Managing a working-time account: overtime, negative hours and target/actual time
How to keep a working-time account properly — with target-actual comparison, overtime rules, negative-hours handling and practical tips for getting started.
Overtime that piles up. Negative hours that nobody can trace. Target-actual discrepancies that only surface at payroll. A properly kept working-time account can avoid exactly that — and creates transparency for employers and employees alike.
This article shows you how a working-time account is structured, what to watch out for when introducing one, and which mistakes commonly happen in practice.
What is a working-time account?
A working-time account documents the difference between the contractually agreed working time (target) and the actual working time worked (actual). If someone works more than agreed, positive hours (overtime) arise. If someone works less, negative hours arise.
The account works like a checking account for working time: it has a balance that can be positive or negative, and is usually carried forward monthly or weekly.
Positive hours (overtime)
The employee has worked more than agreed. Can be reduced through time off in lieu or payout.
Negative hours
The employee has worked less than agreed. The cause and the contractual arrangement determine how they are handled.
Target vs. actual: how the working-time account works
The core of every working-time account is the target-actual comparison. Two values are set against each other:
| Term | Meaning | Example |
|---|---|---|
| Target time | Contractually agreed working time | 40 h/week = 173.3 h/month |
| Actual time | Working time actually worked | 185.5 h in April |
| Balance | Difference (actual minus target) | +12.2 h (overtime) |
Important
Public holidays, leave and sick days are generally counted as target time — they do not create negative hours. An employee who is sick does not "owe" the employer any working hours (German Continued Remuneration Act).
Overtime in the working-time account: what to watch out for
Overtime arises when the actual time exceeds the target time. In a working-time account it is recorded as positive hours. The following points are relevant when handling overtime:
- Averaging period: The ArbZG permits extending daily working time to up to 10 hours, provided that an average of 8 hours per working day is not exceeded within 6 months or 24 weeks (§ 3 ArbZG).
- Reduction through time off: Positive hours can be reduced through time off in lieu — in agreement with the employer.
- Payout: Whether overtime is paid out depends on the contractual arrangement. There is no automatic entitlement to a payout instead of time off in lieu.
Special rule for minimum-wage earners
For employees who receive the minimum wage, the MiLoG sets special limits on accumulating overtime. You can find information on this from the Federal Ministry of Labour and Social Affairs or the Minijob-Zentrale. When in doubt, a tax advisor or specialist lawyer should be consulted.
Negative hours: when do they arise — and who bears the risk?
Negative hours arise when an employee works less than contractually agreed. The decisive question is: Who caused the negative hours?
Caused by the employee
The employee leaves early, arrives late or takes time off. These negative hours can be offset under certain conditions — provided this is contractually arranged.
Caused by the employer
The employer assigns no work or sends the employee home. In this case, the law generally provides that the employer bears the risk. A pay deduction in such cases is problematic according to the prevailing view.
Sickness ≠ negative hours
Under the German Continued Remuneration Act, sick days must not create negative hours. They are credited with the target time. The same generally applies to statutory public holidays and approved leave.
Contractual basis and co-determination
A working-time account requires a contractual basis. This can come from various sources:
- A provision in the employment contract (a clause on flexible working time + averaging period)
- A works agreement (if a works council exists)
- A collective bargaining agreement (industry-specific rules)
If a works council exists, it has a co-determination right under § 87 para. 1 nos. 2 and 3 BetrVG when introducing a working-time account. Introducing one without involving the works council may be invalid according to prevailing case law.
What should be contractually arranged
Maximum positive and negative hours, averaging period, expiry deadlines, handling of overtime upon termination, insolvency protection for long-term accounts. The clearer the arrangement, the fewer conflicts.
