The Federal Labour Court delivers its reasoned decision: Yes, employers have a legal duty to fully record their employees’ working hours!
On 3 December 2022, the Federal Labour Court (“BAG”) published its long-awaited reasons on what was probably the most important and sensational decision of the past year (BAG, decision of 13 September 2022 – Ref.: 1 ABR 22/21). The press release of the aforementioned decision had already caused a furore among labour lawyers, employers’ associations and employee representatives in September 2022. ASD had reported on the BAG’s press release. Furore, because since then there was concern that employers were obliged to fully record their employees’ working hours and that such a working time recording system – where it does not already exist – must be implemented. We had already suspected after publication of the press release that the BAG would thus like to tie in with the 2019 ECJ judgement (ECJ, judgement dated 14 May 2019 – Ref.: C-55/18) holding that all employers are obliged to set up an objective, reliable and accessible time recording system. This proved (unfortunately) that our educated guess was right.
Apart from a few special provisions (e.g. § 10 I BinSchArbZV, § 17 MiLoG), which directly stipulate a comprehensive obligation to record working time, probably only very few lawyers were aware that under German law employers are already required to comprehensively record working hours.
But this is what the BAG ruled! In very simplified terms, according to the BAG, employers must now systematically and fully record their employees ‘working hours – in whichever way, so to speak.
Briefly on the core statements of the BAG decision:
- When interpreting § 3 II No. 1 ArbSchG in conformity with Union law, there is (already!) a statutory duty of the employer to introduce and use a system recording the beginning and end of daily working hours and thus the duration of working hours including overtime. According to § 5 I BetrVG this applies to all workers employed in the business. This means that the obligation to record working time applies today already, i.e. without a grace period for employers.
- The recording of working time does not necessarily have to be electronic. Depending on the activity and the company, “old-school” solutions such as paper records (timesheets) are also possible.
- Basically, it is also possible to delegate the recording of working time to the employees. However, it will not be sufficient if the employer makes such a working time recording system available to his employees at their discretional use. Rather, the employer must ensure that this system is actually being applied.
Since the BAG’s ground-breaking core statement regarding the comprehensive obligation to record working time is based on a general clause from occupational health and safety (cf. section 3 II no. 1 ArbSchG), it is not surprising that many questions of practice and detail (e.g. “Are (certain) (small) companies exempt from the obligation to record working time? “Are (certain) (small) companies exempt from the obligation to record working time?”; “Are break times also to be recorded?”) (still) remain unanswered. Also, it is unclear from the decision whether a comprehensive obligation to record working time also applies to the group of executive employees. Here, too, there will probably remain a certain degree of legal uncertainty until the legislator issues an unequivocal or clarifying regulation. The Federal Ministry of Labour and Social Affairs (“BMAS”) has announced on its homepage that it will probably make a practical proposal for the design of working time recording in the Working Time Act in the first quarter of 2023.
The decision is all the more difficult to put into practice in times when both employer and employee generally have a common interest in flexibility in the employment relationship. This is, in any event, apparent in the noticeable general tendency in today’s working world towards “remote work”, “home office” or the like, and by the need of employees to be able to organise their working hours flexibly.
Legal consequences of violation of the obligation to record working time
At present, a violation of Section 3 II ArbSchG, i.e. the employer’s obligation to record working time is not sanctioned. This means that non-compliance with this requirement is currently neither subject to a fine nor does it constitute an administrative offence. It is possible, however, that employers will be fined by the competent authority if, for example, they remain inactive despite having been with officially ordered to implement a working time recording system. Here, too, it remains to be seen to what extent the legislator will provide changes or concretisation.
Homework for employers
- Employers – where applicable supported by their legal departments / HR departments or even external legal advisors – should take a closer look at their respective company practice on the recording of working time the above-mentioned BAG ruling in mind.
- If there is a works council, the following applies: works councils have a right of co-determination with regard to the “how”, i.e. the organisation of the working time recording obligation. This means that the works council must have a say in the implementation of such a system.
- In view of the practical proposal announced by the Federal Ministry of Labour and Social Affairs regarding the details of working time recording in the Working Time Act expected in the first quarter of 2023, “final or conclusive solutions” – especially where works councils exist – should rather be avoided. Often, these solutions are the product of tedious negotiations and may have to be thrown overboard shortly thereafter.
- Employers should, in any case, be prepared to make adjustments in the near future – whether in the form of interim solutions until the legislator provides a remedy or in the form of “overall” solutions subsequent to the remedy.
Author: Hasine Azim