New Federal Labor Court Ruling: Legal Obligation for Employers in Germany to Record Working Time

A recent decision of the German Federal Labor Court (Bundesarbeitsgericht) shows yet again that the issue of working time remains highly fraught for German employers. Following a 2019 ruling of the European Court of Justice (ECJ) setting forth an obligation on the part of European Union employers to establish objective, reliable, and accessible systems for recording their employees’ daily working time, the subject of working time became a widely discussed topic throughout Germany. The Federal Labor Court effectively put an end to such discussions with its decision of September 13, 2022.

Background: The “Time Clock” Ruling of the ECJ

In May 2019, the ECJ ruled in its judgment that EU Member States must require employers to systematically record the working time of their employees. After interpreting the Directive 2003/88/EC in connection with the EU Charter of Fundamental Rights, the ECJ concluded that only by introducing objective, reliable, and accessible systems for recording and tracking employees’ daily working time could EU Member States assess employers’ compliance with the EU Working Time Directive in furtherance of the law’s purported goal of ensuring the safety and health of employees. The Member States were tasked with determining the details of implementing the ECJ’s ruling.

The Working Time Act requires German employers to recording the working time of employees only in exceptional cases, such as work performed on Sundays and public holidays and overtime work. The ECJ’s decision therefore gave rise to uncertainty as to whether employers were under a more comprehensive obligation to record working time, in addition to employers’ concerns regarding implementation and the practical consequences of such obligation. The primary concern was whether the ECJ’s requirements were directly binding upon German employers or whether the law would need to be explicitly implemented in German law to be enforceable against German employers. As a preliminary result of legal discussions in Germany, ultimately, the German legislature was expected to first establish a legal basis for imposing a general time recording obligation on employers.

Groundbreaking Federal Labor Court Ruling

With its September 13, 2022 ruling (Case No. 1 ABR 22/21), the Federal Labor Court preempted the German legislature with regard to imposing a requirement on employers to record working time. In line with the ECJ’s 2019 ruling, the Federal Labor Court ruled that a statutory obligation to record working time already exists.

The underlying legal dispute initially seemed rather low-key: an employer and a works council disputed whether the employer could be obligated to introduce an electronic working time recording system upon the works council’s initiative. When its negotiations with the employer on a works agreement regarding working time recording had failed, the works council had called a conciliation body. The employer objected to the competence of the conciliation body, arguing that the works council lacked a corresponding right to initiate the implementation of a working time recording system in the first place.

The Lower Labor Court agreed with the employer. The State Labor Court, however, upheld the works council’s judgment and affirmed its right of initiative. The Federal Labor Court eventually denied the works council’s right of initiative with regard to the introduction of a working time recording system with a groundbreaking justification: if, and to the extent that, a statutory regulation already existed, a right of initiative on the part of the works council was obviated.

According to the Federal Labor Court, a statutory duty to record working time arose from Section 3 (2) No. 1 of the German occupational health and safety law, which the court interpreted to be in conformity with EU law. The Federal Labor Court stressed that employers, as part of their basic duties, were required by law to implement measures necessary to protect the safety and health of employees, and, in doing so, employers must also ensure suitable organization and provide the necessary resources. According to the Federal Labor Court, these duties include an obligation on the part of employers to introduce systems for the recording of working time, as the ECJ held in 2019.

Few could have foreseen that a seemingly low-key legal dispute would result in such a groundbreaking decision. The Federal Labor Court’s decision contradicts the claim that the issue of whether employers are required to record working time is the legislature’s primary responsibility. With the Federal Labor Court’s decision, employers are immediately required to start recording working time.

Key Takeaways

The Federal Labor Court’s decision is likely to have significant practical consequences for employers in Germany—especially for employers that have not yet introduced comprehensive systems for recording working time. For employers relying on mobile working and trust-based working time arrangements, the decision could also be game-changing: a comprehensive obligation to record working time may in practice often conflict with such working time structures.

For the time being, it remains unclear which specific requirements a system for the recording of working time must meet. In its 2019 ruling, the ECJ gave only general explanations regarding this issue and expressly declared that EU Member States are responsible for more detailed regulations concerning the required design of such systems for recording daily working time. It remains to be seen whether and to what extent the Federal Labor Court has made more detailed statements in the ruling statement, which has not yet been published.

Nevertheless, it already seems clear that in the opinion of the Federal Labor Court’s judges, employers will be hard-pressed to avoid introducing comprehensive working time recording systems in the future. Until the courts and legislature impose specific requirements, employers that implement systematic daily and weekly time recording procedures that ensure objective and reliable documentation of daily working hours will likely be off to a good start.