Since the decision of the European Court of Justice last year, it is clear that the legal obligation to record working hours will soon also be introduced in Germany. But what are the consequences of this decision for German employers?

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The most important facts in brief

• Based on the ruling of the European Court of Justice, German courts can already hold employers responsible if they do not provide their employees with an objective, reliable and accessible system for time recording.
  
• Failure to comply with the time recording obligation and to provide an appropriate system may result in serious legal consequences.
  
• The early introduction of a digital solution ensures secure, modern and legally compliant time recording. This already secures employers today.

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After ECJ ruling on time recording obligation: What is the legal situation?

In its judgment of 14 May 2019, the European Court of Justice (ECJ) ruled that employers in EU member states are responsible for establishing a reliable, objective and accessible system for recording the working time of their employees. In the course of the ruling, the ECJ also called on national legislators to introduce a legal obligation to record time in their countries.

The aim of the decision is above all to strengthen the protection of workers, in particular the fundamental right of workers to respect for rest periods and the limitation of weekly working time. According to the ECJ, without a time recording system, neither the number of hours worked and their distribution over time nor the number of overtime hours can be determined objectively and reliably.

In Germany, there has been no general obligation to record working time to date, but the process of revising the obligation to record time has already begun. For a year now, the German government has been planning an amendment to the Working Time Act, in which the changes to the recording of working time laid down by the ECJ are to be taken into account.

The Federal Ministry of Labour and Social Affairs has been entrusted with the drafting, which is based on the ECJ ruling. Due to the Corona pandemic, the process seems to be stretched out, but the pressure to implement new regulations is not diminishing due to overlapping topics such as mobile work/home office.

Accordingly, it is advisable for employers to deal with the issue promptly. The lack of a system for recording working time can already have a negative impact and lead to legal consequences.

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Who needs a time tracking system?

The ruling of the European Court of Justice is not yet binding at the German level. Currently, German law only provides for an obligation to record working time for marginally employed persons under the Minimum Wage Act (MiLoG) and sectors susceptible to illegal employment under the Act to Combat Illegal Employment (SchwarzArbG). These include, among others, the transport, forwarding and logistics sector, the construction industry as well as restaurants and hostels.

However, the German legal situation is likely to change soon.

Even now, a reliable and objective system for recording working time not only serves to protect employees. At the beginning of 2020, a German employer in Emden was convicted for the first time on the grounds of inadequate recording of working time. Accordingly, courts are already ruling in the sense of the ECJ decision at the expense of employers should they not be able to meet their obligation to provide evidence and explanation.

Even if there is no compulsory law on the general recording of working time today, companies are therefore well advised to take care of an appropriate time recording system at an early stage.

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Which working time models are still possible with the upcoming law?

The future obligation of employers to precisely record the working time of their employees also entails some innovations to previous working time models. While hardly any changes are to be expected in sectors in which time recording is already firmly part of everyday life (e.g. in production), occupational profiles with flexitime regulations, such as commercial activities, are facing a radical change.

Models such as trust-based working time, in which employees determine the beginning and end of their working day themselves, should still be possible in the future. The EU directives allow for deviations from the working time regulations if the duration of working time can be determined by the employees themselves. According to the legal wording, this would also affect trust-based working time. However, it is not yet clear to what extent the forthcoming law will affect the model of trust-based working time. However, companies should already make sure to agree on trust-based working time in writing in order to safeguard themselves legally.

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What do I have to do now as an employer?

In order to protect the health of employees, the maximum permissible working hours in Germany are regulated by the Working Hours Act (ArbZG). This limits the average daily working time to a maximum of eight hours and the weekly working time to 48 hours.

If an employee works longer than permitted or on Sundays and public holidays, the employer is obliged to record this. This is intended to facilitate control by the competent supervisory authorities and at the same time to prove that overtime is compensated as prescribed.

So far, it has been necessary to record:

• Overtime
• Overtime
• Work on Sundays and public holidays

However, as the ruling of the labour court in Emden shows, it is advisable for employees to record the total working time of their employees in a verifiable manner even in the absence of a mandatory time recording law.

