Working time recording: Classification of the draft bill
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The draft bill had been eagerly awaited: Since the ruling of the Federal Labour Court (BAG) of 13 September 2022 (case no. 1 ABR 22/21) (read the blog post of 9 December 2022 on this), it is certain that employers in Germany are obliged to record the working hours of their employees. The Federal Labour Court had taken this from a general provision of the Occupational Health and Safety Act (Arbeitsschutzgesetz "ArbSchG") in an interpretation in conformity with EU law. The Working Time Act (Arbeitszeitgesetz "ArbZG") has so far lacked a specific provision in this regard. The long-awaited draft bill (dated 18 April 2023, "Draft") for the amendment of the Working Time Act announced by the Federal Ministry of Labour and Social Affairs for the first quarter of 2023 is now available.
One thing is clear: the Draft does not introduce any groundbreaking changes rather, the Draft is limited to a minimal solution. In Sec. 16 para. 2 of the Working Time Act, which previously only stipulated an obligation to record overtime, it introduces the employer's obligation to "electronically record the beginning, end and duration of the daily working time [...]". The new paragraphs 3 to 8 regulate further details. This blog post looks at what employers need to consider in the future.
Somewhat surprisingly – and stricter than the European Court of Justice (ECJ) and the Federal Labour Court – the Draft stipulates that recording should only be done in electronic form. The Draft justifies this with the fact that electronic solutions are easier to handle, which in turn guarantees a higher precision of the records. However, the Draft leaves the detailed modalities of the recording to the employer. There are several options here, ranging from the use of a time recording device (e.g. digital "time clock") to the use of an app and to the use of Excel spreadsheets that are filled in manually. For shift operations, the Draft also explicitly allows the use of electronic shift schedules. However, it must be ensured here that deviations from the working times stored in the shift schedules are also recorded electronically.
The introduction of an electronic working time recording system is associated with effort and costs. The Draft puts the costs for the technical introduction of an electronic working time recording system at a flat rate of EUR 450.00 "per company". It is obvious that the costs are likely to be significantly higher, depending on the size of the company. In addition, the organizational effort associated with the introduction of a working time recording system is also likely to represent a considerable cost factor in addition to the technical costs.
Against this background, the Draft contains a "small business clause" according to which employers with up to ten employees may also choose non-electronic forms of recording. However, they are not exempt from the working time recording as such. In view of the intended wording of the law, which refers throughout to "employer[s]," it appears that the company seems to be the relevant unit and not the respective operation, despite the designation as a "small business clause" in the explanatory memorandum to the Draft. Foreign employers without a permanent establishment in Germany may also choose non-electronic forms of recording if they do not send more than ten employees to Germany.
However, the Draft also provides for transition periods. For example, employers are granted a transition period of one year to introduce electronic time recording – but not the time recording itself. Slightly more generous transition periods are provided for medium-sized employers: If the employer has fewer than 250 employees, a transition period of two years applies; if the employer has fewer than 50 employees, the transition period is five years.
Recording must be done on a daily basis. Subsequent corrections are permissible according to the Draft justification, but should be made as promptly as possible.
At this point, the Draft is significantly stricter than, for example, the Minimum Wage Act (Mindestlohngesetz "MiLoG"), which also requires employers in certain industries to record working hours, but gives them seven days to do so. Apparently, the Draft is based on the assumption that electronic recording is easier and thus more promptly – the Minimum Wage Act also allows non-electronic recording. Whether this will prove to be correct in practice, is highly doubtful, at least for activities that are not tied to a specific location.
Recording of break times as well?
The Draft stipulates that "the beginning, end and duration of the daily working time" must be recorded. However, break times are not mentioned in the Draft. Therefore, they do not have to be recorded separately.At least the (total) length of all breaks during the working day can be determined based on the time data to be recorded. However, it is not possible to check whether the legally prescribed location of the breaks (after six hours of work at the latest) and their minimum length (15 minutes) were observed.
