Update on the Employer’s Obligation to Record their Employees’ Working Time

On September 13, 2022, the German Federal Labor Court (Bundesarbeitsgericht) already ruled (1 ABR 22/21) that employers are obliged to record the working hours of their employees (we reported). The reasoning for the decision was finally published a few days ago: According to the Federal Labor Court, a comprehensive obligation to record working hours cannot be derived from the Working Hours Act; however, such an obligation follows from the mandatory interpretation of occupational health and safety regulations in conformity with European law. The decision of the Federal Labor Court has caused great surprise and some uncertainty. Previously, it had been widely believed that although the recording of working time in Germany requires new regulations with regard to the implementation of the EU Working Time Directive 2003/88/EC, national implementation has been lacking to date. In connection with the publication of the Federal Labor Court’s decision, the German Federal Ministry of Labor and Social Affairs has now announced their intention to make a practical proposal for the legal design of working time recording in Germany in the first quarter of 2023. However, employers should not wait for the new legal regulation that has now been announced, as according to the Federal Labor Court’s findings there is already an obligation for all employers to record working hours. Below we provide an initial overview of the effects of the Federal Labor Courts’s decision.

Does the obligation to record working time apply to all employers and all employment relationships?

Yes. The obligation to record working hours applies to all employers, regardless of size and regardless of the type of employment relationship and industry. It is true that the statutory regulations on working time – in addition to the general documentation obligations for overtime and work on Sundays and public holidays – currently only provide for a comprehensive obligation to record working hours for certain employment relationships or sectors (e.g. in the case of marginal employment relationships, in the construction industry, the food service industry, the building maintenance sector or the meat industry). According to the decision of the Federal Labor Court, however, the obligation to record working time does not result from the working time regulations, but is derived directly from § 3 (2) No. 1 of the German Occupational Health and Safety Act, which means that this obligation affects all employers in all sectors. According to this, every employer is obligated to ensure a suitable organization for the maintenance of occupational health and safety and to provide the necessary means for this. In the opinion of the Federal Labor Court, this can also include the introduction and use of a system for recording the working hours of employees, as required by the European Directive 2003/88/EC.

It is currently unclear whether the working time of executive employees within the meaning of § 5 (3) BetrVG must also be covered.  The provisions of the Working Time Act (ArbZG) and thus also the working time limitations and recording obligations contained therein do not apply to executive employees pursuant to §18 (1) No. 1 ArbZG. According to Directive 2003/88/EC, national employers can also make corresponding exceptions for executive employees. Thus, executive employees will likely continue to be exempt from the recording obligations.

Can the recording of working time also be delegated to employees?

Yes, this is expressly permissible according to the Federal Labor Court. It is the responsibility of employers to set up a system for recording working hours. However, this does not mean that employers would be obligated to record the working hours themselves. This activity can be delegated to the employees.

However, it should be noted in this context that it is always the employer who is ultimately responsible for having actually recorded the working time. The employer will not be able to sign off on this responsibility even if they have delegated the task of recording the working time to the employees. The risk that working times are ultimately recorded incompletely by the employees is borne by the employer. Employers may want to take this into account when designing the system for recording working time.

Does the working time have to be recorded electronically?

No. Electronic recording is not required by the Federal Labor Court. Depending on the activity and the structure of the company, it is also permissible to choose analog recording options, such as written recording on paper. However, according to the Federal Labor Court, the selection and detailed design of the respective working time recording system must take into account that it must be appropriate and, in particular, serve to improve the safety and health protection of the employees. According to the Federal Labor Court, these objectives are not to be subordinated to purely economic considerations. In concrete terms, the Federal Labor Court thus requires a working time recording system that is suitable for the respective company.

Does the works council have a right of co-determination?

The works council has no right of co-determination with regard to the question of whether a system for recording working time is introduced. In this respect, as the Federal Labor Court has now stated, there is a legal obligation directed at the employers.

As a rule, however, there will be a right of co-determination in the implementation and design of the system to be introduced for recording working time.

Do break times have to be recorded?

The Federal Labor Court does not make any statement on the specific question whether break times need to be recorded. However, much points to an obligation to also record break times as this is the only way to record the actual (net) working time. The European regulations on working time also aim to better protect the safety and health of employees, which is to be ensured, among other things, by minimum rest periods, breaks during work and an upper limit for weekly working hours. Since this protective purpose cannot be guaranteed without the recording of break times during working hours, a recording of daily working time would not be complete without taking breaks into account. This would probably also call into question the permissibility of an often practiced lump-sum deduction of break times, at least if there is no possibility to correct deviations.

What impact does the obligation to record working time have on the concept of trust-based working time?

The obligation to record working time currently applies to all employment relationships. According to §§ 17 ff. of the Working Time Directive, the European legislator has granted the national states extensive possibilities to provide for deviations from the Directive through national legislation. However, these deviations must result from the respective national laws. The Working Time Act does not yet contain a separate provision on trust-based working time. It remains to be seen which deviations will be provided for in the new regulation of the Working Time Act announced by the Federal Ministry of Labor and Social Affairs.

At least until the new regulation has been announced, the obligation to record working time will have to be implemented when using trust-based working time. Thus, it is (still) possible to leave it up to the employees in the form of trust-based working time when they actually want to perform their work; however, this does not release employers from the obligation to record the working time performed. The current model of trust-based working time, according to which employees are completely free to perform their work and no working time is recorded, is likely to be incompatible with the currently applicable legal situation and the obligation to record working time.

Who monitors compliance with the obligation to record working hours and what sanctions are imposed in the event of a violation of the obligation to record working hours?

Employers are responsible for the proper recording of working time. This also applies if an employer has delegated the daily recording of working time to the employees. The occupational health and safety authorities of the federal states are responsible for monitoring the statutory occupational health and safety requirements and the recording of working hours.

Violations of the statutory recording obligations already expressly regulated (e.g. for overtime according to § 16 ArbZG) can be punished as administrative offenses with fines of up to EUR 30,000. In contrast, the obligation to record working hours under the Occupational Health and Safety Act is not directly subject to fines. However, the competent state authority can order the introduction of a system for recording working hours by way of a case-by-case order and will usually grant employers a deadline for implementation. Violations of such orders can then also be subject to fines of up to EUR 30,000.

Conclusion:

It should be noted that under the current legal situation, all employers are obliged to introduce and use a system for recording working time. It remains to be seen whether and when the German legislator will introduce new regulations in this regard and to what extent it will also regulate exceptions to the obligation to record working time.