edit: see geocar's reply.
You are however fairly safe if it's completely different from your work, for example, pottery or writing fiction (assuming your company does neither).
As for "as part of this employment relationship", I'm not a lawyer but I wouldn't assume that it applies only to what you do at the office. It might very well apply to anything while you are employed there. You need to clear the scope of that with HR or a lawyer.
You definitely don't want to base your company on shaky legal grounds. You might lose your company, your product, and your job. It probably won't look good in your Arbeitszeugnis either.
If everyone acts in good faith Then nobody should end up in jail.
If too many people end up in jail Then major problems could occur.
This is a very dangerous attitude. I'm from The Netherlands, consulted a lawyer on this matter, and she confirmed it was definitely an issue. I proceeded to make it explicit in the contract that it only covers IP created during work time and/or on company hardware.
What you're saying is definitely understandable, but in my experience, it's not how the legal system is currently looking at these matters.