Additional income sources: essential insights to consider
Second Jobs: Know Your Rights and Obligations Before Taking One
In Germany, many people choose to work additional jobs for financial, enjoyment, or self-development purposes. The Federal Statistical Office reported that 4.5% of employed individuals held multiple jobs in 2023, equating to around 1.9 million individuals.
When earning extra income from a second job, it is crucial to be aware of the responsibilities and requirements regarding the primary employer and tax office. Here are answers to some important questions.
Notification Obligation to Employer
The freedom to practice a profession generally applies, but it depends on the rights of the main employer. If an employment contract exists, employees are often required to report and seek approval for any secondary activities. However, for such clauses to be effective, the employer must also grant approval, provided no employer interests are jeopardized.
Even without a contract clause, employees should inform their employer if the side job could possibly affect the company's interests. Essential information includes the planned activity, the company, work hours, and extent, enabling the employer to assess the situation.
Employer's Right to Refuse a Side Job
An employer cannot impose a general ban on a second job. They must evaluate each situation individually and justify their decision based on business interests. This applies particularly to competing activities and anything that might damage the main employer's reputation.
For instance, an engineer working in the automotive industry may not take a job in another automotive workshop, while someone who works for a vegan food company but serves at a steakhouse on weekends should consult their employer.
Considerations Regarding Working Hours
Labor laws apply even to second jobs, including rules regarding maximum working hours, rest periods, and vacation regulations. Employers are concerned about overlapping working hours, potential fatigue, and legal work or rest time violations, which can justify a refusal.
Taxation and Social Security Contributions
Secondary activities are taxed and subject to social security contributions. Tax deductions for mini-jobs (up to €556 net per month) are lower than regular jobs, and they are exempted from social security contributions with the employer paying a flat rate.
For salaries above this threshold, employers pay a higher share of social security contributions. Employees' contributions gradually increase with their salary, with the full amount due once it exceeds €2,000 net per month. Only mini-jobs offer tax advantages, with a low 2% tax rate and no income tax upon paying the flat rate.
In all other cases, income from multiple jobs is reported under Tax Class VI, which has the highest deductions. Employees must submit a tax return, with both salaries added, and the income tax calculated based on the main job's tax class. This often leads to a tax refund.
Divide Working Time Effectively
The most effective way to divide working time between a primary and secondary job varies, depending on personal commitments, work hours, and rest periods. Common strategies include working on weekends, having a four-day week, or working in the evenings. Part-time employees may have more flexibility in observing legal working and rest hours.
For those looking to increase their income without risking legal repercussions or violating labor laws, understanding the rules surrounding second jobs in Germany is vital.
By Jakob T. Lange, Specialist Labor Lawyer, Wiesbaden (for DPA)
In the context of managing multiple jobs in Germany, it's essential to consider the financing aspect when choosing a lifestyle that includes a secondary job. It's crucial to understand the taxation and social security contributions associated with second jobs, as income above €556 net per month from a mini-job is taxed at a higher rate and subject to social security contributions (Employer's Rights and Obligations). Furthermore, lifestyle decisions involving multiple jobs should take into account the working hours and legal restraints to ensure compliance with labor laws (Divide Working Time Effectively).
