💡 Key Takeaways
Overtime may only be covered by the salary if the employment contract clearly specifies how many hours this includes. Flat-rate or unlimited clauses are invalid. Employers may only order overtime if this is provided for by contract, a collective agreement, or in emergencies. Without an explicit agreement, overtime generally must be paid or compensated with time off. Employees should always document their overtime precisely in order to be able to prove claims for payment or time off in lieu.
If employees work overtime, they also want to be paid for it. Here I explain when the company may cover overtime with the salary and what you need to consider when it comes to compensating overtime.
1. Overtime covered by salary: Is that permissible?
Employment contracts often contain agreements stating that overtime is covered by the normal salary. This means that the company does not pay overtime in addition to the regular salary.
However, for such a provision to be permissible, it must meet certain requirements:
- The clause must specify precisely how many overtime hours the employee(s) may be required to work at most.
- The contracting parties must also determine whether the overtime will be paid.
Example:
- An agreement providing that an unlimited number of overtime hours is already covered by the regular salary is invalid.
- A provision that, by contrast, provides for 3 hours of overtime per week with remuneration based on the monthly salary is generally valid.
If an overtime clause is invalid, employees can generally demand the customary pay in the industry.
People who perform services of a higher nature or receive a comparably high salary generally cannot claim overtime pay even without a compensation clause (see below).
With respect to trainees, overtime being covered by the regular salary is generally excluded.
2. Can the employer order additional work?
As a rule, overtime may only be ordered if this is provided for in the employment contract, a collective agreement, or a works agreement. Your employment contract generally specifies the scope of the work you are required to perform. Without such a clause, the company may not order overtime against your will.
Exceptions are only possible in rare cases.
- The employer may order overtime in special emergency situations. This applies in the case of not merely proverbial disasters, such as flooding or a fire, which are unforeseeable for the company and threaten its existence.
- Overtime can also be justified by special operational requirements. This may be conceivable, for example, if a company can no longer maintain operations with normal working hours because too many employees are ill.
3. When may I defend myself against overtime?
If overtime is not provided for in the employment contract and there is no other exceptional situation, you may generally refuse ordered overtime. However, caution is advised here, because if the order to work overtime is lawful, by refusing you are unlawfully refusing to work. After a prior warning, this can justify an ordinary dismissal. During the probationary period and in small businesses, protection against dismissal is weaker, so the company could theoretically respond with a dismissal. It is therefore advisable to work the ordered overtime first and document it well, and then discuss the permissibility of the overtime with an employment law attorney afterwards.
As a rule, the company may not require employees in part-time work or short-time work to work overtime. This would contradict the nature of part-time work—however, exceptions are possible.
4. From when is overtime worked?
When employees start working overtime depends primarily on the working time provisions in the employment contract. The weekly working hours are usually specified there. As soon as you exceed them, you accumulate overtime.
But be careful: the employer may not order overtime without limit. As a rule, the Working Hours Act (ArbZG) only permits a daily working time of eight hours. Daily working time may be temporarily increased to a maximum of ten hours if time off in lieu is granted within the next six months. This means that within the balancing period of six months or 24 weeks, an average of eight hours is not exceeded.
Example: A full-time employee works ten hours on each of four days in a particular week, i.e., two hours above the daily limit. On the fifth day, he works only eight hours, thus observing the maximum working time on that day. On average, he then comes to 9.6h per day. The employer must now ensure that over the next 24 weeks or six months, an average of no more than 8h per day is worked. On some days, the employee will therefore have to work less than 8h per day.
If you work more than the ArbZG allows, the employer faces fines.
5. Does my employer have to pay overtime?
As a rule, the company pays overtime in addition to the normal wage. However, this rule does not apply without exception. In the following cases, you cannot expect remuneration:
- Your employer does not want you to work overtime at all. They neither ordered it nor approved it or subsequently authorized it. So make sure you only work overtime in consultation.
- Your employment contract, a collective agreement, or a works agreement excludes payment for overtime. You can find more details on this in the first section.
- People in managerial positions and occupational groups who perform “services of a higher nature” generally do not receive overtime pay either.
Typical agreements in employment contracts provide for a flat-rate remuneration for a certain number of overtime hours or a provision that grants remuneration for overtime only from a certain number of hours. Collective agreements often also regulate bonuses on top of the normal hourly wage. If there is no other agreement, you can calculate the amount of the wage for a 40-hour week using the following formula:
Annual gross salary / 12 / 174 = gross hourly wage
Note: Social security contributions also apply to overtime and it must be taxed like normal wages.
6. Can I claim time off in lieu for overtime?
Even though paying overtime in money is the rule, you can also compensate overtime with time off. However, whether and to what extent this is possible must be set out in the employment contract. You can also reach a corresponding agreement with your employer afterwards—preferably in writing.
The parties often agree on time off in lieu for overtime after a (contentious) dismissal. The dismissed employee is then to use up remaining vacation and overtime during the notice period so that the employer does not have to make any compensation payments for it. This is then expressly done as part of a so-called garden leave.
7. How can I prove overtime?
In order to be able to claim outstanding remuneration or time off in lieu from the company, you must also be able to prove that you worked overtime and that it was ordered. The burden of proof lies with you. We therefore recommend that you document the overtime you have worked precisely. Taking photos of digital time recording or punch cards can protect you. However, a written account of the overtime worked, stating the days and periods, may also be sufficient in some cases to prove your overtime (BAG, judgment of 21/12/2016, case no. 5 AZR 362/16).
8. Conclusion
- Overtime can only be covered by the salary if it is expressly agreed how many hours employees can expect at most and this does not exceed a certain scope.
- If there is no agreement in the employment contract, the company may only order overtime in rare exceptional cases.
- If overtime is ordered unlawfully, employees can refuse to work without consequences. However, this should definitely be discussed beforehand with an employment law attorney.
- Unless the employment contract provides otherwise, the company generally pays for overtime worked—different rules apply for very well-paid professions and for overtime that was not ordered.
- You can demand time off in lieu for overtime if it is provided for in the employment contract or if the parties agree to it afterwards.
- Employees should be sure to document overtime worked precisely, e.g., by providing a written account stating the days and exact periods.
9. FAQ
No. A corresponding provision in the employment contract is only valid if it specifies precisely how many overtime hours are covered by the salary. Flat-rate or unlimited clauses are legally invalid.
Overtime may only be required if this is regulated in the employment contract, a collective agreement, or a works agreement. Without such a basis, overtime is generally voluntary unless there is an urgent operational emergency.
Keep a precise working time log or secure evidence such as punch cards or screenshots of time recording. Only if you can prove that the overtime was ordered or tolerated are you entitled to payment or time off in lieu.
Managers and employees with high incomes generally do not receive separate overtime pay. In the case of services of a higher nature, overtime is usually considered covered by the salary, even without an explicit contractual clause.