German Employers’ Obligations to Record Employees’ Working Time

On September 13, 2022, the German Federal Labor Court (Bundesarbeitsgericht) ruled (1 ABR 22/21) that employers are required to record the working hours of their employees. The reasoning for the decision was published on December 3, 2022. 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 uncertainty among employers.

Previously, it had been widely believed that regulations would be required to implement the requirement to record working time in Germany, as per the European Union’s Working Time Directive 2003/88/EC. In connection with the publication of the Federal Labor Court’s decision, the German Federal Ministry of Labor and Social Affairs (Bundesministerium für Arbeit und Soziales or BMAS) has now announced that it will introduce a proposal for a legal framework of working time recording in Germany in the first quarter of 2023. However, employers may not want to wait for the BMAS’s proposal, as according to the Federal Labor Court’s findings there is already an obligation for all employers to record working hours. Here is an overview of the effects of the Federal Labor Court’s decision.

1. 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. 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 (e.g., in the case of marginal employment relationships) or sectors (e.g., employment 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 the recording time obligation affects all employers in all sectors. Every German employer is required to ensure the occupational health and safety of its workplace and to provide the means to fulfill that obligation. In the Federal Labor Court’s opinion, this occupational health and safety obligation includes the implementation of a system for recording the working hours of employees, as required by the Working Time Directive 2003/88/EC.

It is currently unclear whether the working time of executive employees within the meaning of § 5 (3) BetrVG are also covered under this decision. The Working Time Act (Arbeitszeitgesetz or ArbZG) and the working time limitations and recording obligations contained therein do not apply to executive employees pursuant to §18 (1) No. 1 ArbZG. According to the Working Time 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.

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

Yes, employers are expressly permitted to delegate this obligation to employees, 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.

Nevertheless, employers are ultimately responsible for having actually recorded employees’ working time. Employers will not be able to sign off on this responsibility even if they have delegated the task of recording working time to employees. The risk that employees ultimately record working times incompletely is borne by employers. Employers may want to take this into account when designing a system for recording working time

3. Are employers required to record working time electronically?

No, the Federal Labor Court does not require electronic recording. Depending on the structure of the company and the manner in which it conducts business, employers may choose analog recording options, such as written recordings on paper. According to the Federal Labor Court, the selection and design of the working time recording system must be appropriate and, in particular, serve to improve the safety and health protection of employees. According to the Federal Labor Court, these objectives are not to be subordinated to purely economic considerations. In concrete terms, this means that the Federal Labor Court requires a working time recording system that is suitable for each company.

4. Does the works council have a right of codetermination?

The works council does not have a right of codetermination with regard to whether a system for recording working time is introduced. In this respect, as the Federal Labor Court has now stated, employers have a legal obligation to record working time. As a rule, however, there is a right of codetermination in the implementation and design of the system to be introduced for recording working time.

5. Are employers required to record break times?

The Federal Labor Court did not make any statement on the specific issue of whether break times must be recorded. However, the new requirement seems to imply that employers must also record break times as this is the only way to record employees’ actual working time. The European Union regulations on working time, which aim to protect the safety and health of employees, aim to do so, in part, by instituting minimum rest periods, requiring breaks during work, and imposing an upper limit for weekly working hours. Because these protective purposes would not be effectuated unless break times are also recorded, a recording obligation would need to take 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.

6. 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 2003/88/EC, the European Union legislature has granted the member nations 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 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 employers are not required to record working time, is likely to be incompatible with the current state of the law and the obligation to record working time.

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

Employers are responsible for the proper recording of working time. This is also the case 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.

Employers that violate the statutory recording obligations already expressly regulated (e.g., for recording overtime according to § 16 ArbZG) can be subject to administrative offenses with fines of up to €30,000. In contrast, the obligation to record working hours under the occupational health and safety law is not 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. Employers that violate such orders can then also be subject to fines of up to €30,000.

Conclusion

The law in Germany now requires all employers to introduce and use a system for recording working time. It remains to be seen whether and when the German legislature will introduce new regulations in this regard and to what extent it will also regulate exceptions to the requirement to record working time.