Alternative Income Streams: Crucial Facts You Need to Understand

Whether it's for extra cash, personal development, or simply fun, many Germans supplement their main job with a side gig. According to recent statistics, about 1.9 million people were employed in a secondary occupation in 2023. But what are the rules when it comes to informing your employer and managing taxes? Here's a breakdown.

Do I need to inform my employer about my side job?

The right to pursue a profession is protected, but it comes with limitations when it affects the rights of the main employer. Jakob T. Lange, a labor law specialist from Wiesbaden, suggests that it's essential to review your employment contract first. Some contracts may require you to report and gain approval for any secondary activities. If there's no such clause, however, you should still inform your employer if there's a risk the side job could harm their interests.

Regarding what information to share, Lange recommends providing details on the activity, the employer, the working hours, and when the side job will take place. This helps your employer assess the situation and take appropriate action if necessary.

Can my employer prevent me from taking on a side job?

Generally, a blanket ban on side jobs is not permissible. The employer must examine the situation and justify their decision based on potential conflicts of interest, such as competing activities or damage to their reputation. For example, a vehicle mechatronics technician should not work in another car repair shop.

What should I consider regarding working hours?

Secondary activities are subject to the same labor laws as primary jobs. The total working time from both jobs should not regularly exceed 8 hours per day and 48 hours per week. Rest periods must also be respected, with at least 11 hours of uninterrupted rest after work. During paid vacation with your main employer, you should refrain from engaging in secondary activities that contradict the purpose of rest and relaxation.

In Germany, tax and social security contributions apply to secondary activities. Mini-jobs (below €556 per month) have reduced deductions, and in some cases, employers pay social security contributions on behalf of the employee. For mini-jobs above €556, social security contributions increase gradually with the salary, and employees may be responsible for a portion of these contributions.

In cases where the salary exceeds €2,000 per month, the employee becomes responsible for the full social security contribution. Tax rates for mini-jobs are low, at only 2%, and may offer tax advantages if the employer pays the tax flat rate.

For regular secondary activities or midi-jobs, tax and social security contributions apply at the same rates as your primary employment. In all cases, you are required to file a tax return, and dual income may lead to a tax refund.

How can I balance my working time effectively?

Balancing your primary and secondary employment depends on various factors, such as private commitments and working hours. Weekend jobs, four-day week arrangements, and evening jobs can be viable solutions, but it's crucial to respect labor and rest time regulations in all cases.

Part-time employees often have more flexibility, as they can more easily adhere to labor and rest time requirements. In some cases, it may be more advantageous to focus on increasing your hours in your primary job to avoid high tax deductions associated with midi-jobs.

Pursuing a side job in the field of science or workplace-wellness, such as consulting on health-and-wellness practices, could provide a second income opportunity for an employee, but it's important to consider the impact on personal-finance management, especially regarding tax and social security contributions.
To manage the financial aspect of a side job effectively, an employee should familiarize themselves with the tax implications and social security contribution requirements, especially for mini-jobs that earn less than €556 per month and midi-jobs that earn more.
While a vehicle mechatronics technician may have the opportunity to work in another car repair shop as a side job, they should carefully consider the potential conflicts of interest and the impact on their primary workplace reputation before making a decision.