Overtime and part-time – regular or individual working time decisive?

Background

Pursuant to Sec. 4 para. 1 of the German Act on Part-Time Work and Fixed Term Employment (Teilzeit- und Befristungsgesetz, "Part-Time Act") a part-time employee may not be treated less favorably than a comparable full-time employee because of the part-time work – unless objective reasons justify different treatment. Whether unequal treatment exists at all is often more difficult to answer in detail than it seems at first glance. In recent years, the Federal Labour Court has repeatedly commented on the issue of overtime pay in connection with part-time employees. However, the case law of the Federal Labour Court is inconsistent, as the various senates involved have reached different opinions or, in some cases, there have been changes in case law within the same senate (see the decisions of the Federal Labour Court dated 25 April 2013, case no. 6 AZR 800/11; 23 March 2017, case no. 6 AZR 161/16; 15 October 2021, case no. 6 AZR 253/19; 19 December 2018, case no. 10 AZR 231/18; 18 October 2021, case no. 8 AZR 370/20 (A)). In addition, the previous case law of the European Court of Justice (ECJ) is not consistent (see below). Recently, several senates of the Federal Labour Court have submitted corresponding questions to the ECJ. The answers of the ECJ could now finally provide clarity on the interpretation of the principle of equality, but also mean a need for changes to existing collective agreements.

Legal framework

Whether the reference to the working hours of full-time employees constitutes discrimination pursuant to Sec. 4 para. 1 Part-Time Act has to be clarified on the basis of two essential questions:

• Is there unequal treatment at all?
• If there is unequal treatment: Is this justified by an objective reason?

Unequal treatment

In the case of bonuses and additional payments which are linked to the fact that the regular working hours of a full-time employee exceeded, the question whether there is unequal treatment between a part-time employee and a comparable full-time employee with regard to remuneration depends, firstly, on whether the total remuneration or, rather, the specific bonus/additional payment is taken into ac-count. On the one hand, the total compensation can be considered as point of reference (total remuneration theory). In case the total compensation of both comparison groups is taken into account, the part-time employee receives the same compensation for the work actually performed. But if part-time employees would receive (additional) overtime pay when their individual working hours are exceeded, they would not be in the same position as full-time employees. Rather, they would actually be in a better position. Based on the decision of the ECJ in the Helmig case (dated 15 December 1994, case no. C 399/92), the Third, Fifth, Sixth and Tenth Senates of the Federal Labour Court also initially assumed such an overall view on the total compensation in their case law and denied unequal treatment (cf. e.g. Federal Labour Court dated 26 April 2017 – 10 AZR 589/15; dated 16 May 2004 – 5 AZR 448/03). Lat-er, however, based on the decision of the ECJ Elsner-Lakeberg (dated 27 May 2004, case no. C-285/02), both the Tenth and the Sixth Senate argued that the remuneration component of the overtime bonus must be considered isolated and that the formal equal treatment with regard to the total remuneration constitutes unequal treatment. Thus, it was ruled out to only assess on an overall assessment of the remuneration components (Federal Labour Court dated 23 March 2017, case no. 6 AZR 161/16; 19 December 2018, case no. 10 AZR 231/18). In addition, according to the court, there would be unequal pay if overtime worked by full-time employees is paid more than that of part-time employees. This is because the latter individually also worked overtime – without receiving additional remuneration for it. The ECJ decision Voß (dated 6 December 2007, case no. C-300/06) did not bring any clarity on the topic either, as the Court also dealt with the question of overtime pay for part-time employees, but ultimately left open which method of consideration (Elsner-Lakeberg or Helmig) the ECJ would adopt. 

Objective reason for justification

Even if one assumes –in our opinion unconvincingly – an unequal treatment of part-time and full-time employees in the constellations described, this does not necessarily constitute discrimination pursuant to Sec. 4 para. 1 Part-Time Act. Instead, the next question is whether the purpose of the overtime pay can objectively justify this unequal treatment. Different treatment of part-time employees can only be justified if its reason can be derived from the relationship between the purpose of the benefit and the scope of the part-time work. Collective bargaining agreements usually stipulate that the increased remuneration is intended to compensate for the additional workload (so-called workload compensation, Belastungsausgleich) that arises when employees work beyond the collectively agreed working hours. In some cases, however, the increased remuneration also intends to reward the loss of employees' ability to dispose of their free time and to discourage employers from using their employees' free time. If the provision in the collective bargaining agreements do not contain any express provision in this regard, the purpose of the regulation must be determined by interpretation.

In March 2017, the Sixth Senate of the Federal Labour Court summarised the previous case law to the effect that unequal treatment can only be justified under two cumulative conditions: The collective bargaining agreement provision must have the purpose of compensating for the additional workload and at the same time have the aim of discouraging the employer from making such excessive demands to its employees (Federal Labour Court dated 23 March 2017, case no. 6 AZR 161/16). In contrast, the restriction of the possibility to dispose of their free time affects part-time and full-time employees in the same way and cannot justify unequal treatment.

ECJ proceedings Lufthansa CityLine (C-660/20)

There are currently a number of proceedings pending before the Federal Labour Court on how to deal with overtime pay claims of part-time employees. In some cases, the Federal Labour Court has submit-ted questions to the ECJ for clarification. In what is probably the most sensational of these cases (C-660/20, Federal Labour Court, order for reference dated 28 October 2021, case no. 10 AZR 185/20 (A)), the defendant airline pays its pilots additional compensation (so-called "additional flight hours compensation") under a collective agreement. This is triggered as soon as the pilot exceeds a certain number of working hours (so-called "trigger limit"). The specified number of working hours required to reach the trigger limit applies equally to full-time and part-time employees. The plaintiff pilot, who is employed on a 90% part-time basis, is of the opinion that the trigger limit must be lowered for part-time employees in accordance with the Elsner-Lakeberg case law. Moreover, in his view, the additional remuneration under the collective agreement would not serve to compensate for the additional workload, but rather to protect the employee's individual free time.

