Whether private appraisal or speaking activities, supervisory board positions, business coaching, yoga training or a mini-job: If an employee earns money through their own labor in addition to their primary job, this is regarded as secondary employment.
1. Does the secondary employment require approval?
Article 12 (1) of the Basic Law guarantees the freedom to choose and pursue a profession. As such, secondary employment is permitted in principle. Consequently, employers and HR managers are not permitted to generally prohibit a second job via employment contract or the employer’s right to issue instructions. A corresponding clause to this effect in the employment contract is invalid.
If employees do not disclose their secondary employment, this may constitute a breach of duty pursuant to the employment contract. This would entitle the employer to compensation and/or even termination of the employment relationship.
2. When is secondary employment prohibited?
However, there are limits: If the secondary employment violates the legitimate interests of the primary employer, the secondary employment is not permitted and consequently the primary employer can prohibit it, if necessary. This is the case, for instance, if an employee regularly shows up overtired at work for their primary employer because he or she has a second job as a bartender, cab driver or at a security company with late shifts or night shifts.
However, the constitutionally guaranteed freedom of profession means that banning secondary employment is only an option after all more lenient alternatives have been exhausted. For example, reducing the working time of the secondary employment could be one more lenient option.
3. Does the secondary employment count as working time?
According to the Working Hours Act (ArbZG), employees may not work more than eight hours per day. A person who already works full-time for eight hours a day is not permitted to work a mini-job at a restaurant or as a cleaner, especially as the eleven-hour rest break between the daily working hours has to be complied with.
It is important to be aware that the working hours at multiple employers are added together in accordance with Section 2 (1) (1), 2nd half-sentence of the Working Hours Act (ArbZG). All employers involved are responsible for monitoring compliance with working hours and rest periods. As such, they may all be liable in the event of violations. Employers may face fines of up to 30,000 euros or even imprisonment for up to one year if the employer knew or should have known that the total of the primary and secondary employment exceeds the maximum limits of the Working Hours Act.
However, there are exceptions: For example, the Working Hours Act does not apply to executive employees or chief physicians. Even employees who are self-employed on the side do not need to adhere to maximum working hours or minimum rest breaks. But even in these cases, if the secondary employment is too demanding on the employee, this may constitute a violation of the employer’s legitimate interests. In turn, this could justify prohibition of the secondary employment.
4. Is working in competition permissible?
If employees have a second job with a competitor or become a competitor themselves, employers are entitled to prohibit the secondary employment pursuant to Section 60 of the German Commercial Code. But what counts as competition? The decisive factor is not the employee’s sideline activity but the employer’s competitive situation: Is the same product sold, for example? To the same customer group? According to Federal Labor Court, an employee of Deutsche Post AG is permitted to work as a part-time newspaper deliverer for a publishing company which also offers Postal services.
5. Is the secondary employment exempt from social insurance?
If the secondary employment is a mini-job and, therefore, a marginal employment, no employee contributions to social insurance have to be paid. However, in this case, the employer is obliged to pay lump-sum social security contributions. It is also important to be aware that remuneration from multiple marginal employment relationships with different employers must be added together. As a consequence, the marginal earnings limit can quickly be exceeded. In this case, employee and employer social security contributions become necessary. If the employer knew or should have known about the other marginal employment relationships, they also face the risk of subsequent payments.
6. Rules regarding volunteer work?
In principle, the legal regulations governing paid secondary employment also apply to honorary offices and voluntary work. However, prohibiting this form of secondary employment is even more difficult. For example, if employees are part of the volunteer fire department, some German federal states even require them to take time off for drills and assignments. In return, private employers are entitled to claim reimbursement for the costs from the municipality. Similar regulations apply to the German Federal Agency for Technical Relief. Under certain circumstances, employers may even be entitled to reimbursement of wages.
7. Is secondary employment permissible when on leave?
The German Federal Leave Act states that vacation time is specifically intended for rest and recovery. Therefore, employees may only work or volunteer to the extent that these activities does not interfere with their rest and recovery. The specific secondary employment determines whether or not this rest and recovery is at risk.
8. Working secondary employment despite sick leave?
If a doctor has put an employee on sick leave and the employee nevertheless works at the secondary employment during this time, the primary employer may be entitled to terminate the employment relationship without notice and even without a prior warning (Federal Labor Court, ruling dated August 26, 1993, Ref. 2 AZR 154/93).
9. Rules during parental leave?
Parents are permitted work up to 32 hours per week during parental leave. If they wish to work for an employer other than their primary employer, they need the primary employer’s permission.
To avoid pitfalls arising from violations of the Working Hours Act and when paying social security contributions, employers and HR managers should include a duty to disclose secondary employment in the employment contract and also reserve the right to approve the secondary employment. However, the clause must state that consent may only be refused if the performance of the employee’s duties pursuant to their employment contract is significantly impaired by the secondary employment or if the secondary employment conflicts with other legitimate interests of the employer. Essentially, secondary employment is permitted and may not be prohibited for arbitrary reasons. It is also important for employers and HR managers to regularly check whether employees are violating regulations due to failure to comply with the maximum working hours or rest periods or whether the company is at risk of being required to make subsequent payments due to non-payment of social security contributions when employees work for multiple employers.