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Overtime and excessive hours are often colloquially used as synonyms. However, from a legal perspective, the two terms must be distinguished.
Overtime refers to work hours that exceed the contractually agreed working time (so-called standard working hours). This also applies to part-time employment. If there are no regulations regarding working hours in the individual employment contract, collective labor agreement, or standard labor contract, the "usual working time" is decisive for distinguishing overtime according to Article 321c (1) of the Swiss Code of Obligations (OR). For example, if an employee works 44 hours in a week and a weekly standard working time of 42 hours has been agreed upon or is customary, the employee has performed two hours of overtime.
Employees are generally only required to work during the agreed working hours. However, in exceptional cases, employees are obligated to perform overtime. Such an obligation exists when the performance of overtime is necessary and reasonable for the employee. The provisions of the Swiss Labor Law (ArG) regarding working and rest periods must also be adhered to when performing overtime. If an employee performs overtime at the request of the employer, they generally acquire a right to compensation. The same applies to overtime that has not been expressly ordered by the employer, provided that the overtime work was necessary or could reasonably be regarded as necessary by the employee. However, the employee must promptly inform the employer about unrequested but performed overtime. If the employee delays this notification, there is a risk, according to federal court rulings, that they may forfeit their right to compensation for the overtime.
The performance of overtime is considered unreasonable if significant interests of the employee are at stake in the individual case. This may include, for example, the duty to care for minor children or other dependents. We recommend that employees promptly report such unreasonableness grounds when overtime is ordered, preferably in a verifiable manner, e.g., via email, so that the employer or supervisor is aware and can take necessary actions.
Overtime performed can be compensated with equivalent time off by mutual agreement with the employee according to Article 321c (2) OR. If compensation is not possible or nothing else has been agreed upon, overtime must be compensated with a wage increase of 25%. The employee’s entitlement to compensation can be restricted (e.g., compensation for overtime only at 100% instead of 125%) or completely waived by the parties. Senior employees are only entitled to compensation for overtime if either a fixed working time has been agreed upon in the contract, or if additional tasks beyond the contractually agreed duties have been assigned to the employee, or if all employees have had to perform substantial overtime over a prolonged period, or if the compensation for overtime has been explicitly agreed upon.
If the compensation for overtime with time off of equal duration is provided for in the employment contract, this is deemed to be the employee's consent. Compensation for overtime must generally occur within 14 weeks, analogous to the subsequent statutory regulations for excessive hours, although this period can be extended to one year by agreement.
Excessive hours refer to work performed by the employee beyond the statutory maximum working hours. The labor law stipulates a maximum weekly working time of 45 hours for industrial enterprises, office staff, technical and other employees, and sales staff in large retail businesses (more than 50 employees), and 50 hours for other businesses (Article 9 ArG). Excessive hours always include overtime. For instance, if a technical employee has a weekly standard working time of 40 hours and works 51 hours in a week, this results in 11 hours of overtime, of which 6 hours are excessive.
In contrast to overtime, compensation for excessive hours cannot generally be waived by contract. The law generally provides for compensation of excessive hours at 125%. An exception to this is provided in the labor law regarding the statutory compensation obligation for office personnel, technical and other employees, and sales staff in large retail businesses for the first 60 excessive hours in a year (Article 13 (1) ArG). Since these first 60 excessive hours in a year also constitute overtime, what has been contractually stipulated regarding overtime compensation or remuneration is crucial. If the ordinary statutory regulation, which provides for overtime to be compensated at 125%, applies, this can also be the case for the first 60 excessive hours. If the overtime is compensated according to the agreement only at 100%, this can also apply to the first 60 excessive hours, and so on.
There is also the possibility of compensating excessive hours with equivalent time off. This requires the employee's consent. It remains questionable whether a general consent of the employee for compensation with time off of equal duration, as with overtime, is possible, or whether this consent is needed on a case-by-case basis after the occurrence of excessive hours.
If the possibility of compensation exists, it must generally occur within 14 weeks after the occurrence of excessive hours. This period can be extended to a maximum of one year by agreement (Article 25 (2) ArGV 1). Additionally, it is important to note that the employee cannot waive claims arising from mandatory legal provisions or from a collective labor agreement during the duration of the employment relationship and for one month after its termination. This includes claims for compensation arising from excessive hours and already performed overtime.
Certain businesses or parts of businesses (e.g., agricultural businesses, horticultural businesses, public institutions, and corporations; see Article 5 ff. ArGV 1) or certain employees or activities (e.g., staff of international organizations and foreign state administrations, higher executive functions, scientific activities, self-employed artistic activities, assistant doctors, educators, and social workers; see Article 8 ff. ArGV 1) are exempt from the scope of the labor law. If the labor law does not apply to certain businesses or employees, the provisions regarding excessive hours and the maximum weekly working hours do not apply either. It remains questionable whether claims for overtime arise in such cases. This must be determined by the individual employment contract, collective labor agreement, or standard labor contract.
As already stated, the labor law and thus the provisions regarding maximum working hours do not apply to employees with higher executive functions. However, employees with higher executive functions according to the labor law are not necessarily the same as executives in the sense of the law of obligations. Specifically, it is not sufficient to label someone as a "manager" to exclude them from the labor law. Rather, this employee must possess extensive decision-making authority based on their position and responsibility and, depending on the size of the business, significantly influence decisions of great importance, thereby having a lasting impact on the structure, business operations, and development of a business or part of a business. Typically, these are employees of the highest management body of a company, such as board members, managing directors, etc.
Although overtime work and excessive hours may seem similar at first glance, the law provides different legal consequences and different structuring options for both. We are happy to assist you with questions regarding overtime and excessive hour claims, as well as in drafting employment contracts.
Luzern, July 1, 2020
Melanie Fischer and Simeon Beeler