The following data must now be recorded for legally compliant documentation:

• Start of work
• End of work
• Total duration of daily working time
• Break times

Exempt from this recording requirement are:

• Persons who earn more than 76,200 euros (West Germany) or 68,400 euros (East Germany) per year, so that the additional working time is included in the salary.
• Persons whose professional field is categorized as "service of a higher kind", e.g.: Doctors, lawyers, architects, tax consultants, politicians
  

The European Court of Justice leaves it up to companies to decide whether the recording is done via app, time clock or paper. The only criteria are the objectivity, reliability and accessibility of the system.

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What are the consequences of not recording time?

First and foremost, careful time recording protects the employer from lawsuits by its own employees. Legal proceedings are almost always accompanied by a loss of image for the company, even in the event of a ruling in favour of the employer. In the event of a negative outcome of the proceedings, compensation and severance pay must also be expected for those affected.

Employers can already protect themselves with clean documentation of working hours. The penalties for failing to record time could be severe under a future law.

In comparison: Failure to record the time of mini-jobbers can result in up to five years imprisonment for minimum wage violations and up to 30,000 euros in fines in addition to compensation (§17 Para. 1 MiLoG in conjunction with § 2a SchwarzArbG, §266a StGB, §21 Para. 3 MiLoG).

By the way:
Working time recording also brings some advantages for companies. It not only facilitates payroll and accounting, but also provides better insight into employee productivity. In the context of controls (e.g. wage audits), the documentation of working hours also saves the employer time-consuming investigations and additional requirements.

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What is the best way to implement time tracking in my company?

The decision of the European Court of Justice as well as the plans of the Federal Government to revise the Time Recording Act make it indispensable for employers to deal with the issue of working time recording at an early stage.

In which way the implementation takes place is basically up to the employer. There are as many solution approaches as there are individual ideas, from manually issued timesheets to fully automated scheduling solutions. Careful preparatory work therefore not only helps to identify and eliminate deficits at an early stage, but also saves a lot of time and money in the long term.

In order to benefit from the advantages of time tracking from the very beginning as an employer, the use of a digital solution is almost inevitable. How entrepreneurs find the optimal software for their employees can be read in our guide to time tracking software.

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What are the advantages of switching to digital working time recording?

Especially a conversion from manual to digital time recording is associated with a certain effort for long-time advocates of paper and time clock. However, this is offset by numerous advantages that will very likely have to become part of any legally compliant time recording system after the upcoming amendment of the Working Hours Act.

Time-saving: The enormous time saving is without question one of the biggest advantages of digital time recording. Time-consuming calculations of working hours or data transfers to payroll accounting are often automated with app and software programs.

Reliable: In addition, digital time recording ensures a significant reduction in the risk of errors. There is no need to fear mishaps during calculations or manual data backup with a digital solution.

Clear: Even chaotic stacks of paper and confusing tables are a thing of the past with modern programs. A large part of the available digital options prepares the data in a clear and orderly manner.  

Legally compliant: Probably the most important advantage of digital working time recording is its legally compliant character. Modern programs meet the requirements of the ECJ to be reliable, accessible and objective - criteria that are difficult to guarantee with manual recording. Data protection requirements can also be taken into account quickly and easily using digital applications.

Good to know:
With Sawayo, an intelligent assistant supports employees in correctly recording their working hours. Through notifications and alerts based on legal requirements, users are permanently trained and the employer is relieved at the same time.

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Conclusion

An update of the Working Time Act is only a matter of time as a result of the ruling by the European Court of Justice (ECJ). The revision of the German Working Time Act is already being implemented.

This year, for the first time, a labour court in Emden ruled against the employer because it was unable to provide documentation of working time that complied with the ECJ ruling. In order to protect themselves from lawsuits and to enable a smooth transition to the new working time recording, it makes sense for companies to deal with the issue now.

Digital solutions for recording working time are proving to be secure, cost-efficient and future-oriented. Not only do they save a considerable amount of time and enable clear data collection, they also comply with ECJ requirements: reliable, objective and accessible. Furthermore, as a rule, all data protection regulations are taken into account.

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