Federal Labour Court overturns precedent: Overtime pay for part-time work, too
In a recent judgment, the Federal Labour Court (Bundesarbeitsgericht, BAG) held that part-time employees can demand that they be paid the overtime premiums, which are regulated in a collective agreement, whenever their working time exceeds their agreed number of part-time hours, even if this is still fewer hours than a full-time position. This position overturns the Court’s earlier precedent (Judgment of 19 December 2018 in Case No. 10 AZR 232/18).
What were the facts of the case?
The employee worked part-time for the employer as an acting branch manager. A collective agreement (specifically the framework collective agreement for the foodservice industry) applied to the employment relationship. This collective agreement regulates the award of overtime premiums and allows the level of annual working hours to be set – as was done for the employee. At the end of the twelve-month period, the Employer merely paid the basic level of remuneration for the hours worked in excess of the set number of annual working hours. The employer paid no overtime premiums due to the fact that the employee’s working time over the twelve-month period did not exceed the working time of a full-time employee. The employee then claimed the payment of the overtime premiums for the hours worked in excess of the agreed number of annual part-time hours.
No discrimination of part-time employees
The employer’s appeal was unsuccessful. In the view of the Federal Labour Court, the collective agreement had to be interpreted as giving part-time employees with an individually agreed number of annual working hours a right to the payment of overtime premiums for the working time which exceed their agreed number of hours. This interpretation of the collective agreement is in line with higher-ranking legal rules. It is consistent with § 4 (1) of the Part-time and Fixed-Term Employment Law (Teilzeit- und Befristungsgesetz). Pursuant to this provision, part-time employees may not be placed at a disadvantage over full-time employees. The income paid to a part-time employee should at least be in the same ratio as the share of his working time compared to the working time of an equivalent full-time employee. Accordingly, the individual payment components for full and part-time employees should be compared, rather than the total remuneration. Part-time employees would be placed at a disadvantage in comparison to their full-time counterparts if the number of working hours, which give rise to the right to be paid overtime premiums, was not reduced in proportion to their agreed number of annual part-time hours. Against this background, the 10th Senate of the Court overturned its earlier precedent on overtime premiums for part-time work (BAG judgment of 26 April 2007 in Case No. 10 AZR 598/15) and concurred with the view of the 6th Senate (BAG judgment of 23 April 2017 in Case No. 6 AZR 161/16).
Significant practical consequences, even where collective agreements do not apply
This judgment established an important principle and has far-reaching consequences because it allows part-time employees to claim overtime premiums as soon as their individual part-time ratio is exceeded. The Court clarified that part-time employees would be placed at a disadvantage in comparison to full-time employees if the right of part-time employees to claim overtime payments was dependent on their working hours exceeding those of full-time employees. The BAG ruling applied specifically to the annual working time that was established in a collective agreement, but should still apply where an employee has regular hours working time over a weekly or monthly basis. The judgment affects employment relationships not only where a collective agreement applies, but also where the employment contract or company guidelines contain rules on overtime premiums.
Urgent need for action for companies
Employers should assess whether they need to appropriately adjust their current practices with respect to the payment of overtime premiums to part-time employees. Employers, who wish to avoid paying such premiums, should effectively control and prevent part-time workers from working overtime, where this is possible from an operational perspective. In addition, the introduction of working time accounts could help offset fluctuating workloads (e.g. seasonal differences).
If you have any questions related to this topic, please feel free to contact Nadine Radbruch (Lawyer).