The German Federal Labor Court (Bundesarbeitsgericht, or “BAG”) has ruled that part-time employees must be treated the same as full-time employees when it comes to overtime pay. Any differentiation must be backed by a strong justification (Judgment of December 5, 2024, Case No. 8 AZR 370/20). This article highlights the actions employers should now take.

The Case

In the case at hand, a part-time caregiver sued her employer for overtime pay. The employer only offered overtime pay after full-time employees exceeded their working hours. The BAG ruled that this practice was discriminatory—not only directly against part-time workers but also indirectly against women, as part-time work is more common among women. As a result, the plaintiff was awarded retroactive overtime pay and compensation under Germany’s General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz, or “AGG”).

Background to the Decision

According to Section 4 (1) of the Part-Time and Fixed-Term Employment Act (Teilzeit-und Befristungsgesetz, or “TzBfG”), part-time employees cannot be treated less favorably than full-time employees unless there are objective reasons to justify the difference. Regarding overtime pay, many employers, unions, and works councils have followed the rule that part-time employees are only entitled to overtime pay once they exceed the working hours of full-time employees. This approach has been justified by considering overall compensation:

• Part-time and full-time employees receive the same pay for the same number of working hours, regardless of the total hours worked.
• As long as this condition is met, there is no unequal treatment between the two groups, so part-time workers were only entitled to overtime pay after exceeding the full-time hours.

At first, the BAG accepted this practice. However, it recently revised its stance, requiring a separate assessment of compensation components (basic pay and bonuses) to prevent potential discrimination. The BAG ultimately referred the matter to the European Court of Justice (ECJ), which ruled that an overtime policy that only pays extra for hours beyond full-time employees’ schedules discriminates against part-time workers unless there’s a valid reason for different treatment.

Clear Guidelines from the BAG

Based on these principles, the BAG’s 8th Senate has now ruled:

1. Overtime policies must apply equally to all employees. Part-time workers must not be disadvantaged simply because they work fewer hours overall.
2. Differentiation may be allowed in certain cases, but such differences must be clear and justified within the policy. Otherwise, the risk of discrimination claims is high. However, according to the latest case law, this justification must be robust. For example, blanket rules should consider individual workload impacts and specific reasons for part-time work, such as personal or health-related issues.

This ruling marks a significant shift from long-standing practices among employers, unions, and works councils. In practical terms, it means that part-time employees are now entitled to overtime pay from the very first extra hour worked.

Key Statistics

In Germany, 12.2 million people (31%) work part-time, including 50% of women and 13% of men, according to the Federal Statistical Office. Among parents, 67% of women and 9% of men work part-time. A quarter of part-time workers choose reduced hours for reasons unrelated to health or family.

Employers Should Take Action

This ruling strengthens the rights of part-time employees and aligns with the ECJ’s standards. Employers should review and assess the consequences:

• Review and Update Policies. Employers should examine their current policies in light of this decision and assess any financial risks, taking into account limitation periods. While the ruling specifically addressed a collective bargaining agreement, it’s likely to apply to works agreements and employment contracts as well. If bonus structures are based on employment contracts or works agreements, changes can be made more easily. Adjusting collective bargaining agreements, however, requires negotiations between social partners.

• Minimize the Risk of Discrimination. In companies with a significant number of female part-time employees, there could be indirect discrimination under the AGG. In this case, the BAG awarded a modest 250 euros in compensation. Employers should review their existing regulations to reduce the risk of discrimination claims.

• Update Scheduling Practices. Employers need to adjust their personnel planning to reflect the fact that part-time employees are now entitled to overtime pay from the first extra hour worked.

Unresolved Questions

It’s still unclear whether this new case law will disadvantage full-time employees or apply to on-call duties. A final clarification will come once the full judgment is published.