CJEU on Overtime Supplements for Part-Time Workers

Overtime supplements for part time workers: what the CJEU ruled

In its judgment of 29 July 2024 in joined cases C-184/22 and C-185/22 (KfH Kuratorium für Dialyse und Nierentransplantation), the Court of Justice of the EU held that a rule under which overtime supplements for part time workers are paid only for hours worked beyond the normal working hours of comparable full-time employees treats part-time employees less favourably within the meaning of the EU Framework Agreement on part-time work.

Such a rule cannot be justified by the aim of deterring employers from ordering overtime beyond individually agreed hours or by the aim of preventing full-time employees from being treated less favourably. If the rule disadvantages a significantly higher proportion of women than men, it also constitutes indirect sex discrimination.

The Federal Labour Court (BAG) followed the CJEU in its judgment of 5 December 2024 – 8 AZR 370/20. It held that a collective agreement requiring part-time employees to exceed full-time hours before earning overtime supplements breaches the prohibition of discrimination against part-time employees in § 4(1) of the Part-Time and Fixed-Term Employment Act (TzBfG), unless there are objective reasons, and at the same time indirectly discriminates against women under § 7(1) of the General Equal Treatment Act (AGG) where significantly more women than men work part time. The claimant received the time credit she had claimed and compensation of EUR 250 under § 15(2) AGG.

Background: the KfH collective agreement

The cases concerned nurses working part time for a non-profit provider of dialysis services. Their employment was governed by a collective agreement concluded with the trade union ver.di. Under the agreement, overtime supplements were payable for hours worked beyond the monthly working time of a full-time employee, provided they could not be compensated by time off. A part-time nurse who worked more hours than agreed in her contract, but fewer than a full-time colleague, therefore received no supplement. The claimant, working 40% of full time, had accumulated additional hours and sought a time credit corresponding to the supplements as well as compensation for discrimination.

The BAG referred questions to the CJEU, asking whether the rule constitutes less favourable treatment of part-time workers and indirect sex discrimination, how the groups to be compared are determined, and whether the purposes invoked could justify the rule. The case was of broad importance because similar clauses exist in many collective agreements and company policies in Germany, particularly in sectors such as healthcare, retail and public services where part-time work is widespread.

The CJEU's reasoning

On part-time discrimination, the Court compared a part-time worker's situation with that of a full-time worker for the hours exceeding the individually agreed working time. For a part-time worker, those hours exceed what she has agreed to work and intrude on her free time, just as overtime does for a full-time worker.

Requiring her to work the same number of hours as a full-time employee before receiving any supplement means that she must work more additional hours relative to her contract before benefiting, which is less favourable treatment because of part-time work. The aims invoked by the employer, deterring excessive overtime and avoiding less favourable treatment of full-time workers, could not justify that difference, because the rule undermines the first aim for part-timers and the second does not require it.

On sex discrimination, the Court held that indirect discrimination under Article 157 TFEU and Directive 2006/54/EC is established if the rule disadvantages a significantly higher proportion of women than men. It is not necessary to show in addition that the group that is not disadvantaged, here full-time employees, consists of considerably more men than women. This clarification lowers the evidentiary hurdle for claims in sectors where both part-time and full-time staff are predominantly female.

The BAG's follow-up decisions

The BAG applied the CJEU's guidance to the German statutory framework. Under § 4(1) TzBfG, part-time employees may not be treated less favourably than comparable full-time employees because of part-time work unless objective reasons justify it, and remuneration and other divisible benefits must be granted at least in proportion to working time. The court held that the collective agreement's overtime rule breached this provision because there were no objective reasons for the difference. The consequence is that the disadvantaged employees must be treated as the agreement treats full-time employees: overtime supplements for part time workers apply to hours exceeding their individually agreed working time.

The BAG also confirmed a claim to compensation for non-material damage under § 15(2) AGG, because the rule indirectly discriminated against women. The court set the compensation at EUR 250, much less than the claimant had sought, taking into account the circumstances of the case. Even so, the recognition of a compensation claim means that discriminatory pay rules carry a financial risk beyond the pay difference itself, especially where many employees are affected. The court treated the case as the leading decision for parallel proceedings decided the same day.

Calculating overtime supplements for part time workers in practice

Illustration: a collective agreement provides a 25% supplement for overtime, defined as hours exceeding the monthly working time of a full-time employee, which is 160 hours. A full-time nurse who works 170 hours receives the supplement for ten hours.