Delegation to employees permitted
Fortunately, the Draft clarifies that working time recording can also be carried out by the employees themselves or by third parties. The employer can thus delegate the recording obligation, but ultimately remains responsible for ensuring that the recording is reliable. In order to fulfill its responsibility, the employer must – as the Draft's explanatory memorandum expressly stipulates – inform the employees of the recording obligation and at least randomly check the correctness of the records. Employers will therefore not be able to avoid setting up internal processes for this purpose. Information and internal processes should be documented and described for the purpose of providing evidence to the authorities. Employees should therefore always be informed in writing or electronically (e.g. by e-mail).
Trust-based Working time still possible
According to the Draft, trust-based working time should continue to be possible. However, this does not (any longer) mean blind trust that employees will always arrange their working hours in accordance with the provisions of their employment contract and the legal framework. Rather, the working hours of employees with trust-based working time must also be recorded in the future. The reference point of trust is therefore now different: The employer refrains from monitoring compliance with the contractually agreed working time and its location. In contrast, he must monitor compliance with the statutory working time limits, i.e. he must be made aware of any exceeding of the maximum working time and minimum rest periods. A first answer as to how this balancing act is to succeed – after all, the employer has at his disposal the data with which he can see compliance with the contractually agreed working time and its location – is provided by the justification of the Draft: The electronic working time recording system will be programmed in such a way that any exceeding of the statutory limits will be automatically reported to the employer. In addition to this, the employer will have randomly check whether employees are recording their working hours correctly (see above).
Scope of application of the working time recording
In principle, the employer must record the working hours of all employees in the company. The new regulation does not provide for any exceptions in this respect, even if the European Working Time Directive would have made this possible. However, the Draft does not take this up (see below for information on possible exceptions under collective agreements). Instead, the exceptions already in place, especially for managing employees, continue to apply unchanged. The discussion that has flared up in the meantime as to whether the working hours of managing employees should also be covered is thus probably outdated. This is because the Working Time Act is more specific than the Occupational Health and Safety Act with regard to general maximum working time regulations and is therefore to be applied with priority. There is therefore no room for deriving an obligation to record working hours from the Occupational Health and Safety Act, which also applies to executive employees.
Deviations only by or on the basis of a collective bargaining agreement
According to the Draft, deviations from the statutory requirements for the working time recording are only possible if this is provided for in a collective agreement and the employer is bound by this collective agreement. The collective agreement may contain the deviation itself or leave it up to the parties to the agreement. In companies where the employer is not bound by collective agreements, a deviation is therefore ruled out in any case – even if the employer and works council consider deviations to be appropriate. This is because, in contrast to numerous other provisions of the Working Time Act, the Draft does not (even) provide that employers who are not bound by collective agreements and who are within the scope of a collective agreement can apply the deviations opened up by the latter in their operations. This regulatory technique fits in with the objective set out in the coalition agreement according to which the parties to collective agreements are to be given more freedom in shaping working conditions.
In substance, deviations are allowed in the following respects:
- Instead of electronic form, another form of record may be permitted.
- It can be determined that the recording of working time does not have to take place on the same day, but within a period of up to seven days.
- Employees "for whom the total hours of work are not measured or predetermined or can be determined by the [employees] themselves because of the special characteristics of the work performed" may be exempt from recording hours of work altogether.
It is unclear which groups of employees are meant by this in detail and this is likely to give rise to lively discussion in the future. The only thing that is certain is that the wording is identical to that of the European Working Time Directive. However, the case law of the ECJ on this issue is limited. It can only be inferred that the ECJ interprets the regulation in a restrictive and activity-related manner. The Draft lists executives, high-ranking experts and scientists as examples.
At this point, a (further) inadequacy of the regulation technique is revealed. The occupational groups mentioned are typically non-tariff employees. They do not belong to the target group of the trade unions. The regulations of a collective agreement on working time recording may also apply to them since they are probably so-called company standards whose validity in the company depends solely on the employer's commitment to the collective agreement and thus also covers non-tariff employees. However, the trade unions are unlikely to be interested in agreeing on derogations for these occupational groups.
