UPDATE: Federal Labour Court on mandatory working time recording
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With its decision of 13 September 2022 (1 ABR - 22/21), the Federal Labour Court (Bundesarbeitsgericht, BAG) has caused an uproar in the working world by outpacing the legislator and ruling that, if Sec. 3 Para. 2 No. 1 of the Occupational Health and Safety Act (Arbeitsschutzgesetz "ArbSchG") is interpreted in conformity with Union law, the employer is already obliged to introduce a system with which the working time of employees can be recorded. The grounds for the decision, which are now available, provide clarity in some areas but, as expected, cannot eliminate all ambiguities. It is now up to the legislator to use the leeway available to create a legal framework that makes reliable recording of working hours practically manageable, even in the world of work 4.0. The German Federal Ministry of Labor and Social Affairs (BMAS) has already announced its intention to present a draft bill in the first calendar quarter of 2023.
Obligation to comprehensively record the start and end of working hours
One thing is certain: the recording of working time must relate to the beginning and end of the entire daily work performed - and thus not only to the duration of the working time. Overtime must also be recorded. The same is likely to apply to rest breaks. In the future, their beginning and end must also be recorded, because this is the only way to determine the duration of the working time properly. The previously widespread practice of automatically deducting the statutory break time from the daily (total) working time recorded after the start and end of work seems difficult to reconcile with this. This is because it is only possible to determine whether the requirements of the Working Time Act (Arbeitszeitgesetz "ArbZG") regarding maximum working hours, as well as rest breaks and rest periods, are actually being complied with by accurately recording break times as well.
Accurate recording of working time not always easy to implement in practice
While the obligation to comprehensively record working time can easily be illustrated in theory, it presents employers with considerable practical difficulties. When the "work" to be recorded exactly begins and ends depends on the specific activity and can often only be assessed individually. Time recording is likely to be less problematic for location-based activities, such as in the office or in production. In this case, there always remains the option to return to the "time clock" - with all the associated disadvantages - if no other solutions can be found. By contrast, another and usually more promising solution may be to involve employees in the recording of working hours, which is probably the best way to reflect employees' local flexibility, especially in home offices and in case of mobile work.
Nevertheless, employers will not be able to avoid examining individual activities separately for their relevance to working time. For example, while for most employees the way within the company to the workplace does not constitute working time, time spent putting on uniforms at the workplace may count as working time. Even the short-time performance of work duties outside regular working hours, such as briefly answering an e-mail in the evening, are strictly speaking working time. If the Federal Labour Court's decision is taken seriously, these aspects must be adequately taken into account when designing the working time recording system. Simply not recording these times should not (any longer) be a viable option. The handling of short-term performance of work duties outside of regular working hours in particular raises difficult questions in practice. Whether and to what extent consolidations into a lump sum are permissible here also depends on the extent to which the legislator will make use of its leeway under the (European) Working Time Directive (Directive 2003/88/EC). However, this leeway is limited by the requirement of the Federal Labour Court following the landmark decision of the European Court of Justice (ECJ) (judgment of 14 May 2019 C-55/18, "CCOO") that an "objective, reliable [...] system for recording all working times" must be made available and used. Such reliability can hardly be reconciled with a flat-rate approach. The legislator is nevertheless called upon to act boldly and to provide for regulations that allow for a justifiable practical handling of the recording of working time.
Significance of working time recording for remuneration
The "working time" to be recorded refers to the working time as defined by the working time law. Separate from this is the remunerated working time. Although in most cases both terms run in parallel, this is by no means always the case. The question of which working time is to be remunerated - in contrast to working time under working time law, which is of sole interest here - is subject to scope for interpretation. Overtime, for example, may not be remunerated at all or only to a limited extent - but it still counts as part of the working time to be recorded in any case. Existing working time recording systems can therefore only continue to be used without adaptation if they (also) record working time within the meaning of working time law.
In this context, the question also arises as to what role working time recording systems will play in future in compensation disputes, in particular regarding the remuneration of overtime. Up to now, it has generally been up to the employees to explain in detail and, if necessary, prove the extent to which they have worked overtime. The lack of a working time recording system does not change this. However, if there are records showing that the claimed amount of overtime was worked, employers will find it more difficult to counter this in the future.
Applicable to all employee groups with the exception of executive employees
The working hours of all employees in the company must be recorded. The only most likely exception to this - the reasons for the decision are not entirely clear at this point - are senior executives. This seems logical, because the requirements of the Working Time Act, whose compliance is ultimately at stake, do not apply to them. According to Article 17 Para. 1 Letter a) of the Working Time Directive, the national legislator can exempt "executive employees or other persons with independent decision-making authority" from the provisions on maximum working hours and rest periods, which the German legislator does (albeit possibly excessively) by excluding executive employees from the scope of the Working Time Act.
The same applies to external managing directors of a limited liability company (GmbH). Even if these are partly classified as employees under European law, they do not fall within the scope of the Working Time Act, which is also likely to be covered by the Working Time Directive.
In contrast, the working hours of temporary workers deployed in the company must be recorded by the hirer. This is because for the duration of the assignment, the hirer is also responsible for compliance with the occupational health and safety regulations vis-à-vis the temporary workers, which includes both the regulations of the Occupational Health and Safety Act and those of the Working Time Act.
Recording of working hours also in the case of trust-based working hours
The obligation to record working hours exists regardless of the working time model. There is no indication that employees with whom trust-based working time has been agreed are exempt from this requirement. Merely trusting that employees will independently comply with the provisions of working time law does not meet the demand of the Federal Labour Court and ECJ for an "objective, reliable and accessible system for recording all working times". Nevertheless, this is not the end of trust-based working time. The Federal Labour Court's decision does not change the fact that employers are free to allow employees to freely organize their working time. However, in order to bring this freedom into line with the working time recording, employers must and can include the employees in the obligation to record working times (for more details, see below). Here in particular, it is to be hoped for a deviating regulation by the legislator.
