How is overtime paid? A lawyer explains the legal situation

Ms. Oberthür, Finance Minister Christian Lindner and his FDP want by giving them tax advantages. How does the state regulate overtime so far?
They are not regulated in detail in the law, but only in collective agreements or in the respective employment contract. It must say that someone is obliged to work overtime, otherwise they don’t have to. And then the employment contract should also state how they will be paid.

However, the wording “overtime is paid for with salary” is often found in contracts.
Exactly, that’s what it says in many contracts. However, this regulation is ineffective because it is completely non-transparent. Employees can refer to Section 612 of the German Civil Code (BGB). This means that remuneration is necessary if the service can usually only be expected in return for remuneration. And case law considers this expectation of remuneration to be a given for the vast majority of employees.

So no overtime for free?
Oh well. There is an exception for employees who have an income above the contribution assessment limit in the general pension insurance of 7,550 euros. You are not entitled to overtime pay without an agreement in your employment contract or collective agreement; Employees who receive lower salaries do.

Does overtime have to be paid with a supplement?
No, there is no legal obligation to pay overtime premiums. Although such a passage is often found in collective agreements, it is rarer in individual employment contracts.

Can the employer force employees to work unpaid overtime and if so, what is the maximum amount of overtime that must be worked?
With appropriate agreement, employers can have around 10 to 15 percent of weekly working hours worked as overtime without compensation. If you work 40 hours per week, that’s a maximum of six hours. The maximum legally permissible working time in Germany is 48 hours per week. So you can make a regulation that says: The employee is obliged to work overtime. The salary covers up to two hours of overtime per week.

What does the wording in contracts mean that you can be obliged to work overtime?
Overtime is usually understood to mean working hours that exceed the statutory maximum working time of eight hours per day. This can be extended to ten hours. The term overtime is often used synonymously for overtime. It makes sense for the employer to make it clear in the contract how much extra work and/or overtime must be worked. According to the prevailing understanding, overtime is anything that goes beyond the individually agreed working hours. So if you have agreed to six hours a day, the hours from the seventh hour onwards are overtime.

If overtime is not regulated by law – could that be the reason for the FDP proposal to promote it through tax incentives?
It could be that the reason lies in the debate about less work and the four-day week. With tax privileges for overtime, one could agree on a weekly working time of 30 hours and then make overtime cheaper. But that depends on which legal regulation is specifically to be proposed.

Provided that overtime is tax-privileged. Isn’t there a risk of massive amounts of unpaid overtime and companies ultimately making good business?
In this case, the overtime would not be unpaid, but would be tax-favored. The fight against unpaid overtime takes place via working time recording. The Federal Labor Court has decided that employers must record working times. And when they are recorded, they are usually paid.

Even though there is no fundamental right to pay overtime?
In most cases there is a claim to compensation. If no remuneration is paid for overtime, of course no tax is due on the lack of remuneration. The idea is to pay overtime and give it tax privileges in order to create an economic incentive to work more.

How would something like this be reflected in the payroll?
As an additional line in the payslip, similar to night work or holiday surcharges. Some of them are also tax-privileged.

From a legal perspective, what is appropriate overtime pay?
A given value There is no such thing because the adequacy of remuneration – above the minimum wage – is not something that the legislature stipulates. As a rule, overtime is paid at the agreed rate for one hour of work. If overtime remains unpaid, this must not lead to a distortion of the appropriate relationship between performance and consideration.

In the end, is overtime worth it financially?
In my opinion, overtime is paid in most companies, at least in the larger ones. Simply because many employees would no longer accept unpaid overtime today.