HR-Glossar
Zeitlohn (pay by time worked)
What pay by time worked is, how it differs from performance pay and a fixed salary, and what matters in recording and payroll.
1. What is Zeitlohn (pay by time worked)?
Zeitlohn is pay for time spent working – the obligation to pay itself follows from Section 611a(2) BGB. The measure is the hour, not the result: working longer earns more, working faster does not.
It is the most widespread form of pay in Germany and the normal case wherever output cannot sensibly be measured in units, or where quality and care matter more than speed.
In payroll it is distinguished from a fixed salary, where a set monthly amount is paid regardless of the hours actually worked. The difference matters considerably in processing: pay by time requires reliable time recording as the input to every payroll run; a fixed salary does not – there, time recording is occupational safety, not a basis of calculation.
The minimum wage is likewise a time-based rate: under Section 1(2) MiLoG it is measured per clock hour. With a fixed salary it therefore has to be calculated back to check compliance.
Those last two paragraphs are the ones that matter to a group setting monthly salaries centrally.
2. Origin and development
Pay by time historically replaced piece rates, which predominated in early industrialisation. The reason was less social than practical: piece rates produce speed at the cost of quality and safety, and as work became more complex, output became ever harder to measure in pieces.
Performance pay has remained in niches and as a hybrid – pay by time as the base, supplemented by performance- or result-related components. That combination is today the normal case wherever variable pay is used at all.
3. Core principles and how it works
What is paid for is the time
The basis is the working time performed, not the result. That shifts the performance risk to the employer.
Time recording is the basis of calculation
Without reliable recording, pay by time cannot be processed. That is more than the occupational safety duty.
Premiums come on top
Extra work, night, Sunday and public holiday work are regularly paid with premiums; some of them are favoured for tax.
The minimum wage applies per hour
With pay by time, compliance can be read off directly – an advantage over a fixed salary.
Separate wage types for each component
Basic hours, extra hours and types of premium are kept separately; they behave differently for tax and contributions.
4. Who is Zeitlohn (pay by time worked) relevant for?
- Production, trades, logistics, hospitality, retail – pay by time is the normal case there.
- Businesses with fluctuating workload – the pay follows the deployment.
- Marginal and part-time employees – frequently paid on an hourly basis.
- Payroll teams – taking over the hours and calculating premiums is ongoing work.
5. How it differs from related terms
- Pay by time and a fixed salary – with a fixed salary the monthly amount is independent of the hours actually worked. - Pay by time and performance pay – performance pay is measured by result, units or achievement of targets. - Pay by time and piece rates – piece rates are a form of performance pay with standard times. - Pay by time and premium pay – premium pay combines pay by time with a performance-related supplement.
6. Variants and adaptations
- Pure pay by time – the hourly rate times the hours worked. - Pay by time with premiums – the normal case in shift and weekend work. - Premium pay – pay by time plus a performance-related component. - Pay by time with a working time account – hours are stored rather than paid immediately. - A fixed salary with hours monitored – a fixed salary in calculation but with recording for minimum wage and occupational safety checks.
7. Advantages and challenges
Advantages
- Simple, intelligible and traceable for both sides
- No incentive to sacrifice quality or safety to speed
- Compliance with the minimum wage can be checked directly
- Fits a fluctuating workload
- Premiums can be allocated cleanly
Challenges
- No direct incentive to perform
- Fluctuating monthly amounts make planning harder on both sides
- It presupposes functioning time recording
- Higher processing effort than a fixed salary
- With on-call work there is a risk of uncertainty for employees
8. Best practices for implementation
Automate the transfer of hours
The interface from time recording into payroll is where most errors arise – and where they are most easily avoided.
Hold the premium rules in the system
Not calculated by hand each month. Types of premium and time windows belong configured once and then maintained.
Insist on discipline in recording
Late or blanket returns of hours lead to recalculations and disputes.
Check against the minimum wage regularly
With pay by time as well – where premiums are to be counted towards it, or where hourly rates have been unchanged for a long time.
9. Tips for employers and employees
For employers
- **Time recording is the basis of calculation here** – not only an occupational safety duty
- **Separate the premiums cleanly** – tax-free and taxable premiums need their own wage types
- **Diarise the returns of hours** – late supply is the most common cause of late payroll
For employees
- **Keep your own record of hours** – where there is a discrepancy, that is your basis
- **Check the premiums** – night, Sunday and public holiday work are paid separately
- **Plan for fluctuating months** – pay by time means a fluctuating income
10. Conclusion
Pay by time is the simplest and most widespread form of pay – and the one most dependent on functioning time recording. Here it is not only an occupational safety duty but the basis of calculation for every payroll run. Automating the transfer of hours, holding the premium rules in the system and insisting on discipline in recording deals with most of the effort. The rest is a trade-off: no incentive to perform, but equally no incentive to sacrifice quality and safety to speed.
For an international group two points connect to decisions taken elsewhere. Where a group reads time recording purely as a compliance obligation, it has half the picture: for hourly-paid staff the same data are what payroll calculates from. And because the minimum wage is measured per clock hour, a monthly salary set centrally has to be calculated back against actual hours to show compliance – which is only possible if those hours are recorded in the first place.
A note on sources: the Civil Code and the Minimum Wage Act have official English versions, cited below. The Industrial Code does not (checked on 2026-09-28); its German text governs.
Sources
- Section 611a BGB – Contract of employment (official English version) (opens in a new tab)
- Section 1 MiLoG – Minimum wage per clock hour (official English version) (opens in a new tab)
- Section 107 GewO – Calculation and payment of remuneration (German original; no official English version) (opens in a new tab)
Related terms
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