In particular, employers who are not bound by collective agreements are faced with an apparently almost unsolvable task. They must ensure that the working hours of employees whose working hours are difficult or impossible to record are reliably recorded.
Retention periods and official powers
The employer is obliged to keep the time sheets for a period of at least two years. The records must be made in German and stored in Germany in case of an inspection by the authorities. At the request of the supervisory authority, the records must also be available at the place of employment.
According to the Draft, a violation of the aforementioned regulations constitutes an administrative offense that can be punished with a fine of up to EUR 30,000. It can be assumed that a violation of the retention obligation can be punished with a corresponding fine per employee. This can quickly become expensive for employers.
Right to information
According to the ECJ decision, the system for working time recording must be accessible to employees. According to the Draft bill, the employer must therefore provide its employees with information on the recorded working time and a copy of the records upon their request. It is sufficient for this purpose if the employees can access the corresponding electronic records and make a copy themselves. According to the Draft, a violation of the right to information also constitutes an administrative offense and can be punished with a fine of up to EUR 30,000.
The right to information comes into focus in particular with regard to the remuneration of any overtime. Up to now, it has generally been up to the employee to explain in detail and, if necessary, prove the extent of overtime worked. In the future, this will be made much easier by recording the entire working time and it will therefore be difficult for employers to oppose the corresponding proof.
Co-determination rights of the works council
If a works council has been formed in the operation, the works council's right of co-determination must be observed. While employers in companies without a works council can (and must) now tackle the establishment of the working time recording system on their own, in companies with works councils there is a right of co-determination pursuant to Sec. 87 para. 1 no. 7 of the Works Constitution Act ("BetrVG"). However, a distinction is to be made with regard to the scope of this co-determination right:
With regard to the question if working time will be recorded, the works council has neither a right of co-determination nor a right of initiative, as there is a legal obligation to record. There is no room left for co-determination by the works council on this issue.
However, if there is still room for leeway with regard to the design of the working time recording system in accordance with the statutory regulations, the works council must have a say in this. The law stipulates that the recording must be made electronically. As already mentioned above, however, there are several options as to how the electronic recording can be carried out, so that the works council must be involved here. The works council must also be involved in the recording of data that goes beyond the legal requirements, e.g. the recording of rest breaks or the storage of data for longer than the legally prescribed period.
In addition, the works council is also likely to have a right of co-determination in the design of the electronic system pursuant to Sec. 87 para. 1 no. 6 of the Works Constitution Act which relates in particular to the technical design and method of use of the system such as access rights to and handling of the stored data.
Finally, it should be noted that not only the employees but also the works council must be shown the working time records upon request. A corresponding right of inspection arises from Sec. 80 para. 1 no. 1 in conjunction with para. 2 sentence 2 of the Works Constitution Act since the works council has to check compliance with the laws applicable in favour of the employees – in this case the Working Time Act – and must be provided with the relevant documents for this purpose.
Apart from the obligation to keep electronic records, the Draft does not contain any real innovations. Fortunately, the Draft answers some open questions. However, it does not solve the difficulties of practical implementation of working time recording. For example, the handling of short-term professional activities outside regular working hours remains unclear. This would require a comprehensive reform of working time law to take account of the digitalisation and flexibilisation of work. Although such a reform is provided for in the coalition agreement and is long overdue, it remains completely absent.
In addition, the Draft has shortcomings in a number of places. In particular, the employer and the works council should always be able to agree on deviations. It is to be hoped that improvements will be made in the further course of the legislative process.
Employers should therefore continue to follow the legislative process closely and familiarise themselves with the possibilities of electronic time recording. The Draft itself does not trigger any immediate need for action. However, it is now at least possible to see in which direction working time recording will develop and what challenges employers will face in the future.