Term and Definition of Downtime
Downtime refers to periods in which an employee, machine, or entire production unit is unavailable for work performance or production due to operational or other reasons. Legally, the term is multifaceted, as downtime can involve aspects of labor law, social security law, civil law, as well as public law. In the context of employment law, “downtime” typically refers to periods of work prevention, while in other areas, such as the law of contracts for work and services, it can mean delays in performance caused by uncovered interruptions in production or operation.
Downtime in the Employment Relationship
Legal Classification under Labor Law and Continued Remuneration
Within the scope of an employment relationship, downtimes frequently represent periods during which the employee is unable or not permitted to perform their work duties. Such a situation may arise, for example, due to illness (§ 3 EFZG), maternity protection (§ 3 MuSchG), incapacity to work, vacation (§ 1 BUrlG), short-time work, or an operational production shutdown.Continued Remuneration During Downtime: In principle, labor law follows the rule “no work, no pay” (§ 326 para. 1 BGB). However, there are significant exceptions to this, which provide for continued remuneration during downtimes. The most important include:
- Downtime Due to Illness (§ 3 Continuation of Remuneration Act – EFZG)
- Downtime Due to Operational Reasons (e.g. lack of work, § 615 BGB)
- Downtime Due to Statutory Employment Bans (Maternity protection, § 18 MuSchG)
- Special Leave and Other Temporary Hindrances (§ 616 BGB, unless contractually excluded)
Short-Time Work and Loss of Work
A specific legal case is the loss of work within the context of short-time work. Short-time work occurs when the employer reduces the normal working hours due to a significant loss of work with corresponding remuneration losses (§ 95 SGB III). For affected employees, this creates downtime to the extent that no or less working hours are performed. The loss of earnings can, under certain conditions, be compensated by short-time work allowance (§ 96 et seq. SGB III).
Co-determination Rights and Duties During Downtime
Downtimes for operational reasons are subject to the co-determination rights of the works council according to § 87 para. 1 BetrVG. Also relevant are regulations regarding the documentation of working hours and reporting obligations to social insurance agencies and authorities.
Downtime in Social Law and Social Security Law
Downtime plays a central role in social security law, particularly regarding pension and unemployment insurance:
- Pension Insurance: Downtimes may be considered as so-called credited periods (§ 58 SGB VI) in the calculation of pensions if, during these times, for example, there was an entitlement to continued remuneration, sickness benefits, or other wage replacement benefits.
- Unemployment Insurance: Periods of involuntary loss of employment may be legally relevant for eligibility for unemployment benefits (§ 150 SGB III).
In addition, in accident insurance, work-related downtimes are considered within the scope of reintegration measures and in the calculation of injury benefits.
Downtime in Contract for Work Law, Tenancy Law, and Commercial Contexts
Law of Contracts for Work and Services
In the law of contracts for work and services, as regulated by the German Civil Code (BGB), downtimes arise if the contractor is delayed in completing the work for reasons beyond their control or if performance temporarily becomes impossible (§§ 286, 275 et seq. BGB). This may raise issues regarding claims for compensation or deadline extensions.
If, for example, production is interrupted by circumstances for which the manufacturer is not responsible (so-called force majeure), downtime can occur without fault and may lead to mutual compensation obligations between contractual parties.
Tenancy Law
Downtimes also play a role in tenancy law. If rented production equipment or leased real estate becomes unusable due to defects, claims for rent reduction may arise (§ 536 BGB). The tenant may also be entitled to further claims for damages or substitute performance as a result of downtime.
Operational and Industrial Perspective
In industrial contexts, downtimes regularly refer to economically significant interruptions in the use of machinery or plants. Such downtimes may be due to technical faults, staff shortages, or maintenance work. From a civil law perspective, this may lead to claims for damages or liability issues, particularly if the downtime is attributable to faulty maintenance or defective product-owner obligations (see Product Liability Act).
Tax Law Aspects of Downtime
From a tax law perspective, downtimes are generally relevant in connection with the deduction of business expenses (e.g., for unused plant utilization or inventory during operational interruptions) and when apportioning input tax.
Public Special Regulations, Reporting Obligations, and Documentation
Statutory provisions require the recording and reporting of downtimes to government authorities in certain cases. These include:
- Documentation Obligations pursuant to the Working Hours Act (ArbZG)
- Notification of Short-Time Work to the Employment Agency (§ 99 SGB III)
- Documentation requirements in the field of occupational safety and in healthcare (Maternity Protection Act, Infection Protection Act)
Liability and Compensation for Damages in Case of Downtime
Liability for downtimes is generally determined by the proven loss and by any relevant contractual or statutory liability regulations. It must be distinguished whether the downtime was caused by one’s own fault (then possibly a claim for damages) or by force majeure (exclusion of liability). The contracting parties may specify liability for downtimes through detailed arrangements, for instance within the framework of service and maintenance contracts (e.g., so-called Service Level Agreements).
