How do I correctly include overtime and supplemental pay in the payroll statement?
August 11, 2023 | 40,00 EUR | answered by Christiane Rapp
Dear Tax Advisor,
My name is Uwe Hentschel and I run a medium-sized company with 50 employees. Lately, we have been accumulating more and more overtime hours and have also been paying more frequently for night and weekend work. Up until now, I have always handled the payroll myself, but the more overtime and additional payments there are, the more uncertain I become about whether I am doing everything correctly.
I am worried that I may be making mistakes in calculating overtime hours and additional payments, which could lead to legal consequences for my company. Therefore, I would like to know from you how I can correctly implement overtime hours and additional payments in the payroll. Are there any specific regulations or laws that I need to consider? How are overtime hours and additional payments treated for tax purposes? And how can I ensure that all employees are fairly compensated?
I would greatly appreciate it if you could provide me with specific steps on how to correctly implement overtime hours and additional payments in the payroll to ensure legal compliance and fair compensation for my employees.
Thank you in advance for your help.
Sincerely,
Uwe Hentschel
Dear Mr. Hentschel,
Thank you for reaching out to me with your question. It is important that overtime and supplements are correctly implemented in the payroll to avoid potential legal consequences and ensure that your employees are fairly compensated. I am happy to provide you with some specific steps and information that can help you with this.
First and foremost, it is important to know that overtime and supplements are regulated by law. For example, the Working Time Act (ArbZG) specifies how many overtime hours an employee can maximum work and which rest periods must be adhered to. Collective agreements may also play a role here and must be taken into account.
In terms of payroll, overtime and supplements should be listed separately. Overtime is usually compensated at a defined hourly rate that is higher than the regular hourly rate. It is important to accurately record the exact number of overtime hours worked and calculate them correctly.
Supplements for night and weekend work are often legally required and must be taken into consideration accordingly. These supplements may be tax-advantaged, depending on whether they are tax-exempt or taxable supplements. Therefore, it is important to know and apply the tax regulations correctly.
To ensure that all employees are correctly compensated, it is recommended to keep an accurate record of working hours. This way, overtime and supplements can be accurately recorded and correctly accounted for in the payroll. It is also advisable to offer regular training for your employees to ensure that they are familiar with and comply with the regulations in place.
In conclusion, it is important to implement overtime and supplements correctly in the payroll to ensure legal compliance and fair compensation for your employees. If you have any further questions or need assistance with the specific implementation, I am happy to help.
Best regards,
Christiane Rapp
