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Germany: A works agreement, which compensates overtime hours with a pre-defined number of additional days off per year, is invalid

The plaintiff was employed by a trade union as a trade union official. The parties agreed on trust-based working hours, which obliges the official to the fulfilment of certain tasks and not to a mere temporal presence for a certain number of weekly hours. The general working conditions at the trade union, which apply to the plaintiff, are regulated in a general works agreement concluded between the trade union and the works council established there. The general works agreement provides that the trade union officials who “regularly” work overtime hours shall be compensated for all such overtime hours by nine additional days of leave per calendar year. However, the works agreement did not specify the term of “regular” overtime or any further requirements for the compensation. Furthermore, other employees employed at the trade union in different positions than the plaintiff, received compensatory time off or overtime pay equivalent to the overtime hours they actually worked.

The plaintiff demanded overtime pay, which was far in excess of the nine days of additional leave provided in the general works agreement. To substantiate his claim, the plaintiff submitted time records signed off by his superior, which demonstrated the amount of overtime hours worked.

The German Federal Labour Court ruled in favour of the plaintiff. He is entitled to overtime pay and overtime surcharges for the exact number of overtime hours worked.  The regulation in the general works agreement providing that trade union officials are only entitled to a pre-defined number of additional days off as a compensation for overtime hours was deemed invalid by the court. The provision pursuant to which only “regularly worked overtime hours” shall be subject to the lump-sum compensation, does not make it sufficiently clear to employees when exactly they do overtime “regularly” and when not. Furthermore, the provision does not comply with the principle of equal treatment under the German Works Constitution Act, as the lump-sum compensation of overtime hours with a pre-defined number of additional days off does not adequately relate to the number of overtime hours actually worked by each employee. Thus, the plaintiff was entitled to remuneration for the overtime hours actually worked.

Based on this verdict, employers should refrain from any provisions in employment contracts, or works agreements, regulating a compensation of overtime through a pre-defined monetary amount or a pre-defined number of additional days off. Any overtime compensation should always be directly related to the overtime hours actually worked by each employee.