An overview of overtime. A particular focus is placed on the analysis of recent case law regarding senior executives.
“Over-hours” (Überstunden) refers to the working hours in excess to the agreed regular working time (we reported:working time – crystal clear?), the so-called normal working time (Art. 321c para. 3 CO). In principle, it is within the autonomy of the parties to contractually stipulate which working time is owed, whereby 40 or 42 hours are most common for a full-time position (8 or 8.24 hours per working day).
In contrast, overtime (Überzeit) means according to art. 13 of the Labor Law the working hours that exceed the legally allowed maximum. The maximum weekly working time for most employees is 45 or 50 hours. However, office staff and technical and other employees, including sales staff in large retail companies, are only entitled to compensation of overtime work exceeding 60 hours per calendar year.The distinction between simple “over-hours” (Überstunden) and “overtime” (Überzeit) is crucial for multiple reasons. In particular, “overtime” (Überzeit), is strictly regulated by Labour Law which is public law:
“Over-hours” (Überstunden) may be compensated with a supplement of at least one-quarter of the normal wage or, with the employer's consent, by time off in lieu of at least equal length.
It is possible to exclude the compensation as such as well as the supplement in writing, i.e. to settle with the regular salary.
“Overtime” (Überzeit) must also be compensated with the normal salary and a supplement of at least one-quarter thereof or by time off in lieu within a certain period.
The provision regarding “overtime” (Überzeit) is mandatory, making any deviating agreement null and void.
What applies to managers?
Regarding members of management, working time is usually not precisely defined in hours. It is assumed that the increased workload is compensated by the higher salary. The reason behind that assumption is that the scope and weight of the tasks to be performed by the managers are more important than the hours put into that work. According to their responsible and important position, managers can also generally organize their working hours to a large extent themselves.
Therefore, without an explicit contractual obligation of the exact working hours, executives are only entitled to compensation for “over-hours” (Überstunden),
The threshold for falling outside of the scope of protection of Labor Law is higher. Not every person who takes on management tasks within a company is exempt from the right to compensation for “overtime” (Überzeit). Rather, this requires a ""higher executive position"" (art. 3 lit. d ArG). In accordance with art. 9 of Ordinance 1 to the Labor Law, a higher executive position is only held by a person who, due to his position and responsibility and depending on the size of the company
In the recent judgment 4A_38/2020 of July 28, 2020 the Swiss Supreme Court had to determine whether a trader who was not only employed by a LLC but also held significant stakes in that company should be defined as such a “higher executive”.
The discussed case shows that companies regularly struggle to determine which employees need be compensated for supplementary working hours. Generally, a (higher) executive position requires that the manager in question oversees multiple employees, though there are no blanket categories. In fact, the highest court of Switzerland did not consider the criterion of the authority to issue instructions to be decisive in the particular case at hand, since it had to assess a relatively small group of traders with equal status who determined the structure of the LLC themselves.
We advise to remain cautious: Even if an employee is contractually qualified as a (higher) executive, a court may not share this legal view in case of a dispute. Since the decision-making powers based on the position and responsibility in the company are to be evaluated differently depending on the size and organization of the company, employers will continue to face a little transparent legal situation.
For a reliable legal assessment, each company must be examined separately, and the specific circumstances of the individual members of management shall be taken into consideration. We would be happy to conduct such individual case studies or answer other legal questions regarding both “over-hours” (Überstunden) and “overtime” (Überzeit) that may arise within your company.