Legislation Draft in Germany Makes Working Time Tracking Compulsory

Germany’s top labor court has mandated that employers must now keep track of their employees’ working hours irrespective of their company’s size or the presence of a works council (Ref.: 1 ABR 22/21). Previously, the Working Time Act (ArbZG), except for overtime, did not explicitly demand the recording of all employees’ working hours.

In September 2022, the German Federal Labor Court (Bundesarbeitsgericht – BAG) expanded the employer’s responsibility to document working hours and provided comprehensive guidelines in December 2022, specifying what German employers must comply with.

The specific requirements for meeting the obligation to record working hours were released in a preliminary bill (Draft Bill) in April 2023, by the Federal Ministry of Labor and Social Affairs outlining the precise manner in which working hours should be recorded and logged.

The legal mandate to document working hours is anticipated to be integrated into the ArbZG through amendments and additions.

Employer Obligations:

• Effective immediately, employers must now set up a system to record employees’ daily work, covering start and end times, breaks, and overtime.
• Employers must first promptly assess if their existing time recording system aligns with the recent BAG decision’s requirements.
• Simply providing a time recording system to employees is insufficient; employers must ensure its proper utilization.
• While employers can delegate time recording to employees, they bear the responsibility for implementing and overseeing the system.
• These obligations apply regardless of company size or the presence of a works council.
• At the employee’s request, the employer must share recorded working hours and provide copies. This can be done by allowing employees to access these records in the electronic system.
• Alternative methods can be used if electronic recording isn’t in place.

Decision Highlights:

• The Draft Bill allows collective agreements to waive recording rules, permitting non-electronic or delayed (up to seven days) recording, and exempting specific employee groups from this requirement.
• A transitional period of one to five years is given to companies to implement electronic time recording, based on their size. All companies need an electronic system within a year, while those with 50-250 employees have 2 years, and those with fewer than 50 have 5 years. Smaller entities with up to 10 employees are exempt initially. 
• When creating a time recording system, it’s crucial to consider employee data protection. Time records are seen as personal data and must align with key data protection principles such as data minimization, storage duration, and international data transfer.
• Flexible working models, like trust-based or remote work, won’t face significant changes and remain feasible. Trust-based work aligns with Working Time Act conditions that existed prior. Also, having a remote time-tracking system fulfills the new legal requirements.
• Companies that have a works council need to involve them in decisions regarding the setup of a working time recording system, as the council holds participation rights in this matter. 
• Failure to electronically record working hours as mandated could lead to fines of up to EUR 30,000 and is an administrative offense.

Additional Details:

• The term “electronic” encompasses not only common tools or apps but also spreadsheet programs like Excel. Hence, electronic recording doesn’t exclusively mean automatic tracking; Excel, for instance, could still be used. 
• Requirements are not specified for how working hours should be recorded, granting employers substantial freedom in choosing the recording system, whether electronic or not.
• Employees will still have the autonomy to set their working hours themselves. 
• Records must be retained for a minimum of two years.
• Both employees or a third party, such as a supervisor or a temporary staffing agency, can record the working hours. 
• While the Ministry’s Draft Bill is pending revisions and Cabinet approval before going to Parliament (Bundestag), employers are urged not to delay compliance with the recent binding case law on recording working hours as it is binding with immediate effect.