You wish to terminate your employment relationship by mutual agreement through a termination agreement and are wondering what will happen to your accumulated overtime? Then you have come to the right place. The following article explains what you should know about overtime in termination agreements and what you should pay attention to in the termination agreement.
- General: When must overtime be compensated at all?
- Caution: Do not waive compensation for overtime too hastily!
- Overtime at the end of the employment relationship: What options are available?
- Conclusion
Attention: When concluding a termination agreement, there is much to consider. It is not advisable to sign a termination agreement without legal assistance and in haste. Otherwise, you risk incurring a suspension period for unemployment benefits. If you negotiate on your own, you will also very likely have to accept worse conditions in the termination agreement.
General: When must overtime be compensated at all?
Overtime is part of everyday working life for many people, perhaps including you. However, caution is advised: In order to receive compensation for overtime in time off or money, you must observe the following:
Is overtime already covered by the salary?
Overtime is not always compensated. In most employment relationships, this is legally required (Section 612 (1) BGB). However, the employment or collective agreement often excludes additional payment. This naturally also has implications for the termination agreement. Because if overtime is generally not paid out, this will also not be the case in the termination agreement. However, such clauses in the employment contract are often invalid:
- There must be a clear agreement as to which overtime the salary covers. Example: “The first 10 hours of overtime per month are deemed covered by the monthly salary.” Vague blanket provisions are not permissible.
- The minimum wage must not be undercut by the inclusion of overtime. Example: You earn the minimum wage, and according to your employment contract, your overtime is to be covered by the salary. If you factor in the overtime, however, you would earn less than the minimum wage on average. Such a provision would therefore be inadmissible.
Particularly in better-paid jobs, the employer may expect you to stay longer for your regular salary even without a contractual clause. Overtime is then not compensated. This is regularly assumed if your salary is above the contribution assessment ceiling for pension insurance.
As you can see: Whether you can claim anything for overtime depends heavily on the individual case.
Did the employer agree to the overtime?
In any case, you should ensure that your employer has approved the overtime or at least knows about it and has consented to it. If you work longer on your own initiative and without consultation, your overtime may remain unpaid. Your chances are somewhat better, however, if your employer’s assignments are quite obviously not achievable within regular hours and the employer effectively orders or approves overtime already when assigning you the work.
Attention: Burden of proof!
Caution! You must prove whether the two aforementioned requirements are met. The latter point in particular often leads to disputes in court. I therefore recommend that you document overtime precisely. This will save you stress in the termination agreement.
Overtime with flextime and trust-based working hours
Incidentally, the above requirements also apply to flexible working time models such as flextime and trust-based working hours. In both cases, it remains the case that you only have to work a certain number of hours. Anything beyond that constitutes overtime. With flextime, you may only vary the start and end of your daily working hours; with trust-based working hours, only the employer’s control of working hours is eliminated.
Caution regarding termination agreements: Do not waive compensation for overtime too hastily!
Let us therefore assume that you wish to terminate your employment relationship with a termination agreement and have some regularly accumulated overtime remaining. What is important now above all: You must be very careful that your overtime is not declared as settled in a more or less “hidden” agreement or that you inadvertently waive it.
Such clauses look like this, for example: “The parties agree that, in addition to the claims regulated here, no further claims arising from or in connection with the employment relationship, regardless of the legal basis, exist between them.”
Such a complete waiver is fundamentally possible, because the conclusion of the termination agreement is a matter of negotiation. Once you have signed, you can only attempt to challenge the entire termination agreement or reverse it by other means. This is possible, for example, if the employer has deceived you in the termination agreement. However, you must then expect difficult evidence gathering and a complex legal process.
It is also popular to fob off the employee with a higher severance payment as consideration for the waiver. If you agree to this, however, difficulties with social security obligations quickly arise. The background is that no social security contributions are actually payable on the severance payment, whereas they are on back pay. You must then explain to the insurance funds which part of your severance payment is back pay and which is not. This effort can be avoided.
Overtime at the end of the employment relationship: What options are available in the termination agreement?
Overtime is compensated by taking it as time off or having it paid out in money. Which option applies to you is regularly based on the overtime provision in your employment or collective agreement. A major advantage of the termination agreement: You can freely negotiate here what happens to your remaining overtime—regardless of what is stated in your employment or collective agreement.
Having overtime paid out
If you agree on payment in the termination agreement, the situation is quite clear. The remaining overtime is simply paid out to you in money. The amount is based on your usual remuneration. Some employment or collective agreements also provide for surcharges for overtime.
Modern employment contracts in particular do not provide for a fixed hourly wage. You must then first calculate this from your gross monthly salary. The following formula applies if there are no overtime surcharges:
Gross salary (per month) x 3 : 13 : number of weekly working hours = hourly wage (gross).
Taking overtime as time off
Taking overtime as time off simply means compensating for overtime through time off. This means that you receive some days off during your remaining employment and are still paid.
You may be able to get even more out of it: In many cases, the employer releases you from work anyway, or you agree on this. There is an interest in this, for example, if you are about to switch to a competitor and should no longer come into contact with internal matters. Depending on how the release is structured, it is not offset against your overtime. This means for you: You have time off and can still claim money for outstanding overtime after the end of the employment relationship.
Whether the release “consumes” your overtime depends essentially on the content of the termination agreement. You must agree to this; otherwise, your overtime remains intact despite the release. Something different only applies if the employment or collective agreement already provides for a corresponding offset.
It may also be that the release is credited against your overtime and you are still entitled to money. This is the case if you have simply accumulated too much overtime.
Example: You are only released from work for a few days at the end of the employment relationship because you are starting a new job immediately afterwards. However, you have accumulated 40 hours of overtime, which corresponds to your usual weekly working hours. You are entitled to remuneration in money for the “leftover” overtime in the termination agreement.
Conclusion
- Overtime does not always have to be compensated. It depends on the activity, the remuneration, and the contracts. However, the employer is often obliged to provide compensation in the termination agreement.
- If overtime is compensated in the termination agreement, taking time off and payment of overtime are the usual options. You can negotiate with the employer in the termination agreement which method you choose.
- Ensure in the termination agreement that you do not waive your overtime. Most templates in termination agreements provide for corresponding settlement clauses.