A part-time nurse contracted for 64 hours who works 80 hours in a month would, under the old rule, receive no supplement at all, because she remained far below 160 hours. After the CJEU and BAG decisions, the comparison is made relative to each employee's agreed hours: the part-time nurse has worked 16 hours beyond her contract and, absent objective justification, is entitled to the supplement for those hours, just as the full-time nurse is for hours beyond hers.

Employers often ask how to treat additional hours that a part-time employee works voluntarily or at her own request, for example to swap shifts. Collective agreements commonly distinguish between overtime ordered by the employer and additional hours agreed for other reasons, and such distinctions can remain valid if they apply equally to part-time and full-time staff. What is no longer permissible is a threshold that only part-time staff have to cross before supplements start. Where time accounts are used, the same principle applies to the conversion of additional hours into time credits with supplements.

Employers that grant overtime supplements for part time workers under the new approach should also consider the interaction with flexible working time arrangements. Flexitime models, in which employees can vary their hours within a range, usually define what counts as overtime. Those definitions should be reviewed so that part-time employees are not systematically placed in a less favourable position, and works councils should be involved where the rules are part of a works agreement.

Collective agreements are not immune

A notable feature of the decisions is that they concern a collective agreement. German law grants collective bargaining parties considerable leeway, and courts traditionally review collective agreements with restraint. The prohibition of discrimination against part-time employees and the prohibition of sex discrimination, however, also bind the parties to collective agreements. Where a clause breaches § 4(1) TzBfG, it is ineffective to that extent, and the disadvantaged employees can claim the benefit granted to the favoured group. Employers that apply a collective agreement cannot rely on the agreement to defend a discriminatory rule, although the parties may renegotiate the system for the future within the limits of the law.

The decisions also mark a change from earlier German and EU case law, which had accepted that overtime supplements could be linked to full-time hours on the basis that part-timers and full-timers received the same pay for the same number of hours. The current approach focuses on the burden that additional hours place on the individual employee relative to her contract.

Exposure, limitation and exclusion periods

Claims for overtime supplements for part time workers are subject to the regular three-year limitation period and, often more importantly, to contractual or collective exclusion periods, which can require claims to be asserted within a few months. Compensation claims under § 15(2) AGG must generally be asserted in writing within two months under § 15(4) AGG. Employers should calculate potential exposure by identifying part-time employees who worked hours beyond their individual working time but below full-time hours during the relevant periods.

The decisions are also relevant to other benefits linked to working time thresholds, such as on-call allowances, night and weekend premiums or bonus eligibility. While each scheme requires its own analysis, the guiding principle is that part-time employees must not be required to meet full-time thresholds before receiving benefits designed to compensate for additional burdens, unless objective reasons justify that.

In transactions, the issue deserves a place in employment due diligence. Buyers of businesses with large part-time workforces, for example in healthcare, retail, logistics or cleaning services, should check whether pay rules contain full-time thresholds and whether claims have been raised. Because rights and obligations under collective agreements and employment contracts pass to the acquirer in a business transfer under § 613a BGB, unresolved claims can become the buyer's problem. Warranty and indemnity clauses in the purchase agreement can allocate the risk, but only if it has been identified. Public sector employers and church employers with their own pay regulations face the same questions, since the principles apply to all employers, regardless of the source of the pay rule.

Practical steps for employers

• Identify all pay rules that require part-time employees to reach full-time hours before receiving supplements or premiums.
• Analyse whether objective reasons, unrelated to part-time status or sex, could justify any difference; deterrence of overtime and protection of full-timers will not.
• Quantify exposure for past periods, taking account of limitation and exclusion periods.
• Adjust rules for the future, if necessary by renegotiating collective or works agreements.
• Review the gender composition of affected groups to assess indirect discrimination risk.
• Coordinate the review with pay transparency obligations under the EU Pay Transparency Directive.

How TRW & Co helps

We advise employers and employer associations on overtime supplements for part time workers and on discrimination risks in pay systems more generally. We review collective and works agreements, calculate exposure, design compliant supplement rules and represent employers in litigation and negotiations with trade unions and works councils. Our work connects with our works councils and employment practices; see also our notes on part-time and fixed-term employment, collective bargaining agreements and the BAG equal pay ruling. Please contact us to review your pay rules. This briefing is general information, not legal advice.