Recording of Working Time in Germany Legally Required – Open Questions for Employers Following New Decision of the German Federal Employment Court

Surprisingly, the German Federal Employment Court (BAG) decided on 13 September 2022 that an obligation exists for employers in Germany to comprehensively record employees’ working time (case reference 1 ABR 22/21). For employers, this results in a great deal of uncertainty, as the details of this obligation remain unclear.

The starting point of the case was a works council’s co-determination request demanding that the employer implements an electronic working-time recording system. BAG denied this request based on the argument that, pursuant to section 3, paragraph 2, number 1 of the German Health and Safety Act, there is already an obligation on employers to record working time. Consequently, with an existing legal obligation already in place, there is no room for a works council co-determination on the question of such implementation.

Previously, the obligation to record working time had been discussed following the “time clock” decision of the European Court of Justice (ECJ), dated 14 May 2019 (case reference C-55/19). Our previous alert, dated 13 June 2019, on this ECJ decision can be read here. However, the ECJ decision only imposed an obligation on EU member states to ensure that employers set up an objective, reliable, and accessible system for measuring actual daily working time. Therefore, it has been the predominant position in Germany thus far that there is not yet a legal obligation on employers to comprehensively record working time. Rather, it had been understood that the legislature would first have to specifically implement such an obligation before it would be legally binding on employers.

The health and safety provision to which BAG referred in the current case to justify an already existing obligation to record working time is very generic. It does not include any detail on working-time recording, but rather only general health and safety principles. In practice, this raises a number of unresolved questions. For example, it remains unclear what the decision will mean for the practice of so-called Vertrauensarbeitszeit (working time based on trust) in Germany, where employers in large do not monitor working time at all, but leave it to the employees to decide when exactly they complete their work. Further, it remains unclear what options employers will have when implementing a working-time recording system (for example, when choosing between analog and digital recording systems or when delegating recording obligations to employees). Furthermore, it remains unclear whether noncompliance with recording obligations can actually result in any material legal consequences for employers as things stand. At the very least, it is likely that administrative fines provided for under the German Health and Safety Act will not be applicable so long as the recording obligations have not been further formalized in a legal ordinance or a specific law.

It remains to be seen whether BAG’s—so far unpublished—written decision will provide answers. The written decision might further provide some clarity on the extent to which the legislature can still further regulate, limit, or extend such recording obligations.

Further working-time recording will usually result in a significant additional administrative burden for employers. In this context, there will also be a question of the extent to which employers will want to use recorded working time to better monitor employees’ performance. We believe that, in principle, it is likely to remain possible to delegate recording obligations to employees. However, this will only be in cases where the employer checks such records from time to time and intervenes in the case of violations.

When introducing a working-time recording system, the employer should also ensure that it will not result in unwanted disadvantages for potential entitlements to overtime compensation. BAG has already clarified that even where there is no working-time recording, the burden will remain on the employee to provide sufficient proof for overtime compensation claims. Recording of working time within the meaning of the German Working Time Act (as a health and safety matter) does not necessarily go hand in hand with questions relating to compensation of overtime (as a remuneration matter). However, where working-time recording systems are introduced carelessly, it could become easier for employees to meet the burden of proof with regard to overtime compensation claims.

In any event, employers should prepare to introduce working-time recording systems going forward. In our view, however, it is still necessary that employers balance the risks between implementing such recording as soon as possible and waiting for further clarity. In this context, BAG’s written decision, clarifications by further court decisions, and potential specifications by the legislature should be carefully monitored. Hastily and poorly planned implementation of working-time recording could later prove damaging.