Company parties and outings are an integral part of working life at many companies in Germany. They serve to foster team building, recognition, and social cohesion within the company. However, behind these social gatherings lie a number of legal questions: Is participation mandatory? Who is liable in the event of an accident? What about compensation? This article provides a structured overview of the most important aspects of labor law.
Key points at a glance:
- There is generally no obligation to attend company parties or outings—participation is voluntary
- If the company outing takes place during regular working hours, it is considered paid working time—any overtime beyond that is not automatically subject to compensation
- For up to two company events per year, a tax deduction of 110 euros per person per event applies
- Accident insurance coverage applies during the official program—but not during private side activities or in cases of excessive alcohol consumption
- Misconduct such as insults or sexual harassment at a company party may justify termination without notice
What exactly is a company event in legal terms?
What counts as a company event from a legal standpoint?
A company event is a social gathering organized by the employer in which employees, their guests, and, where applicable, temporary workers may participate (Section 19(1), sentence 1, no. 1a of the German Income Tax Act (EStG)). Typical examples include summer parties, Christmas parties, anniversary celebrations, and company outings. The key factor is that the event must be open to all employees—only then do the tax and social security benefits apply in full.
Private gatherings—such as a birthday party for a colleague at the office—are expressly not considered company events in the legal sense and, as a result, are not covered by statutory accident insurance.
As an employee, am I required to participate?
Is there an obligation to attend company parties or company outings?
No. Under labor law, there is generally no obligation to attend company events. Participation is voluntary—regardless of whether the event takes place during or outside of working hours. An employer may not issue a written warning or impose any other disciplinary measures under labor law if an employee chooses not to attend the event.
At the same time, the general principle of equal treatment applies: all employees must be invited to the event. Individual employees may be excluded only for objective reasons—such as when essential services must be maintained. Exclusion without a valid reason constitutes unlawful unequal treatment, which may also be relevant under the General Equal Treatment Act (AGG).
Does a company outing count as work time?
Is the time spent on a company outing considered working time and compensated?
If the company outing takes place during regular working hours, it is considered working time—employees do not have to make up the time and receive their full salary. If the event extends beyond regular working hours (for example, due to a group dinner), this generally does not entitle employees to overtime pay unless the employer has expressly ordered it. If, on the other hand, the outing takes place on the weekend or after work, it is not legally considered working time subject to compensation—the employer may voluntarily grant compensation, but is not obligated to do so.
Taxes and Deductions: How Much Can a Company Party Cost?
What is the tax deduction for company events?
For up to two company events per year, the tax office grants an income tax exemption of 110 euros gross per event and employee. Eligible expenses include catering costs, admission fees, musical performances, travel expenses, and gifts presented during the event. Benefits exceeding the 110-euro allowance, as well as benefits provided in connection with a third or subsequent company celebration, are subject to income tax and social security contributions—but may be taxed at a flat rate of 25%.
Important: On April 23, 2024, the Federal Social Court ruled (Case No. B 12 BA 3/22 R) that retroactive flat-rate taxation of company party expenses cannot retroactively eliminate the obligation to pay social security contributions if the payroll period has already expired. Employers should therefore ensure correct tax treatment is applied in a timely manner.
Accident Insurance Coverage: Who Is Covered and When?
Is statutory accident insurance coverage provided for company parties and outings?
Generally speaking, yes—but only under certain conditions. Insurance coverage applies if the event was organized by the employer or a company group, involves as many employees as possible, and the participants are acting within the scope of the official program. In a landmark ruling, the Federal Social Court (BSG) confirmed that an organized hike as part of a Christmas party can constitute a work-related accident—even if the accident occurs when someone slips on a hiking trail.
