Multiple income streams: crucial insights to consider

Workers in Germany often hold secondary jobs for financial, leisure, or personal development purposes. Data from the Federal Statistical Office reveals that in 2023, 1.9 million people with a job held at least one additional employment, equating to 4.5% of the employed workforce.

Whether planning to work part-time or freelance, there are essential factors to consider, including your main employer's and the tax office's involvement. Here's an elucidation of crucial questions.

Is disclosing my second job mandatory?

The right to practice professions is self-evident, yet it's subject to limitations when it affects the main employer's rights. According to labor law expert Jakob T. Lange, most employment contracts require workers to inform and seek permission for parallel employment. Such clauses are binding only if they obligate employers to approve, provided there's no conflict of interest.

Even without a contract clause, it's advisable to inform your employer if your additional job could possibly jeopardize their interests. Doing so requires a minimum of four pieces of information: what specific activity, for which company, and at what times and extent will you work? Your employer needs this information to evaluate the situation.

Can my employer prohibit my side job?

Generally, employers cannot enforce a blanket ban. They must analyze each case individually and defend their decisions. Conflicting business interests are among the few reasons justifying a refusal to accommodate a side job, particularly when it involves competing activities or damages the employer's reputation.

For instance, a motor vehicle mechatronics technician may not work in another workshop, while someone serving in a vegan food business but working in a steakhouse over weekends should discuss this with their employer, advises Lange.

What should I consider regarding working hours?

Labor law applies to secondary employment as much as to primary ones. Key points to remember include:

Avoid exceeding 8 hours a day and 48 hours a week on average.
The side job should not interfere with your rest periods, such as ensuring 11 hours of uninterrupted rest after work.
Working hours during paid vacation should not contradict the vacation's purpose of relaxation.

Since employers are interested in knowing your side job's schedule, pay close attention to whether your working hours clash with your primary job, lead to fatigue, or potentially violate labor laws.

Side jobs are subject to taxation and social security contributions, with differing implications depending on your arrangements. Consider the following scenarios:

Mini-jobs (up to €538 per month, as of 2024/2025) are subject to flat-rate social insurance contributions paid by the employer and have favorable taxation. However, employees do not have tax withholding unless an exemption is revoked.
If your side job income exceeds the mini-job threshold, there may still be financial advantages. Employers may opt to pay higher contributions for mid-level jobs (Midijobs), allowing employees to pay proportionally less.
If your side job doesn't fit into the mini-job or mid-level job categories, both income streams are taxed under tax class VI, which incurs lower deductions. Every worker doing a side job must file a tax return. The tax office calculates the overall tax liability based on the tax class of the primary job, often leading to a refund.

Dividing your working hours between primary and secondary jobs can vary based on factors like personal commitments and working hours. Common scenarios include work on weekends, four-day workweeks followed by two days of secondary work, or evening shifts. Part-time employees typically have greater flexibility to comply with labor laws and work hours. Since higher deductions apply under tax class VI, it might be smart for employees to seek more hours in their primary job before taking on another one.

Informing your employer about a second job is often required, especially if it might conflict with your primary job's interests.
Employers cannot arbitrarily prohibit a side job; they must examine each case individually to ensure no irreconcilable business interests.
Labor laws apply to secondary employment, and workers should be mindful of working hours, ensuring they do not exceed daily or weekly limits and do not interfere with rest periods or vacation.
Taxes and social security contributions for side jobs are subject to different implications, such as pay-as-you-go arrangements for mini-jobs or a more complex tax calculation for jobs not fitting those categories.