Global Compliance Desk – Germany

Germany: Federal Labor Court decides in favor of Recording Working Time

The Working Time Directive 2003 of the European Union, contains no time recording or record-keeping obligations per se but requires the Member States to take measures necessary to ensure that employees are entitled to their respective rights of rest breaks, annual leave, and limits on working hours.

In a historic judgment [Spanish case of Federacion de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE, 2019 ] the ECJ held that, without a system enabling daily time worked to be measured, it is not possible to determine objectively and reliably either the number of hours worked by the worker, when their work was done or the number of hours worked as overtime. Although the judgment did not impose an immediate obligation to record working time, it required the Member States to provide for record-keeping provisions in domestic legislation. To comply with the judgment some Member States may have to make changes to existing legislation or introduce new provisions. 

[Read our detailed blog on the ECJ judgment and its impact on EU Member states]

Recently, the Federal Labor Court of Germany issued a significant ruling (Case no. 1 ABR 22/21)  mandating employers to record the working hours of employees.

Case Facts

In this case, the negotiations of the employer with the Works Council seeking agreement on the electronic recording of working hours failed. As a result, the employer decided to completely forego the recording time requirement. In response to this, the Works Council initiated conciliation proceedings, setting up a conciliation body and arguing that it had a ‘right of initiative’ regarding the introduction of an electronic working time recording system pursuant to Section 87 (1) No. 6 of the German Works Constitution Act (BetrVG). 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 has overturned that decision and held that in the present case there is no scope for such a right of initiative on the part of the Works Council. As with an existing legal obligation (under the German Occupational Health and Safety Act) already in place, there is no room for a Works Council co-determination on the question of such implementation.

The decision of the Federal Labor Court (Bundesarbeitsgericht, BAG)

• A Works Council has no right of initiative in the introduction of a system for recording working hours. The issue between the Works Council and the employer was whether the Works Council could demand the introduction of a time recording system on its own initiative. The BAG determined that the Works Council has no right of initiative for the introduction of a system for recording working hours because such a system can only exist if the operational matter is not regulated by law.
• Employers are obligated to implement a comprehensive working time recording system. Under German law, prior to the decision, it was well-established that employers are obliged to track working hours exceeding eight hours per day as well as work on public holidays and Sundays. Many employers did not adhere to these requirements. As a result, the BAG decided in its judgment that employers must set up a thorough system for keeping track of each employee’s working hours.

The BAG derived such an obligation from EU law in combination with the existing German Occupational Health and Safety Act.

Following the historic 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.

Section 16 (2) of the Working Time Act requires employers to record the working time of employees only in exceptional cases, such as work performed on Sundays and public holidays and overtime work. But according to Section 3 (2) of the German Occupational Health and Safety Act, employers are obliged to introduce a system with which the working hours worked by the employees can be recorded. Hence all systems in which working hours are not measured are no longer in line with the law.
It has been the predominant position in Germany, that there is not yet a legal obligation on employers to comprehensively record working time as the ECJ’s ruling had not been put into effect by the German legislature. However, the BAG has finally made clear the employers’ responsibilities in this regard and they are required to record the working time of employees.

Impact of the Decision

It is quite evident that the decision should not have any repercussions if a time tracking system is already in place. But if a system for keeping track of time is not already in place, waiting much longer is not advised and employers should start right away.

For employers, this judgment also puts them in a great deal of uncertainty, as the details of this obligation of time recording remain unclear. However, it is safe to say that systems that do not measure working hours are no longer compliant with the law. Employers must determine exactly how this can be designed, taking into account their specific areas of activity. It is advised that employers should involve the Works Council in the introduction and design of a system for recording working hours. 

Conclusion

Although the 2019 ECJ decision did not impose an immediate change in record-keeping requirements, many employers across Europe are using the ECJ’s decision as a catalyst to review their working time recording practices. As for legislation, France is already largely compliant (by requiring daily time recording and prescribing a measuring system), while laws in Belgium, Italy, Luxembourg, the Netherlands, and (after recent amendments) Spain are partly compliant. However, laws in the United Kingdom, Romania, Bulgaria, Slovakia, etc, fall short of EU law standards and will have to be revisited.

The ruling of the BAG is expected to have a substantial practical impact on employers in Germany, particularly those who have not yet implemented thorough systems for tracking working time. It is still largely unclear how the legislator would determine the challenges in this area, especially with flexible working time and work-from-home scenarios. For now, employers are eagerly awaiting the Labour Ministry (BMAS) to publish a report which will look into the reasoning behind the BAG ruling, which is expected to be published by November 2022.