

For most employees, dismissal comes unexpectedly. Therefore, employees almost never have the opportunity to take all of their overtime as time off (‘time off’) before their employer dismisses them. So what happens to overtime when you are dismissed? Which rules apply and when it makes sense to get support from a specialist employment lawyer, we describe in the following blog article:
The most important information at a glance:
- Overtime occurs when more than the contractually stipulated hours are worked.
- In the event of termination, overtime does not expire.
- There are two options for compensating overtime: time off or money.
- Clauses such as ‘Overtime is compensated with the salary’ are often invalid – so you are still entitled to compensation in money or time off.
- In order not to lose any claims to overtime pay, you should be aware of any limitation periods and be extremely careful with so-called receipts of compensation.
- If the employer does not pay for overtime after the termination, you should ask the employer in writing for the payment of the overtime after your departure. It is recommended to consult a specialist lawyer for labour law.
Contents
- Overtime upon termination: time off in lieu or pay in lieu?
- When is overtime exceptionally not remunerated?
- How much overtime pay after termination?
- Termination with exemption taking into account overtime
- Overtime in the event of termination without notice
- Overtime and termination agreements
- Attention: cut-off periods and compensation receipts!
- What can you do if your employer does not pay you for overtime after you have handed in your notice?
- FAQ on overtime when you are dismissed
Unfairly dismissed in Germany?
Check your severance pay now – you have only 3 weeks to preserve your severance package!
Overtime upon termination: time off in lieu or pay in lieu?
Overtime occurs when an employee works more than they are contractually obliged to. However, employees can only be compensated for overtime if the employer has ordered them to work overtime (or at least knew about it). Employees who simply always need a little longer to complete their tasks (or do so intentionally), secretly record their hours and hope to build up a nice overtime account (and get paid for it later) will therefore usually get nothing (yes, such people do exist!).
So if you are dismissed with an overtime balance (with notice) or resign, the overtime does not expire for the time being. Rather, the employer is obliged to compensate the overtime either with time off (time off in lieu) or with money. The normal case is payment, while time off in lieu is only permissible if this is contractually regulated. If it has been contractually agreed that compensation can be provided either by time off or by payment, the employer has a fundamental right of choice.
If there is no contractual provision regarding overtime compensation, the employee is generally entitled to remuneration. It is important to note that, according to the Federal Labour Court, clauses such as ‘Overtime is compensated with the salary’ are usually invalid. Such clauses are only valid if they describe exactly the number or proportion of overtime hours that are to be compensated with the salary. An example of this would be ‘The remuneration covers up to two hours of overtime per week’.
When is overtime exceptionally not remunerated?
Even though the general rule is that overtime must be remunerated, there are some exceptional cases. For example, managers and professions of a ‘higher nature’ cannot demand remuneration for overtime worked. These include chief physicians, tax advisors, accountants and lawyers.
In addition, employees must be able to prove that overtime has actually been worked. The employee therefore needs comprehensive documentation – especially if the employer, as is so often the case, has not set up a system for recording working hours. Particularly when working from home, many employees work beyond the contractually owed working hours and therefore have to create their own documentation.
In addition, the employee must be able to prove that the overtime was ordered by the employer (or that the employer was aware of it). So be sure to print out any relevant emails!
Do you need help with German labor law?
Get a free initial consultation now – with an expert on German labor law!
How much overtime pay after termination?
The amount of overtime pay after termination depends on the contractual agreements. If nothing has been agreed, the normal hourly wage applies. However, sometimes there are regulations that provide for a surcharge (e.g. a surcharge of 15-25%).
To calculate your overtime pay, you must first determine your gross hourly wage. To do this, you need to multiply your weekly hours by 52 weeks (to get to the year) and divide by 12 (to break it down to the month). After that, you need to divide your gross monthly salary by this result. This gives you your gross hourly wage, which you then only need to multiply by the overtime you have worked.
