Overtime must be paid when it was ordered, approved or at least knowingly tolerated by the employer and no effective provision for time off in lieu or lump-sum compensation exists. The legal basis is Section 611a of the German Civil Code (BGB) in conjunction with Section 612(1) BGB, pursuant to which work that, in the circumstances, can only be expected to be performed in return for remuneration must also be paid.
In practice, employers and employees frequently dispute whether overtime was actually ordered, whether a lump-sum compensation clause (Pauschalabgeltungsklausel) in the employment contract is valid, and within what period the claim must be asserted. This article sets out the legal requirements that must be met and what employees should bear in mind when enforcing their entitlement.
Legal Basis: When Does an Entitlement to Overtime Remuneration Exist?
The employment contract typically specifies the agreed working hours, for example 40 hours per week. Where an employee works beyond those hours, the additional time constitutes overtime (Überstunden). A statutory entitlement to payment arises from Section 612(1) BGB where remuneration was to be expected in the circumstances. As a rule, this is indeed the case, since work is not typically performed gratuitously.
Where the employment contract or an applicable collective agreement (Tarifvertrag) contains specific provisions on overtime remuneration, such as supplements or fixed rates, those provisions take precedence. In the absence of any such provision, the customary remuneration pursuant to Section 612(2) BGB is the applicable measure, which will ordinarily be the standard hourly rate.
Ordered, Approved or Tolerated: The Decisive Requirement
A right to remuneration does not arise merely because overtime was objectively performed. According to the settled case law of the Federal Labour Court (Bundesarbeitsgericht), the employee must set out and, in the event of a dispute, prove that the overtime was ordered, approved or at least tolerated by the employer. Tolerance means that the employer was aware of the additional work or ought to have been aware of it and did not intervene.
This duty to plead and prove (Darlegungs- und Beweislast) rests in principle with the employee. In practice, this means that anyone wishing to bring a claim for overtime must specify precisely on which days and by how many hours they worked beyond their regular working time, and that the employer knew of this or at least accepted it implicitly.
Payment or Time Off in Lieu: Which Takes Priority?
Whether overtime is paid out or compensated by time off in lieu depends in the first instance on contractual or collective agreement provisions. Where the employment contract expressly provides for time off in lieu, the employer may elect this option, provided it is granted within a reasonable period. In the absence of such a provision, the employee is in principle entitled to monetary payment.
It is also important to note that an entitlement that has already accrued cannot be unilaterally converted by the employer into time off in lieu where the employment contract does not provide for this. If the employment relationship ends before the time off in lieu has been granted, the entitlement converts into a monetary claim (Zahlungsanspruch).
Lump-Sum Compensation Clauses in Employment Contracts
Many employment contracts contain clauses such as "all overtime is covered by the salary". According to the case law of the Federal Labour Court (Bundesarbeitsgericht), such lump-sum compensation clauses (Pauschalabgeltungsklauseln) are only valid if they are sufficiently transparent and make clear how many hours of overtime are at most covered by the clause, for example, in relation to the level of remuneration.
A clause that purports to compensate "all overtime" on a blanket basis without limit contravenes the transparency requirement under Section 307(1) sentence 2 BGB and is invalid. In that case, the statutory entitlement to remuneration under Section 612 BGB remains in full force, as though the clause had never existed.
- Clause specifies no concrete number of hours: generally invalid - Clause limits compensation to a defined number of hours per month: potentially valid - Senior managers with significantly above-tariff remuneration: compensation may be permissible within narrow limits
Observing Limitation Periods and Exclusion Deadlines
Overtime claims are subject to the standard limitation period (Verjährung) of three years under Section 195 BGB. Pursuant to Section 199(1) BGB, the period begins at the end of the year in which the claim arose and the employee was aware or ought to have been aware of it.
Anyone wishing to claim overtime remuneration should check the deadline set out in the employment contract or collective agreement carefully and assert the claim in writing with the employer in good time, so as not to lose it.
Proving Overtime: Working Time Records as a Key Aid
Since the Federal Labour Court's (Bundesarbeitsgericht) decision on the obligation to record working time (ruling of 13 September 2022, case ref. 1 ABR 22/21), employers are in principle required to record the start, end and duration of their employees' daily working time. This obligation makes it considerably easier for employees to prove overtime worked in the event of a dispute, since corresponding records must be kept within the organisation.
Independently of this organisational obligation, it is also advisable to keep personal timesheets (Stundenzettel) recording the date, start and end of working time, and breaks. Such records constitute an important piece of evidence before the courts, even though they alone do not fully satisfy the duty to plead and prove.
What to Do if the Employer Does Not Pay for Overtime?
If the employer fails to pay despite the claim being due, the entitlement should first be asserted in writing with a set deadline. If this proves unsuccessful, the remuneration may be claimed before the competent employment tribunal (Arbeitsgericht). It should be noted that in first-instance employment tribunal proceedings under Section 12a of the Labour Courts Act (ArbGG), each party bears its own legal costs regardless of the outcome.