Time premium
A time premium is a supplement on the base wage for work at certain times or beyond regular working time. Apart from night work, there is no statutory entitlement to one.
As of:September 2026
Where an entitlement exists
Only for night work, and even there only in principle: section 6(5) ArbZG requires an appropriate number of paid days off or an appropriate premium on gross pay, unless a collective compensation rule exists. The law names no figure; the case law regularly regards 25 percent as appropriate, and more for permanent night work.
For Sunday and public holiday work, and for extra work, there is no statutory entitlement to a premium. It arises only from a collective agreement, a works agreement, the employment contract or established company practice.
MetronHR works these figures out itself: time accounts, premiums, overtime and the limits of the German Working Hours Act, with every booking.
What section 3b EStG governs
Not the entitlement but the taxation. Tax-free are premiums of up to 25 percent for night work between 20:00 and 06:00, up to 40 percent between 00:00 and 04:00 where the work started before midnight, up to 50 percent for Sunday work, up to 125 percent for statutory public holidays and for 31 December from 14:00, and up to 150 percent for 24 December from 14:00, for 25 and 26 December and for 1 May.
The base wage is capped at 50 euros per hour for this. For exemption from social security contributions the limit is 25 euros per hour (section 1(1) sentence 1 no. 1 SvEV). The two limits differ, and that is exactly what often gets overlooked.
Example: a night shift at a base wage of 22 euros
- Eight hours between 22:00 and 06:00, premium 25 percent.
- Premium: 22 euros × 25 % × 8 h = 44.00 euros.
- Tax-free, because 22 euros is below the limit of 50 euros.
- Free of contributions, because 22 euros is below the limit of 25 euros.
Common mistake
An overtime premium gets treated as tax-free. Section 3b EStG covers only night, Sunday and public holiday work. A premium for somebody working longer is fully subject to tax and contributions.
Further reading
- Section 6(5) ArbZG
- Section 3b EStG
- Section 1(1) sentence 1 no. 1 SvEV
This is not legal advice; for a specific case at your workplace you are better off asking someone qualified to give it.
Published by: AMNAU GmbH
Editorial responsibility: Ugur Aydogan, Product development.
Last reviewed: September 2026
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Related terms
Night work
Night work is any work covering more than two hours of night time. Under section 2(3) ArbZG, night time runs from 23:00 to 06:00, and in bakeries and confectioneries from 22:00 to 05:00.
Shift allowance
A shift allowance compensates for the burden of changing working times, for instance in two- or three-shift operations. It attaches to the shift model, not to a particular time of day.
Time off in lieu
Compensatory time off means that extra work performed is offset by paid release from work instead of payment. It requires an agreement; it does not follow from the law.
Substitute rest day
A substitute day of rest is a work-free working day that has to be granted for employment on a Sunday or public holiday. It is not a voluntary benefit but the statutory condition of the exception.
Basic wage
The base wage is the ongoing pay due for regular working time, converted to one hour. It is the basis of assessment for premiums under section 3b EStG.
Public holiday pay
Public holiday pay is the remuneration for working time lost solely because of a statutory public holiday. It is not an allowance but the continued payment of the regular wage.
Additional hours
Extra work in the narrow sense is work beyond the statutory maximum working time. Overtime is work beyond the contractually agreed time. In everyday language the two terms get mixed up.
Blanket settlement
A blanket settlement is the contractual clause under which overtime is supposed to be already paid for with the agreed salary. In its widespread wording it is ineffective.