Foreign managers: Are overtime hours paid?

For many foreign managers and highly qualified specialists, the career move to Germany is accompanied by high expectations. An attractive salary, a state-of-the-art workplace, and the prospect of long-term residency shape the image. However, in the daily work routine, many expats quickly encounter reality: projects demand full commitment, and weekly working hours significantly exceed the contractually agreed hours. When it comes to compensating this overtime, foreign professionals and the HR departments of German companies often encounter a legal gray area characterized by serious misconceptions. Many blindly rely on the clauses in their employment contracts or are lulled into the false sense of security that every hour worked must ultimately be paid. As a specialized law firm for visa law and international employment law, we repeatedly see that this misconception can ultimately cost them real money and, in the worst-case scenario, even their residency permit .

Why is the statement "All overtime is covered by the salary" often ineffective?

Most standard employment contracts for managers contain a clause stating that required overtime is covered by a flat-rate payment in the gross salary. However, the widespread conclusion that "the clause is invalid, so I will be paid for my overtime" is incorrect in German legal practice – and regularly costs managers their legitimate claim. To understand the legal situation, the analysis must be divided into two stages.

In the first stage, we examine the contractual agreement based on the review of its clauses. The Fifth Senate of the Federal Labor Court requires a clear and specific upper limit on hours for such lump-sum compensation clauses. A clause that attempts to cover all overtime work in a blanket and unlimited manner is opaque to the employee. It therefore violates the transparency requirement under Section 307 Paragraph 1 Sentence 2 of the German Civil Code (BGB) and is simply invalid. According to our firm's experience, this applies to the majority of standard employment contracts presented to foreign skilled workers upon hiring.

Does an invalid contract clause automatically lead to a subsequent payment?

This leads to the second stage of the legal review, which holds the real surprise for many affected expats: In German labor law, invalidity does not automatically mean payment. If the contractual flat-rate clause is invalid, it is replaced by the statutory provision of Section 612 Paragraph 1 of the German Civil Code (BGB) . According to this provision, overtime pay is only owed if the additional work could objectively only be expected in return for corresponding compensation.

The Federal Labor Court regularly denies this so-called objective expectation of remuneration for highly paid professionals . Those employed as top performers or in top management owe the company a certain level of success, not merely their time spent at work, which is why overtime pay is often not socially expected in these circles.

Where is the magic salary threshold for compensating overtime?

The threshold at which the courts generally deny an expectation of overtime pay is specifically linked to a social security benchmark: the contribution assessment ceiling in the statutory pension insurance scheme . In 2026, this ceiling is €101,400 gross per year (for the former West German states).

For those whose fixed salary exceeds this threshold, according to established case law, everything is usually covered by the salary. However, if the salary falls below this threshold – which can be the case for many young professionals, entry-level academics, or holders of an EU Blue Card – there is generally a legitimate expectation that overtime worked must be compensated additionally or with time off.

What role do tolerance and documentation play in everyday work?

Exceeding the contribution assessment ceiling is a significant indicator, but by no means a rigid, inviolable limit. Labor law allows for exceptions, which we can utilize in practice for our clients. If an employer is aware of significant overtime work by their managers, requires this work for the company's success, and takes no steps to reduce working hours, they are tacitly condoning it. Tolerated overtime can be subject to compensation , regardless of the salary level. This was the ruling, for example, of the Berlin-Brandenburg Regional Labor Court in a landmark case.

For foreign managers, especially from countries like the USA , Great Britain , or Canada, this is a crucial factor. They are often accustomed to the concept of "exempt employees" in their home countries, where overtime is expected without time tracking, and tend not to record their working hours in Germany at all. However, without complete and verifiable documentation, any claim before a German labor court will fail .

What residency-related risks must foreign skilled workers be aware of?

For foreign workers, disputes over overtime are not merely a labor law issue, but also carry significant implications under visa law. If foreign skilled workers are massively overworked without financial compensation, this can violate the provisions of the Working Time Act ( § 3 ArbZG ). If the responsible immigration authority or the Federal Employment Agency identifies irregularities in working conditions during a pending renewal of a residence permit (e.g., under § 18b AufenthG for academic professionals ), the residence permit may be denied . Salary must be commensurate with actual working hours to avoid accusations of wage dumping.

At the same time, many expats are hesitant to assert their rights, fearing the loss of their visa if they resign . A tactical and discreet approach is therefore essential to avoid jeopardizing their professional and legal standing in Germany.

Conclusion

Whether this restrictive case law of the Federal Labor Court regarding overtime compensation for high earners will stand in the long run remains to be seen. Currently, however, we must consider it as a mandatory basis for all consultations and contract drafting. For foreign executives and their employers, precise risk management is crucial. Every executive and HR department should immediately check three things: What does the contract actually stipulate – has an effective maximum working hours limit been agreed upon? How does one's own salary compare to the social security contribution ceiling of €101,400? And are overtime hours documented completely, day by day, in a verifiable manner? As a specialized law firm, we support you in drafting legally sound employment contracts and effectively minimizing immigration-related risks.