Worked example: monthly target vs. actual
An employee has a contractual weekly working time of 40 hours (5-day week). Here is how their working-time account might look for a month with 22 working days:
| Week | Target | Actual | Difference | Cumulative balance |
|---|---|---|---|---|
| Week 14 | 40.0 h | 42.5 h | +2.5 h | +2.5 h |
| Week 15 | 40.0 h | 38.0 h | −2.0 h | +0.5 h |
| Week 16 | 40.0 h | 45.0 h | +5.0 h | +5.5 h |
| Week 17 (public holiday) | 32.0 h | 32.0 h | ±0 h | +5.5 h |
At the end of the month, the employee has 5.5 hours of overtime on the account. These are carried over into the following month and can be reduced through time off in lieu or — depending on the arrangement — paid out.
Keep an hours account automatically
Target, actual and balance per employee — transparent and traceable. Try it free for 14 days.
Common mistakes with working-time accounts
No written framework
A working-time account introduced without a contractual or operational basis. In a dispute, the employer has no leverage.
Negative hours during sickness
Sick days are booked as negative hours — which is generally not permissible under the German Continued Remuneration Act.
No averaging period defined
Overtime accumulates over months without any plan to reduce it. This can cause ArbZG problems.
Negative hours deducted from pay across the board
Without checking whether the employee actually caused the negative hours themselves. For negative hours caused by the employer, a pay deduction is problematic according to the prevailing view.
An Excel spreadsheet as the 'system'
Manual upkeep is error-prone, opaque and hard to trace during audits.
Hours account with Shiftdesk
Shiftdesk offers a digital hours account per employee that can be based on the time tracked:
Target-actual comparison
Contractually agreed weekly hours as the target, tracked time as the actual. The difference is calculated and displayed.
Positive/negative balance
Balance viewable per employee — weekly or monthly.
Data export
Hours data can be exported for payroll preparation and analysis.
Frequently asked questions about the working-time account
Is a working-time account required by law?
No, there is no general legal obligation to keep a working-time account. However, it is advisable in many businesses — especially with flexible working-time models. The obligation to record working time (BAG 2022) concerns the documentation of start, end and duration — not the keeping of an account with a balance.
Can negative hours be deducted from pay?
That depends on who caused the negative hours. For negative hours caused by the employee, an offset may be possible under certain contractual conditions. For negative hours caused by the employer (e.g. no work assigned), the law generally provides that the employer bears the risk. When in doubt, a specialist lawyer should be consulted.
What happens to positive or negative hours upon termination?
That depends on the contractual arrangement. Positive hours (overtime) generally have to be settled — through time off or payout. For negative hours, it depends on whether they were caused by the employee and whether a contractual offset clause exists.
How much overtime can a working-time account accumulate?
The German Working Hours Act (ArbZG) provides that, on average over 6 months or 24 weeks, no more than 48 hours per week should be worked. For minimum-wage earners, the German Minimum Wage Act (MiLoG) sets additional limits on accumulating overtime. You can find details from the Federal Ministry of Labour and Social Affairs.
Do I need a works agreement for a working-time account?
If a works council exists, the German Works Constitution Act (BetrVG) provides co-determination rights on working-time matters. Introducing a working-time account without involving the works council may be invalid according to prevailing case law. When in doubt, a specialist lawyer should be consulted.
Conclusion
A working-time account brings transparency to working-time management — for employers and employees. The prerequisites are a clear contractual basis, a clean target-actual calculation and a system that documents the data in a traceable way.
If you want to introduce a digital hours account in your business, try Shiftdesk free for 14 days.
This article is for general information purposes only and does not constitute legal advice. The presentation is based on the German Working Hours Act (ArbZG), the German Minimum Wage Act (MiLoG), § 615 of the German Civil Code (BGB) as well as published Federal Labour Court (BAG) case law (as of April 2026). Employment contracts, collective bargaining agreements and works agreements may contain differing rules. The presentation relates to German law. Different rules apply for Austria and Switzerland. Shiftdesk accepts no liability for the accuracy, completeness and timeliness of the content presented. For an individual assessment, consult a specialist lawyer for employment law.
The Shiftdesk team writes about scheduling, time tracking and labor law in the DACH region — practical and easy to follow.
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