Significance of Downtime in Case Law
There is a broad range of supreme court case law on downtimes, in particular regarding continued remuneration, short-time work, allocation of risk in the event of operational disturbances, and claims for damages arising from breach of contract or reduction.
Summary
Downtime is a central concept in labor law, social law, civil law, and public law. Its legal assessment is context-dependent—it may encompass claims to continued remuneration, social benefit entitlements, rent or contract for work related claims for reduction or compensation, as well as tax and documentation effects. A precise assessment of downtimes requires examining the relevant statutory provisions, applicable contracts, and current case law.
Frequently Asked Questions
Is the employer liable for downtime resulting from technical malfunctions at the workplace?
In a legal context, when downtime is caused by technical malfunctions, such as a server outage or machine breakdown, the question arises whether the employer remains obliged to continue wage payments. As a rule, the employer bears the so-called operational risk, pursuant to § 615 sentence 3 BGB. This means that downtime not attributable to the employee but instead caused by operational circumstances does not affect the employee. In the event of a technical malfunction that makes performance impossible, the employee generally retains the right to remuneration or salary. However, this does not apply if the employee caused the malfunction through their own misconduct, such as improper use of equipment. The extent of the employer’s liability may also be further defined by employment or collective agreements, or company agreements.
What reporting obligations exist in the case of downtime due to sickness?
In the event of downtime due to sickness, employees are obliged to inform the employer of their incapacity to work and its anticipated duration without delay (§ 5 para. 1 Continuation of Remuneration Act). Such notification must occur without culpable delay and at the latest at the start of the first day of absence. If the illness lasts for more than three calendar days, a doctor’s certificate of incapacity for work must be provided by the fourth day at the latest, although the employer may require earlier submission. If notification or submission of the certificate is not made in time, this may lead to a warning or even employment law consequences, such as pay reduction.
Does the employee have to make up for or catch up on downtime?
Whether downtime must be made up is largely determined by the legal assessment of the cause of the absence. If the absence is attributable to the employee’s own fault, such as unexcused absence from work, the employer can generally demand that the time missed be made up. In cases where the downtime was caused by the employer or by operational circumstances, however, there is usually no obligation to make up the lost time. An obligation to make up for downtime generally arises only if it is expressly stipulated in the employment contract, a works agreement, or a collective agreement. Without such an agreement, the employer cannot demand make-up work.
When does an employee lose their right to remuneration during downtime?
The employee’s entitlement to remuneration lapses if they caused the downtime through their own fault, for example by unexcused absence, unauthorized leaving of the workplace, or intentionally causing incapacity for work. This entitlement may also be suspended if a statutory exclusion period applies or the employee fails to promptly report incapacity for work and the employer suffers damage as a result. In cases of excused downtime, such as illness or operational downtime without fault on the part of the employee, the entitlement to remuneration generally remains unaffected.
What are the documentation requirements in connection with downtime?
Both employers and employees are subject to certain documentation requirements in the event of downtime. Employers must properly document working hours, absences, and their reasons (§ 16 para. 2 ArbZG, § 17 MiLoG). This serves as proof in the event of disputes, such as in cases of continued remuneration or proof of working hours requested by supervisory authorities. Employees must, particularly in the event of sick leave, present appropriate certificates (e.g. medical certificates of incapacity for work) and comply with reporting obligations without delay. Failure to fulfill these obligations may result in employment law consequences, such as warnings or salary reductions.
Are there differences in how downtime is handled in the home office and at the workplace?
Legally, there is no difference in the treatment of downtime, whether the employee is working from home or at the workplace. The employer also bears the operational risk for home office work, provided the downtime is caused by internal company factors (e.g., system failure, IT problems on the employer’s side). However, if the work cannot be performed for reasons within the employee’s sphere of influence (e.g., power outage at home or internet issues), the wage claim may lapse if make-up work is not possible. Of particular importance are the specific provisions in the employment contract, home office guidelines, or company agreements.
What compensation claims exist for mandated downtimes (e.g., short-time work)?
In cases of mandated downtimes due to economic fluctuations, such as short-time work, there are special social security regulations. Affected employees are generally entitled to short-time work allowance pursuant to §§ 95 et seq. SGB III. This is paid by the Federal Employment Agency and compensates part of the lost earnings resulting from the reduced working hours. The prerequisite is that the downtime is due to significant loss of work caused by economic reasons or an unavoidable event, and that the employer informs the authorities about the short-time work in the correct form and within the deadline. The claim to short-time work allowance generally supersedes the original wage claim vis-à-vis the employer for the hours lost during receipt of the benefit.
Can downtimes affect vacation or remuneration claims?
Downtimes resulting from absence due to incapacity for work (e.g., illness) are, according to § 9 BUrlG, treated as working days and thus do not lead to a reduction in vacation entitlement. The situation is different, for example, during unpaid special leave or parental leave: here, proportionate reductions in vacation entitlements may apply (§ 17 BEEG). Remuneration claims can also be reduced or lapse during long periods of unpaid downtime, such as when the employment relationship is dormant. Specific regulations may also be found in collective bargaining agreements and individual contractual arrangements.
