A few days ago, Germany’s Federal Labor Court (Bundesarbeitsgericht, BAG) published the reasons for its September 2022 decision on the requirement to record working hours (BAG, decision dated Sept. 13, 2022 - 1 ABR 22/21). We provide a short overview of the long-awaited reasons for the decision and explain practical implications.
What is at stake?
The BAG ruled on a legal dispute between employer and employee works council. Against the employer’s wishes, the works council had tried to enforce the introduction of an electronic time-recording system. However, the BAG rejected a right of co-determination (i.e., the right of employees to participate in some decisions of the management of the companies they work for) on this question. Pursuant to § 3 para. 2 No. 1 German Occupational Health and Safety Act (Arbeitsschutzgesetz, ArbSchG), employers are legally obligated to record their employees’ working time. The works council has a say in the concrete implementation of time recording; however, it cannot demand electronic recording.
What exactly did the BAG decide?
1. Employers are required to comprehensively record working hours
According to the BAG, employers must record the beginning and end, and thus the duration, of their employees’ daily working hours, including overtime. The European Court of Justice (ECJ) ruled in 2019 that an objective, reliable and accessible time recording system was required. According to the ECJ, this was the only way to safeguard employee rights to comply with statutory maximum working hours and rest periods (ECJ, judgment of May 15, 2019 - C-55/18). These rights derive from European law provisions under European law. However, some assumed that this ruling would only be binding if the German legislator amended the law accordingly. The BAG sees things differently: employers are already required to comprehensively record working time.
2. Much flexibility in the way working time is recorded
The BAG emphasizes the obligation to document daily working time in the form of a record. Without such recording, authorities could check neither working-time location nor compliance with daily and weekly maximum working hours. The law does not prescribe a special form of recording. The respective areas of employee activity and the size and the company’s characteristics are to be taken into account. Depending on the company and the activity, the BAG also considers permissible the recording of working time in paper form. Employers also may delegate the recording of working time to employees. However, employers must ensure that such recording is done. It has been an open question whether the beginning and end of break times must also be recorded. In our view, if one wants to be able to monitor compliance with all working time regulations, there is no way around recording break times as well.
3. Working time based on trust remains possible and requires recording
Companies must use a time recording system for trust-based working time – without exception. The employer must carefully communicate this change to preserve the corporate culture. Nevertheless, based on trust and good faith, employers may leave the allocation of individual working time to employees. This is because the recording of working hours is not used to check whether employees are working “enough”, but only to check compliance with the Working Hours Act (Arbeitszeitgesetz, ArbZG).
4. The works council can have a say only in the way working time is recorded
According to the BAG, the works council has no right of co-determination regarding whether a time recording system should be introduced. Such obligation already stems from § 3 para. 2 No. 1 ArbSchG. In contrast, the BAG considers the concrete design of the time recording system to be subject to co-determination. Here, there is further scope for the parties, if the legislator does not issue any specific regulations. However, the works council cannot demand that time be recorded only in a certain form (e.g., electronically).
5. Unclear: Validity of the time recording obligation for executive employees
The BAG has left open whether the new time recording obligation also applies to executive employees. There is uncertainty here because the ArbZG does not apply to executive employees (§ 18 Abs. 1 Nr. 1 ArbZG). Neither maximum working hours nor mandatory rest periods or rest breaks apply to them. In contrast, executive employees are not exempt from application of the ArbSchG. However, the BAG derives the time recording obligation from the ArbSchG. There is much to suggest that the obligation to record time does not apply to executive employees – if only because the working time requirements of the ArbZG do not apply to them which means their working time is not subject to governmental controls.
What do employers now have to observe in detail?
- Employers are now obliged to set up and use a suitable time recording system. This must record the start, end, and total duration of daily working time as well as breaks. Employers can choose any recording method that allows for official control. Different time recording systems for different employee groups are possible and often useful. The time recording system must meet data protection requirements.
- Time recording can be delegated to employees. The employer’s obligation to record working time is then reduced to regularly monitoring the employees’ self-recording and – where necessary – acting against violations.
- Trust-based working time remains possible as a working time concept. The prerequisite, however, is that employees also record their self-determined working time.
- Before introducing a time recording system, employers with a works council must duly involve the works council in the design of such time recording system.
- To avoid a fine, employers already are obligated to record working hours of more than eight hours per working day, as well as work on Sundays and public holidays (§ 22 para. 1 No. 9, in conjunction with § 16 para. 2 ArbZG). However, there is no direct risk of a fine in the event of an employer’s breach of the general obligation to record working hours, which the BAG now has significantly extended. Only if the responsible occupational health and safety authority issues an enforceable order to use a time recording system and this is subsequently violated could employers be punished with a fine of up to 30,000 Euros (§ 22 para. 3 in conjunction with § 25 ArbSchG).
Employers seeking guidance on questions arising from the BAG decision, including the introduction of a time recording system, should consult with experienced labor law counsel.