Did you know that working overtime is not a common business practice in Germany? This is due to the emphasis placed on employee contracts, as well as the social and personal welfare of German citizens.
So, what does that mean for international employers looking to expand into Germany? Is overtime forbidden, frowned upon or merely a foreign concept?
Let’s review Germany overtime laws.
Germany overtime laws
There’s no legal definition of overtime in German law. Colloquially, overtime is the number of working hours that exceed the employee’s fixed workweek.
As a result, overtime pay and surcharges are rarely governed by federal or state regulations. Instead, they’re left to unions, employers and work councils to determine. Often, internal regulations define the term and then stipulate rules.
German laws do, however, require employers to record employee overtime hours, along with hours worked on holidays and Sundays. This requirement also extends to foreign employees sent to Germany on a temporary basis.
Because of this, there are two main influences on overtime policies:
Work councils. In a company with more than five employees, those employees have the right to form a work council. Members are elected and serve a term of four years. They represent all employees, not including senior staff, managing boards or managing directors. As one of their duties, work councils have some codetermination rights about:
- Company rules
- Working hours, including breaks
- Temporary extension of working hours (overtime)
- Policy holidays
- Wage structures
Collective bargaining agreements. Statutory regulations concerning employee work hours, such as the Working Hours Act (“Arbeitszeitgesetz”), are often the result of collective bargaining agreements. This may impact various aspects of employee working conditions, including:
- Work hours provisions
- Regulations for hazardous work
- Duration of the workweek
- Holidays, weekend policies and remuneration
- Extra work (overtime)
Economist Reinhard Bispinick writes in the Cambridge Journal of Economics:
Collective agreements regulate extra work either by establishing the maximum number of overtime hours that can be worked per week or per month, for example, or by stipulating a daily or weekly maximum number of working hours that includes overtime. Extra work that exceeds these limits is normally allowed in exceptional circumstances, and some agreements do not regulate overtime at all.
Collective bargaining and work councils can impact a variety of aspects regarding employee regulations, including the employee’s salary, maximum working week, overtime, workplace health and safety.
The maximum workweek
Germany’s workweek, which can go Monday through Saturday, is determined by the Working Hours Act. This places a statutory minimum that stipulates a maximum of eight-hour workdays and 48-hour weeks. Unique elements of this labor law include:
- No work is allowed on Sunday unless explicitly permitted by statutory law
- Germans must be given an uninterrupted rest period of 11 hours after daily work
- Germans can work up to 10 hours in a day so long as the average workday doesn’t exceed eight hours in a six-month period
- Workers are required to have at least 30 minutes of break in a six- to nine-hour workday
- Workers are required to have at least 45 minutes of break if their workday exceeds nine hours
For regular employees, overtime typically will not be compensated via regular remuneration. That said, it is possible to agree to include an additional 10%-20% overtime in your employment contract with standard remuneration. For managing directors and board members, overtime hours are typically priced into their salary.
Disability protections and overtime work
In Germany, disabled workers are protected from discrimination according to the General Equal Treatment Act “Allgemeines Gleichbehandlungsgesetz”) A disability is defined by the law as a “limitation which results in particular from physical, mental or psychological impairments and which hinders the participation of the person concerned in professional life.” This law affects:
- Conditions for access to employment
- Employment and working conditions
- Access to training
- Membership of workers organizations
As a result, employees who are disabled have the right to refuse to work overtime. And they may do so without any consequences, including dismissal, so long as their request to refuse isn’t considered unreasonable or disproportionate.
Lump sum compensation for overtime work
There are two ways a German employer can avoid the need to provide overtime compensation, according to Hagen Köckeritz, partner at Mayer Brown and head of the firm’s German Employments and Benefits:
- Contractual clauses in employment agreements
- Negotiated provisions in work agreements
In either case, companies need to consider the following legal elements when it comes to bargaining:
General terms and conditions. Most clauses within employment contracts fall under this category unless they have been individually negotiated between the two parties, which is a rare occurrence. In this case, clauses that seek to eschew overtime remuneration must:
- Be easy for the employee to understand
- Clearly state the services overtime will cover and to what extent
- Be capped with an agreed remuneration at the maximum
- Neither take advantage of employees nor create an imbalance between work owed and pay received
Compensation clauses agreed by works agreements. These are typically bargained upon by the employer and the work council. In this case, work agreements must satisfy the following:
- Create certain and clear standards, particularly in regard to the term “regular overtime”
- Abide by the principles of equal treatment under the Works Constitution Act
- Set an upper limit for overtime hours for both irregular and regular overtime
Legal consequences of invalidity. An invalidity clause does not necessarily mean that employers are required to pay overtime. Some groups are not entitled to additional compensation, depending on the type of employment and the salary. For those employees not deemed high earners—making €82,800 (for West Germany) and €77,400 (for East Germany)—overtime pay is calculated according to the actual number of hours worked combined with pay for additional hours worked.
Admissible design. Companies are advised to set the number of overtime hours that will be paid via regular salary. It may not be so high that it exploits workers. Typically, it can’t exceed more than 10% to 25% of an employee’s regular weekly or monthly hours.
Tips for employers
For employers that expect overtime to be standard to the job, there are certain steps you should take to prevent internal conflicts, according to an article from Ius Laboris by German attorneys Jeremy Bister and Janike Tambor:
- Stipulate internal guidance. Overtime needs to be clearly defined and hours set ahead of time. These should be legally stipulated in writing and made obvious to employees. Failure to do so could create internal conflicts that leave workers feeling exploited.
- Make sure that company working times are coordinated. In many cases, employee hours worked must be tracked and logged. Elements such as flexitime rules could create confusion or internal conflict if they’re not universally applied to all employees.
- Consider personnel planning. All strategies need to abide by the rules of the Working Hours Act. If your organization seeks to avoid overtime, it’s essential that the right personnel, rules and strategies are in place.
In many cases, German employees will be happy to work a little longer, especially if the situation demands. However, it’s important that they are treated well, clearly communicated with, and that expectations are laid out ahead of time.
Trusted guidance for overtime in Germany
Whether you’re in the planning stages of hiring in Germany, or you already have workers in country, it’s important to understand and prepare for the cultural and regulatory differences of employment, of which overtime is just a small part.
A global employment partner with local HR expertise can help you navigate the nuances of overtime laws, making the transition seamless so you can avoid many of the common mistakes others have madede . Learn more about a Germany employer of record today.