On September 26, 2024 (Case No. B 2 U 14/22 R), the Federal Social Court (BSG) ruled that an accident occurring during an in-house soccer tournament does not constitute a work-related accident. Three factors were decisive: The tournament was open only to employees interested in soccer and was therefore not a company-wide social event for the entire workforce. Furthermore, the competitive nature of the event was the primary focus, which excludes insurance coverage as company sports. Finally, the regularity required for company sports, which serves a recreational function, was lacking. This ruling makes it clear: Whether accident insurance coverage applies depends largely on how an event is designed and for whom it is intended.
What are the rules for the outbound and return trips?
Are employees covered by workers' compensation insurance even when traveling to a company event?
Travel to and from a company event is generally covered as a commuting accident—provided the employee actually attends or intended to attend the event and the trip is directly related to the event. However, anyone who interrupts their journey home with personal activities (e.g., a personal detour) loses insurance coverage for that portion of the trip. Particular caution is required if excessive alcohol consumption is the sole cause of an accident: In this case, insurance coverage may be voided, as the action can no longer be attributed to the company.
Misconduct at a party: What are the potential consequences?
Can bad behavior at a company party lead to disciplinary action under labor law?
Yes—and this can have far-reaching consequences. Although company parties provide a social setting, labor law still applies. Insults directed at supervisors or colleagues, damage to property, or aggressive behavior can justify a written warning or even termination for cause. Cases of sexual harassment are particularly serious: On July 24, 2024, the Siegburg Labor Court ruled (Case No. 3 Ca 387/24) that sexual harassment at a company party constitutes a significant breach of the duty of consideration under Section 241(2) of the German Civil Code (BGB) and may justify extraordinary termination without notice. The ruling is not yet final; an appeal to the Cologne Regional Labor Court is possible. Under the AGG, employers are obligated to protect employees from harassment—including at company events held outside the workplace.
What rights does the works council have?
Does the works council have a right of co-determination regarding company parties?
In general, the works council does not have a mandatory right of co-determination under § 87 BetrVG with regard to company parties, as these are not considered social facilities within the meaning of § 87(1)(8) BetrVG due to the lack of a permanent organizational structure. However, a right to co-determination may apply if the working hours lost on the day of the event are to be made up on another day—in which case Section 87(1)(2) of the BetrVG (co-determination regarding the scheduling of working hours) applies. Employers should therefore inform and involve the works council at an early stage to avoid labor law disputes.
Alcohol and Liability: How Far Does an Employer's Responsibility Extend?
Is the employer liable if employees drive while intoxicated after a company party?
The issue of liability regarding alcohol at company parties is complex. Employers are not generally required to prevent employees from drinking alcohol—but they do have a duty of care. Employers who allow employees who are clearly unfit to drive to do so without offering alternatives (such as taxis, carpooling, or public transportation) may be held jointly liable under civil law. For liability reasons, it is advisable to implement an internal company policy on alcohol consumption at corporate events. Offering non-alcoholic beverages, communicating transportation options home well in advance, and arranging or canceling taxis for all attendees have proven effective in practice.
Equal Treatment: What Are the Rules for Part-Time and Remote Employees?
Do part-time and remote employees also have to be invited to the company party?
Yes. Under labor law, the principle of equal treatment requires employers to invite all employees—regardless of contract type, working hours, or work location—to company events. This includes part-time employees, those on fixed-term contracts, and, as a general rule, temporary agency workers. Arbitrary exclusion of individual employees is prohibited and may result in claims for damages as well as complaints under the General Equal Treatment Act (AGG). For remote teams, whose numbers have risen significantly since 2020, hybrid formats or special in-person events are recommended to avoid structurally excluding anyone.
Conclusion
Company parties and outings are more legally complex than they appear at first glance. Employers bear significant responsibility—for ensuring tax compliance, preventing accidents and harassment, and treating all employees fairly. By knowing and following the rules, you protect yourself and your company—and create an event where everyone can relax and enjoy themselves.
Do you have questions about an upcoming company event or a specific legal matter? Our law firm can provide you with comprehensive advice— contact us today.
