How are overtime hours billed in the payroll?
August 27, 2022 | 40,00 EUR | answered by Elvira Klinger
Dear Tax Advisor,
I am Maria Zimmermann and I work for a company where overtime is regularly incurred. I have some questions regarding the calculation of overtime in the payroll and hope that you can help me.
Currently, we compensate overtime either with time off in lieu or with a financial remuneration. I am wondering how exactly the calculation of overtime in the payroll is done and what legal regulations need to be considered. Are there specific rules or regulations that we as a company need to adhere to?
Furthermore, I am concerned about how overtime should be accurately recorded and documented to avoid potential disputes or misunderstandings. What are the options for transparent and traceable recording of overtime? Are there specific software solutions or tools that can assist us in this?
I also wonder if it is advisable to record overtime on a working time account and how this affects the payroll. What are the advantages and disadvantages of using a working time account and what legal aspects need to be considered?
I am aware that the calculation of overtime is a complex issue and look forward to your expert assistance. Could you please explain how the calculation of overtime in the payroll is done specifically and what steps we as a company should take to ensure everything is documented and invoiced correctly?
Thank you in advance for your help.
Best regards,
Maria Zimmermann
Dear Mrs. Zimmermann,
Thank you for your inquiry regarding the billing of overtime in the payroll. I will try to answer your questions as comprehensively as possible.
First of all, it is important to know that the billing of overtime is regulated by law in Germany. According to the Working Hours Act (ArbZG), employees are allowed to work a maximum of 8 hours per working day and 48 hours per week. Overtime refers to additional working hours that exceed this legal limit. These must be compensated by the employer either through payment or compensatory time off.
Overtime is usually billed through the payroll. The overtime hours must be recorded separately and shown separately. The compensation for overtime can be in the form of a surcharge on the hourly wage or as a lump sum. It is important that the corresponding regulations for overtime compensation are documented in the employment contract or in a company agreement.
To transparently and comprehensively track overtime, I recommend using a time tracking system. Employees can input their working hours there, and overtime can be calculated automatically. There are various software solutions and tools on the market that can assist companies in tracking and documenting overtime. These can be customized to the company's needs.
Using a working hours account can also be useful for tracking and managing overtime. Through a working hours account, overtime can be accumulated and later compensated through time off or payment. However, it is important to comply with legal regulations and collective agreements to ensure that the working hours account is managed lawfully.
Overall, it is important for companies to carefully and correctly bill overtime to avoid any legal consequences. I recommend consulting with an experienced tax advisor or labor lawyer to ensure that all regulations and requirements are met.
I hope I was able to answer your questions sufficiently. If you need further information, please feel free to contact me.
Best regards,
Elvira Klinger
