Case Discussion of the Federal Labor Court Decision of 16 May 2012

    May 2012

    In its decision dated 16 May 2012 (5 AZR 331/11), the Federal Labor Court dealt with the question of the validity of a regulation on overtime compensation. This decision of the Federal Labor Court now shows employers a legally secure way of settling overtime work for the first time. A clause, which only stipulates that a certain number of overtime hours are compensated by payment of the regular remuneration, will not be reviewed for its reasonableness within the scope of Section 307 para 1 sentence 1, 2 German Civil Code (BGB). However, this only applies if the employer does not combine this regulation with the authority to order the performance of overtime work. The employer is only free in this case to settle overtime work within the limits of wage extortion (Section 138 BGB).

    This article was published in February 2013 in the renowned legal journal “Arbeit und Arbeitsrecht” (pg. 118).

    *NB - The PDF publication is only available in German