR 642/88 and Federal Labour Court, judgment of 11 November 1997 - 9 AZR 566/96)

For a part-time employee, the individual scale applies; the usual number of hours in the organisation does not have to be reached first.

Who is obliged to work overtime, when and why?

If a fixed number of hours is agreed, in principle employees must only make their services available to this extent. But as is well known, exceptions confirm the rule! The most common exceptions are as follows:

  • There is a contractual term relating to the obligation to work overtime. The individual provisions of the contract apply, for example, there may only be an obligation to work overtime in the event of a particular staff shortage.
  • Special features of the occupational profile result in such an obligation. Example: you are a roofer. The new roof is only half finished, it’s time to stop working but a thunderstorm has been announced for the night: you have to go on.
  • An obligation arises from the employee's duty of loyalty. Example: the heating fails. In the middle of winter. Friday evening, of course. In these cases caretakers are always on duty; after all, nobody should freeze to death.

Overtime compensation

Overtime can be dealt with in a variety of ways.

Depending on the job, there are often terms in the employment contract according to which overtime is compensated as a lump sum with salary. These terms are only permissible in employment contracts on certain conditions: the number of overtime hours to be worked without additional payment must be specified (taking into account the limits of the Working Hours Act and the case law on flat-rate overtime remuneration), otherwise the term is invalid.

But what would happen if the regulation were invalid? Ineffectively regulated overtime hours are treated in the same way as if there was no provision in the contract. This can regularly lead to overtime being remunerated in cash. But attention: this only applies if the overtime was ‘ordered, approved, tolerated by the employer or in any event necessary for the completion of the work owed.’ Sounds complicated? Unfortunately, it is, and in practice often leads to disputes, because these terms are vague and the overtime work was often completed a long time ago.

If there is no interest in additional payment, the parties to the employment contract can also agree compensation in the form of time off work. There is a special feature in contrast to the holiday law: If the employee falls ill during the fixed period of leisure time compensation, the employee bears the risk not to be able to catch up on this time. The contrary employee-friendly provision of the Federal Leave Act does not apply in this context.

Tips for employers to ensure overtime is as conflict-free as possible

Clear internal guidance

What is meant by ‘overtime’ in an organisation? And when is this ‘arranged’? Employers should establish binding, legally effective definitions and processes. This ensures equal treatment within the company and that nobody feels unfairly treated.

Ensure different company working time rules are coordinated

Does the organisation already have flexitime rules? If so, caution is required! There is a danger a flexitime hour can quickly turn into an overtime hour and back again...or was it the other way round? With a uniform set of rules, you can keep track of things.

Keep personnel planning in mind

Does your organisation want to avoid overtime? Or can short-term personnel bottlenecks be easily absorbed with appropriate rules in place? Whether leisure time compensation, remuneration or even extra overtime bonuses as an incentive, much is a question of the right strategy, though of course remaining within the framework of the Working Hours Act.

In general, as is so often the case, satisfied employees like to work a little longer if they feel valued and treated fairly. It is often a question of good communication and clear, binding agreements between employees and their superiors. After all, work can also be fun!