On 1 December 2022, Advocate General Nicholas Emiliou presented his Opinion on the first question referred by the Federal Labour Court. The question aims clarifying which methodology is to be used to determine whether the remuneration regulation in question leads to worse treatment of part-time employees, i.e. whether the overall remuneration or the individual remuneration components should be taken into account. The Advocate General is of the opinion that, in order to examine whether part-time employees are treated unequally with regard to remuneration, it is necessary to consider whether the part-time employee receives the same remuneration as a full-time employee for the same number of hours of (identical) work performed (according to this, the Advocate General supports the total remuneration theory). There would be no unequal treatment, since the hours below and above the trigger limits apply equally to all employees. Although it is true that it is less common for part-time employees to reach the trigger limits, this does not lead to unequal treatment within the meaning of the Part-Time Work Directive. The purpose of the Part-Time Work Directive is to establish a minimum level of protection against discrimination for part-time employees. A proportional reduction of the trigger limits for part-time employees, on the other hand, would lead to an advantage for part-time employees com-pared to full-time employees.

The proceedings before the ECJ have not yet been concluded. However, a decision is expected in spring 2023.

ECJ proceedings KfH Kuratorium für Dialyse und Nierentransplantation (C-184/22)

In October 2021, the Eighth Senate also submitted questions to the ECJ on overtime pay for part-time employees (Federal Labour Court reference decision dated 28 October 2021, case no. 8 AZR 370/20 (A), pending before the ECJ under C-184/22). In this case, a part-time employee sued for payment of collectively agreed overtime bonuses (30%) or a corresponding time credit on her working time ac-count. However, the collectively agreed norm applicable to the plaintiff only provides for additional overtime pay in the event that overtime is worked in excess of the calendar monthly working hours of a full-time employee. Thus, the Eighth Senate would like to know from the ECJ, inter alia, whether corresponding collective agreement provisions, according to which the payment of overtime bonuses is only provided for such working hours that are worked beyond the regular working hours of a full-time employee, constitute an unequal treatment of part-time employees. In particular, it is questionable whether the ECJ rulings in Helmig and/or Elsner-Lakeberg and Voß are relevant in this respect for answering the question or whether other requirements may apply here.

In the order for reference, the Eight Senate positions itself to the effect that, in its opinion, there is no unequal treatment of part-time and full-time employees given the ruling in the Helmig case. As a result, part-time and full-time employees would receive the same remuneration per hour worked – and also for the same number of hours worked. However, due to the existing – divergent – ECJ case law, the Senate could not completely rule out the possibility that a mere orientation towards the remuneration received per hour worked would lead to an (unlawful) unequal treatment with regard to the other working conditions. Therefore, clarification of the issue by the ECJ is required.

No dates have yet been set by the ECJ in these proceedings. Information about the competent chamber and the responsible Advocate General is only available on Curia once the dates have been announced. Responsible Chamber for the proceedings C-660/20 is the First Chamber. Whether the First Chamber is also responsible for the proceedings C-184/22 and whether Advocate General Emilio will also be active in these proceedings is therefore not yet completely ruled out, although it is rather unlikely.

Practical Relevance / Outlook

The ECJ's decision in Case C-660/20 is expected as early as spring 2023. The ECJ is not bound by the Advocate General's Opinion in its decision. However, the ECJ tends to follow the Opinion, especially since – in our view – the arguments in favour of the total remuneration theory are better from a factual point of view. Should the ECJ take the same view, many employers should be able to breathe a sigh of relief. If, on the other hand, the ECJ should deviate from the opinion of the Advocate General and answer the first question referred in the affirmative, i.e. see unequal treatment in the collectively agreed trigger limit, there is still not necessarily discrimination, as has been shown. In this case, the discussion would shift to whether the unequal treatment is not justified. Should the ECJ classify the workload compensation (Belastungsausgleich) as a suitable justification, collective bargaining parties should – if not already done so – consider amending the relevant provisions in the collective bargaining agreements with regard to the purpose of the compensation payment. It should be made clear what purpose is being pursued with the overtime bonuses. However, this cannot prevent any compensation claims by employees from the past, rather only has an effect on the future. According to the Opinion, the Advocate General was instructed by the ECJ not to present his opinion on the second question referred. This suggests that the ECJ could follow the Advocate General in his assessment.

Regardless of the outcome, this decision is relevant for a growing proportion of employment relation-ships: According to the latest figures (Statista) from the 3rd quarter of 2022, around 28% of all employees in Germany are currently working part-time, and the trend is rising – in 2000, the proportion was still 19%, in 2020 it was already 26%. In this context, the average weekly working time of all part-time employees in 2021 was just under 21 hours. In view of the common practice of agreeing a corresponding trigger limit for additional compensation, this is likely to affect a considerable number of employees.

Furthermore, it is to be hoped that the preliminary rulings C-660/20 and C-184/22 will at least not differ in content. The current situation, in which ECJ rulings cannot be reconciled with one another, is not acceptable to the parties to collective agreements, the employees and employers affected, and the labor courts. This situation should be resolved as quickly as possible.