Example: An employee earns €5,000 gross per month. She works 40 hours per week. Last month, she worked ten hours of overtime. She works 40 hours per week x 52 / 12 = 173.2 hours per month. Her ‘fictitious hourly wage’ is therefore €5,000 (gross monthly salary) : 173.2 (hours per month) = €28.87 (gross hourly wage). She is therefore entitled to €28.87 (gross hourly wage) x 10 (overtime hours) = €288.70 (overtime pay). Any applicable overtime surcharge is paid on top of this.
Of course, income tax and social security contributions are due on the overtime pay as usual. Under certain conditions, overtime bonuses may be tax-free in some cases, for example, if they are Sunday, holiday or night bonuses.
Termination with exemption taking into account overtime
If you are dismissed and your employer no longer has any interest in you performing work, they can release you from work. If you are released from work, you will generally no longer have to work until the end of the notice period, but you will still be paid for this period. Whether you are still entitled to overtime pay (you can no longer take time off in lieu of overtime due to the leave of absence) depends on whether the leave of absence is to be granted ‘taking into account overtime’. If this is the case, you are no longer entitled to overtime pay. If there is no such provision, you are released from your duties but can still claim your overtime pay.
Do you need help with German labor law?
Get a free initial consultation now – with an expert on German labor law!
Overtime in the event of termination without notice
If an immediate termination has taken place, the only option left for the employer is to compensate the overtime with money. This is because an immediate termination ends the employment relationship with immediate effect. So no more time off in lieu can be granted because there is no notice period. In the event of instant dismissal, overtime must therefore always be remunerated. This applies regardless of whether the instant dismissal was justified or not.
Overtime and termination agreements
Apart from termination, an employment contract can also be terminated by means of a termination agreement. In this case, employees should pay attention to any clauses regarding overtime. Employers often try to gain an advantage by including clauses in the termination agreement that, among other things, ‘settle’ claims arising from overtime (possibly also in connection with the termination agreement and acknowledgement of compensation – more on this in a moment). You should never sign a termination agreement immediately. Do not let yourself be put under pressure and take time to read the contract carefully and make up your mind. It is advisable to seek advice from a specialist lawyer in labour law before signing a termination agreement.
Attention: cut-off periods and compensation receipts!
Employment contracts may contain so-called ‘exclusion periods’. Claims that the employee has against the employer (e.g. the claim for overtime pay) expire if they are not asserted within the exclusion period. Since these deadlines can be quite short, you should claim your overtime quickly after a termination, otherwise you could run the risk of missing the exclusion period. If you do not assert your claims within this period, they will expire. If there are no contractual cut-off periods, the statutory limitation period of three years applies.
You should also be careful if your employer gives you a receipted cheque to sign after the end of the employment relationship. The effect is similar to that of the cut-off period. If you sign a receipted cheque, this means that all claims arising from the employment relationship are deemed to have been settled. Even then, you can no longer demand overtime pay.
What can you do if your employer does not pay you for overtime after you have handed in your notice?
If your employer does not pay you for overtime after you have handed in your notice, you should consult a specialist solicitor for employment law. They will be able to check whether you are entitled to the payment.
In most cases, it makes sense to ask the employer in writing for the overtime to be paid after you leave. If the employer continues to refuse, the specialist lawyer will draft a letter to that effect and, in the worst case, take legal action steps.
FAQ on overtime when you are dismissed
No, you do not lose your overtime entitlement if you resign. You are entitled to compensation in the form of a payment or time off in lieu.
Yes, you are almost always entitled to payment for your overtime.
In the event of termination without notice, overtime must generally be remunerated, as no compensatory time off can be granted.
That depends on the contractual limitation periods, which can usually be short. Claims should be made promptly. If there are no limitation periods, the statutory limitation period of three years applies.
First of all, you should request payment in writing from your employer; if they continue to refuse, you should consult a specialist lawyer.

How much severance pay are you entitled to? Calculate now!
- Calculate your individual severance pay for free
- Calculation of the standard payment up to a very high settlement
- Get a strategy to maximise your severance pay