Alternative Income Sources: Essential Insight on Multiple Employment Options

In Germany, nearly 4.5% of employed individuals held a supplementary job in 2023, amounting to roughly 1.9 million people, according to the Federal Statistical Office. While offering financial stability, personal growth, or simple enjoyment, pursuing extra employment can raise important questions about legal obligations and employer expectations. With clarity, we explore the essential aspects of side jobs, including employer notification, working hours, and tax implications.

Notifying Employers

German labor law generally permits employees to engage in secondary employment. However, it is crucial to consider potential contractual arrangements that may require reporting or seek permission from the primary employer. The locus of the landmark case, Wiesbaden, emphasizes this significance. According to Jakob T. Lange, a Wiesbaden-based attorney specializing in labor law, these clauses are enforceable only if employers are equally obliged to grant consent, provided it serves no conflicting interests. It is wise to inform employers about planned secondary employment if there is any suspicion that it may impact their interests. The essential information should include the nature of the work, the company, working hours, and scope.

Employer Refusal

With few exceptions, employers cannot impose a general ban on secondary employment. Instead, they are required to evaluate each scenario uniquely and substantiate their refusal. Competition with another business or potential damage to the principal employer's reputation constitute valid reasons for prohibiting additional employment.

Working Hours

The application of labor regulations extends to secondary employment:

The combined workweek from the primary and secondary employment may not regularly exceed 8 hours per working day and 48 hours per week.
Rest periods are mandatory, with 11 uninterrupted hours following each workday.
Employees may not engage in secondary employment during paid vacations if it clashes with the objectives of relaxation.

Consequently, employers are keenly interested in the working hours of secondary employment. Overlapping shifts, fatigue leading to reduced performance, and the violation of working or rest time guidelines might warrant rejection.

German tax authorities and social security institutions view secondary employment as taxable income. Lower tax rates are applicable for mini-jobs, with earnings below €556 per month exempt from social security contributions. Employers of mini-jobs must register the positions with the mini-job center.

For earnings exceeding €556 per month, there are still financial advantages: if the secondary employer registers the activity as a mid-level job, they pay a higher share of social security contributions. The employee's contribution scales proportionally with increasing earnings. Once earnings surpass €2,000 per month, the full share is due.

Mini-jobs offer tax benefits due to minimal withholding rates and lower net remuneration compared to gross earnings if the employer also pays the tax flat rate. All other secondary employment falls under tax class VI, featuring higher deductions. Those who engage in secondary employment must file a tax return, as the tax office combines both earnings to calculate income taxes based on the tax class of the primary employment, typically resulting in a tax refund.

Balancing Working Hours

The optimal balance between primary and secondary employment varies depending on personal commitments, working hours, and industry-specific regulations. Common strategies include:

Engaging in secondary work on weekends, with Saturday and Sunday labor permissible provided rest periods are respected
Securing a four-day workweek during the primary job, enabling ease of secondary work on Fridays and Saturdays
Scheduling evening secondary employment for individuals who complete their primary work early

Part-time employees typically enjoy greater flexibility, as they can adhere to legal working and rest time regulations more easily. However, Kleinhenz advises considering an increase in primary employment hours before embarking on a secondary job to avoid tax class VI.

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In German labor law, employees are generally allowed to engage in secondary employment, but they may need to report or seek permission from their primary employer if there are contractual arrangements that require it. The notifiable information includes the nature of the work, the company, working hours, and scope.
Employers cannot impose a general ban on secondary employment; they must evaluate each scenario uniquely and substantiate their refusal with valid reasons such as competition or potential damage to the principal employer's reputation.
Working hours in secondary employment must comply with labor regulations, including a maximum of 8 hours per working day and 48 hours per week, mandatory rest periods, and no working during paid vacations if it clashes with relaxation objectives.
German tax authorities view secondary employment as taxable income. Mini-jobs, with earnings below €556 per month, are exempt from social security contributions, but earnings exceeding this amount require higher social security contributions from the employer. Secondary employment earnings above €556 per month and beyond tax class VI require employees to file a tax return, with taxes calculated based on the tax class of the primary employment and potentially resulting in a tax refund.