Minus hours on termination: What you need to know

Terminations often hit employees without warning. And because you rarely see it coming, you usually don’t have the chance to “work off” minus hours before the employer ends the contract. That becomes a real problem when the employer simply deducts the negative balance from the final salary payment. Our article explains how minus hours arise, when they must be compensated, and—most importantly—what happens to them in the event of ordinary or summary dismissal.

Key Takeaways:

• “Minus hours” can only exist if a working time account has been agreed in a collective agreement, works agreement, or employment contract.
• No minus hours accrue when the employee has a statutory right to pay despite not working (e.g., vacation, sick leave, public holidays, or downtime caused by the employer such as power outages or lack of orders).
• If genuine minus hours exist at the time of termination, they can be compensated by working overtime during the notice period. If that is not possible, wage deduction is only allowed if it was contractually agreed.
• On termination or when signing a termination agreement initiated by the employer: Minus hours cannot be deducted from an employee’s vacation entitlement and may only be balanced through time off if explicitly agreed. If a general settlement clause exists, any remaining minus hours lapse in the employee’s favour.

What Are Minus Hours?

Minus hours (also called deficit hours or under-hours) occur when an employee works fewer hours than contractually agreed. If a 38-hour week is agreed but only 35 hours are worked, 3 minus hours are created. In this sense, minus hours are the exact opposite of overtime.

However, minus hours only arise if a working time account has been agreed – via collective agreement, works agreement, or individual contract. The applicable rules depend on whatever instrument introduced the time account. There is no legal obligation to include a working time account in an employment contract.

A working time account allows flexible scheduling: extra work creates a “plus,” fewer hours create a “minus.” But if no working time account exists, no “real” minus hours can arise. If the employee works less than agreed in that situation, they may breach their contractual duties and may be warned—but no minus hours accrue.

Situations that do not create minus hours

“Real” minus hours only arise if the employee alone decides to work fewer hours and thereby receives a wage advance. Where the employee has a statutory right to remuneration despite not working, no minus hours arise. Examples:

• Vacation, sick leave, and public holidays do not create minus hours. The employee is legally entitled to continued pay.
• Employer-caused downtime (e.g., power failure, lack of orders, or other operational risks) also does not create minus hours. In these cases, the employer is in default of acceptance under § 615 BGB, meaning the employee is entitled to “wage without work.”
• Employer-ordered training during working hours counts as working time. No minus hours accrue.

Offsetting minus hours on termination

If an employee has accumulated minus hours while still receiving full pay, the employer has effectively granted a wage advance. When the employment relationship ends – whether by termination or termination agreement – it depends on the rules governing the working time account how the minus hours are handled.

Compensation by Working Overtime

Depending on the agreed rules, minus hours can be worked off during the notice period. In ordinary termination, the contract continues until the notice period expires, and the employee can perform overtime to eliminate the deficit.

Some employers try to offset minus hours against vacation days. This is not allowed. Vacation may not be used to settle minus hours.

Offsetting Against Wages or Salary

Sometimes overtime is not possible – for example, if the notice period is too short, there is no work available, or the employee is released from duties. In those cases, minus hours may only be deducted from pay if all of the following conditions are met:

1. A wage advance exists because the employee received full pay despite working fewer hours.
2. There is an agreement allowing deduction of minus hours at the end of the relationship (collective agreement, works agreement, or employment contract). Exception: If the job is paid at the statutory minimum wage, the right to deduct is already provided by law (§ 2 (2) sentence 2 MiLoG).
3. The employee must have had a genuine opportunity to work off the minus hours.

If these conditions are met, minus hours can be deducted from wages – but the employer must respect garnishment protection thresholds.

Minus hours during short-time work

In economically difficult periods, employers may introduce short-time work. Offsetting minus hours during short-time work is particularly attractive for employers. Whether this is permitted depends entirely on the wording of the applicable collective agreement or works agreement.

However, if short-time work is ordered due to circumstances within the employer’s risk sphere (e.g., lack of orders), minus hours normally may not be charged to the employee. This became especially relevant during the COVID-19 pandemic: employees were willing and able to work, but work was not provided – therefore, no minus hours could arise.

Minus hours when employee resigns

Before giving notice, employees should clarify the following:

• Do “real” minus hours even exist? No real minus hours arise if:
  • there is no working time account, or
  • the employee still has a statutory right to pay despite not working (e.g., sickness, vacation, employer-caused downtime).
• Can wage deduction be enforced? A deduction is only allowed if:
  • genuine minus hours exist,
  • overtime compensation is impossible, and
  • a deduction clause exists in a collective agreement, works agreement, or contract.

If deduction is not contractually allowed, minus hours should not influence the decision to resign. In practice, however, some employers still attempt retroactive deductions or repayment claims. Legal advice is strongly recommended before resigning, signing a termination agreement, or agreeing to release from work.

If a valid deduction clause exists, employees must decide whether they can

• work off the minus hours during the notice period,
• negotiate another arrangement, or
• accept a wage deduction.

Minus hours as grounds for termination

If an employee accumulates a large number of minus hours and ignores a formal request to work them off (e.g., by doing overtime), this may constitute a serious breach of contract. In individual cases, this can even justify summary dismissal – but usually only after a prior written warning.

Frequently asked Questions (FAQ)