Draft Law – Germany Plans to Introduce Obligation to Record Working Time Electronically

The so-called ”Time Clock Ruling” of the European Court of Justice (ECJ) from 2019 on the recording of working time has so far received very little attention in Germany. This will change now as the German legislator is taking action about half a year after the decision of the German Federal Labor Court of September 13, 2022.

On April 18, 2023, the German Federal Ministry of Labor and Social Affairs presented a long-awaited draft law that is intended to incorporate the obligation to record working time, which has already been established by the ECJ and the German Federal Labor Court, into the German Working Time Act.

With reference to the ECJ ruling, the German Federal Labor Court had ruled in September 2022 that employers in Germany were already obliged under current law to record the entire working time of their employees. While the question whether an obligation to record working time exists was clearly clarified by the German Federal Labor Court’s decision, the concrete implementation and design of such obligation remains an issue to be handled by the legislator.

The draft law now presented by the Federal Ministry of Labor and Social Affairs essentially provides for the following regulations:

Obligation for Daily Electronic Working Time Recording

§ 16 ArbZG (German Working Time Act), which in its current version only requires the recording of overtime, is to oblige the employer under its new version to “electronically record the beginning, end and duration of the daily working time of the employees in each case on the day the work is performed.”

While both the ECJ and the German Federal Labor Court did not comment on the form of working time recording, the draft law requires employers to record working time in a specific form for the first time. The planned obligation to record time on a daily basis also goes beyond the decisions made by the German Federal Labor Court and the ECJ.

The wording “beginning, end and duration of the daily working time” now gives an answer to the question not explicitly clarified by the German Federal Labor Court as to whether break times also need to be recorded. Only the recording of break times can ensure that the legal requirements regarding maximum working hours and minimum rest breaks are complied with.

Responsibility of the Employer

Furthermore, the draft clarifies that while employers may delegate the recording of daily working time to their employees or third parties, they remain responsible for proper recording.

Thus, employers should closely monitor the correct recording of daily working time by their employees in order to fulfill their responsibility. According to the explanatory memorandum to the draft law, it is also advisable to properly inform and instruct employees about their duty to record daily working time. For evidence purposes, it is also recommended to document the instruction of the employees.

Trust-based Working Time

The draft law also answers the so far unanswered and therefore controversial question raised after the German Federal Labor Court decision as to how the obligation to record working time affects trust-based working time agreed between the parties to the employment contract.

The draft version of § 16 (4) ArbZG (German Working Time Act) expressly stipulates that if the employer has waived control of contractually agreed working hours, he must take suitable measures to ensure that he becomes aware of any violations of the statutory provisions on the duration and location of working hours and rest periods.

The explanatory memorandum to the draft law clarifies that even in the case of agreed trust-based working time, the employer must record the entire daily working time (incl. rest breaks) and keep those records, not just notifications of violations of statutory regulations.

Right to Information and Surrender of Copies

In line with the ECJ, § 16 (5) ArbZG (German Working Time Act) is intended to provide that the employer must inform the employee of the recorded working time upon request and provide a copy of the records.

This regulation is likely to have far-reaching consequences for practice, in particular for disputes in connection with the assertion of overtime compensation.

Employees were previously also able to request information about working time records (if available) via the right to information under data protection law in accordance with the General Data Protection Regulation (GDPR). However, the obligation to record working time and the obligation to provide copies of the records provided for in the draft law will make it significantly easier for employees to meet their burden of proof in legal proceedings concerning claims for overtime compensation, which was confirmed again by the German Federal Labor Court just last year.

Retention Obligation

The employer must keep the time sheets (records of working time and list of employees) for at least two years. This corresponds to the current statutory regulations.

Deviations Possible Through Collective Bargaining Agreement and Works Agreement

The draft law leaves room for deviations for parties to collective bargaining agreements and works agreements.

Accordingly, collective bargaining agreements or works agreements may permit recording in non-electronic form.

In addition, collective bargaining agreements or works agreements may stipulate that time recording may take place on another day, but must happen no later than within one week.

Finally, the parties to the collective bargaining agreement or the works agreement may stipulate that the obligation to record working time does not apply to employees for whom the working time “is not measured or determined in advance” or “can be determined by the employees themselves” due to special characteristics of the activity.

According to the explanatory memorandum, the wording of the latter provision is based on the EU Working Time Directive 2003/88/EC and the related case law of the ECJ. This refers, for example, to “managing executives or other persons with autonomous decision-taking powers” who are not required to be present at the workplace at set times.

Transitional Arrangements and Exceptions

The draft legislation ultimately also recognizes that the implementation of the statutory regulations on electronic recording of working time will affect companies to varying degrees and therefore provides for a transitional arrangement for the introduction of an electronic system for the recording of working time that is staggered according to the size of the company. Small businesses are permanently exempt from the obligation to record working time electronically.

Exemptions from the obligation to electronically record working time also apply to foreign employers without a permanent establishment in Germany if they send up to ten employees to Germany. Exemptions also apply to private households that employ domestic workers.

It is important to note that the aforementioned exceptions and transitional arrangements refer exclusively to the electronic form of time recording. The obligation to record working time already exists now, but can (still) be fulfilled in a non-electronic form (e.g. in paper form).

Executive Staff

Finally, the draft law also clarifies the question left open by the German Federal Labor Court as to the applicability of the recording obligation to executive staff within the meaning of § 5 (3) BetrVG (German Works Constitution Act).

In any case, the draft contains no indication that § 18 ArbZG (German Working Time Act) is planned to be deviated from in the future. Pursuant to § 18 ArbZG, the German Working Time Act is not applicable to executive staff within the meaning of § 5 (3) BetrVG (German Works Constitution Act). Accordingly, executive employees are exempt from the obligation to record working time under the current status.

Sanctions for Non-Compliance

The draft law explicitly expands the catalogue of administrative offenses punishable by fines of up to EUR 30,000.00 under § 22 ArbZG (German Working Time Act) to include the newly introduced obligations.

This means that once the law enters into force, violations of the obligation to record working time as well as violations of the obligation to provide information and copies of the records can now be punished directly with fines of up to EUR 30,000.00, not only – as was previously the case – after a violation of an official order.

Conclusion and Prospects

The long-awaited draft law does offer answers to many questions in connection with the obligation to record working time. The “practicality” announced by the German Federal Ministry of Labor and Social Affairs is questionable, at least in the area of trust-based working time, but also in times of widespread mobile and home office work. The draft law does little to meet the requirements of a modern working world. In particular, it offers little flexibility for reconciling family and work, as the applicable rest periods remain unchanged.

Whether the draft, which is now going through the legislative process, will actually be passed in its current form remains to be seen.

Photo: Shutterstock / Olivier Le Moal