Working Time Recording and Overtime Compensation – New Requirements Introduced by the Regional Labour Court of Lower Saxony?

I. What Happened?

A long-standing clerical employee of a car repair shop filed a claim for overtime compensation. The employment contract stipulated 24 working hours per week; however, according to the claimant, she regularly worked up to 44 hours per week, including Saturdays. As evidence, the claimant submitted detailed tables in which she had documented her working hours. The parties disputed when these tables had been created.

The defendant denied the alleged overtime. The business had not implemented its own working time recording system.

The Labour Court of Oldenburg initially dismissed the claim. Based on the parties’ submissions, it concluded that the detailed tables had been created retroactively and therefore considered the records not credible. Moreover, the Labour Court held that the claimant had failed to demonstrate that the overtime work had been approved, tolerated, or was necessary to fulfil her contractual duties.

The Regional Labour Court of Lower Saxony, however, largely ruled in favor of the claimant and awarded her gross overtime compensation exceeding € 46,000. The court first overturned the Labour Court’s assessment regarding the credibility of the submitted records. Furthermore, the LAG viewed it as a tacit admission that the defendant had not specifically challenged the claimant’s recorded working hours.

II. Decision of the LAG Lower Saxony

The LAG found that the claimant’s working time records were coherent, as they broadly aligned with the garage’s opening hours.

The defendant had failed to specifically refute the detailed working time data submitted. It neither produced its own records nor identified particular dates on which the claimant had allegedly not performed the hours listed in the tables. As the Federal Labour Court (Bundesarbeitsgericht – BAG) established on 13 September 2022, an interpretation of German occupational health and safety law in line with EU law requires that all employers record daily working time of their employees. According to the findings of the LAG, the defendant did not comply with this obligation.

Had a working time recording system been implemented, the employer would have been in a position to substantively respond to the claimant’s detailed assertions regarding her working hours. In the absence of such data, the employer lacked the basis for a substantiated factual defence in the present legal dispute. As a result, the claimant’s assertions were deemed admitted under Section 138 (3) of the German Code of Civil Procedure (Zivilprozessordnung – ZPO).

The core message of the LAG’s ruling: In the absence of working time records, employers may, in individual cases, face significant disadvantages in legal disputes concerning overtime compensation, as they may lack the means to effectively and specifically contest the employees’ detailed claims.

Although the European Court of Justice’s “Time Clock Decision” (Case C-55/18) does not result in a direct reversal of the burden of proof, and the Federal Labour Court in its decision dated 4 May 2022 (5 AZR 359/21) also ruled that the occupational health and safety requirement to record working time does not alter or reverse the burden of proof in overtime compensation proceedings, employers may still find themselves unable to effectively rebut detailed claims about performed working time.

The LAG further found that the overtime work was impliedly tolerated. This conclusion was supported by the workload during opening hours and the knowledge of the company’s managing director, who, according to the LAG’s findings, was predominantly present in person and aware of the claimant’s attendance.

The contractual forfeiture clause did not bar the compensation claim. The clause failed to withstand judicial scrutiny under the rules applicable to general terms and conditions (AGB control).

III. What does this mean for employers?

1. Take the obligation to record working time seriously
   • According to the BAG’s case law, Section 3(2)(1) of the Occupational Health and Safety Act (Arbeitsschutzgesetz – ArbSchG) already establishes an obligation to record the start and end of the daily working time. Employers are well advised to comply strictly with this obligation—not only for reasons of occupational safety but now more than ever to be well-prepared in case of disputes over alleged overtime.
2. Transparent communication
   • If overtime was neither instructed by the employer nor attributable to them, employees are generally not entitled to overtime compensation. However, such compensation may still be owed even in the absence of an express order, especially if the work is regularly equired and the employer is aware of the overtime actually performed.
3. Ensure effective exclusion clauses
   • In the case at hand, the defendant also failed due to an ineffective exclusion clause. Legally sound contract drafting is therefore essential.

IV. Outlook

The matter is not yet finally settled. An appeal is pending before the Federal Labour Court (Case No. 5 AZR 40/25). It remains to be seen whether the Fifth Senate will take this opportunity to develop or revise its existing jurisprudence on the burden of pleading and proof in light of the obligation to record working time.

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