Design of the working time recording system
It is up to employers to decide how they comply with the requirements for setting up a working time recording system. Here, too, the limit is that the selected working time recording system must be "objective, reliable and accessible". Unfortunately, there are no specific guidelines or even best practices that could provide orientation. The only thing that is certain is that the special features of the company, in particular its size, and also the individual area of activity of the respective employees must be taken into account when designing the system. The following principles should be observed in any case:
- Electronic working time recording system not mandatory
The working time recording system does not have to be electronic. Records in paper form may also suffice. However, it should be noted that the working time recording system must also be able to fulfill its purpose, namely the verification of compliance with the requirements of working time law, in practical implementation. The size of the company is likely to be a decisive factor here. Even in medium-sized companies, it seems questionable whether working times recorded in paper form can really be verified in view of the sheer volume of data. Paper records, for example in the form of time sheets, are therefore only likely to be a solution for small companies.
- Automated working time recording system not mandatory
If the introduction of a paper-based working time recording system is subsequently not an option, there are numerous options for an electronic working time recording system. Neither an automated working time system nor software developed specifically for working time recording is absolutely necessary. Simpler solutions are also conceivable, such as Excel sheets. All of this is subject to the reliability of the working time recording system, whereby the size of the company is again likely to play a decisive role. In contrast, the Federal Labour Court indicates that financial aspects are only of secondary importance in the design of the working time recording system.
- Consideration of different work processes and work stations
If the work processes of the employees in the company differ considerably with regard to the start and end of working time, this must also be incorporated into the design of the working time recording system. This is the only way to ensure precise working time recording. It may therefore sometimes even be necessary to design the working time recording system differently for different groups of employees.
But the place of work must also be taken into account. A certain challenge arises here, particularly in the case of mobile working. The selected working time recording system must ensure that working time outside the company is also recorded. Here in particular, the recording of working hours can hardly function without the involvement of employees (see more on this below).
- Delegation of recording of working hours to employees permitted
The establishment of a working time recording system is the sole responsibility of employers. They must ensure that working hours are recorded effectively. However, it is possible to involve employees in the process of recording working hours and require them to independently enter their working hours into the system provided by the employer.
Despite the delegation, employers remain obliged to monitor the reliable recording of working hours by employees. On the one hand this requires an explicit and clear instruction to the employees that the working time is to be documented with the system provided. On the other hand, employees will have to be informed, at least in unclear cases, when exactly the working time to be recorded begins and when it ends. Finally, the recording of working hours must be monitored at least by random checks. The extent of the monitoring obligation in detail has not yet been determined. However, if there are no abnormalities, it would seem disproportionate to monitor employees too closely.
- Storage and processing of recorded working times
The obligation to set up and use a working time recording system does not end with the recording of working times. Rather, employers must store the data and probably also process it in a way that enables them to identify violations of the provisions of working time law. After all, only such processing makes the working time recording system effective. Based on this, the degree of processing required depends on the type and complexity of the working time recording system in use.
In view of the supervisory powers of the authorities, employers should retain the stored and processed data for a certain period of time. The length of time that is appropriate is still completely open. From a data protection perspective, this is unfortunate, since the recorded working hours are personal data of the employees. It seems to make sense to base this on the obligation to retain overtime records pursuant to Sec. 16 Para. 2 Working Time Act. According to this, the recorded working time data would have to be kept for at least 2 years.
Observe the co-determination rights of the works council
The initial question of the legal dispute underlying the Federal Labour Court's decision, namely the extent to which the works council can force the employer to introduce electronic time recording, has almost receded into the background in view of the furor over the obligation to record working hours. While employers in companies without works councils can offset up 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 (Betriebsverfassungsgesetz "BetrVG").
The scope of this co-determination right must be differentiated:
- With regard to the "if" of recording of working hours, the works council has no right of initiative. This is because, in the opinion of the Federal Labour Court, employers are already obliged by law to introduce a working time recording system. There is therefore no room for co-determination by the works council on this issue.
- With regard to the design of the working time recording system - the "how" - there is, on the other hand, extensive leeway which the works council has a right of co-determination how this is implemented. The employer and the works council must therefore reach agreement on the numerous questions relating to the design of the working time recording system and find regulations on this, otherwise the conciliation body will decide. This includes, among other things, the fundamental question of the form in which working time should be recorded. However, the Federal Labour Court clarifies that the works council cannot force a certain form of working time recording, for example electronic.
With regard to the design of the working time recording system, the works council also has a right of initiative. If the employer fails to act, the works council can therefore call on the conciliation body on its own initiative and ultimately force the employer to come to the negotiating table.
If the decision is made to introduce an electronic working time recording system, there is generally also a right of co-determination pursuant to Sec. 87 Para. 1 No. 6 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.
Which body has a right of co-determination in this context depends to a large extent on whether the electronic time recording system is standardized within the company:
- In this case of the introduction and use of uniform company technical systems (Sec. 87 Para. 1 No. 6 Works Constitution Act), it has already been decided that the company works council may be responsible in particular if administrator rights are assigned centrally and there is a possibility of monitoring usage behavior in all of the company's operations.
- In the case of analogous time recording, where the right of co-determination primarily follows from Sec. 87 Para. 1 No. 7 Works Constitution Act, on the other hand, there is probably more to suggest that the competence remains with the local works councils.
As a result of the decision employers already have an objective legal duty to act. Nevertheless, it should be emphasized that there is no immediate threat of fines - in contrast to violations of maximum working hours, rest breaks and rest periods, which are subject to fines under the Working Time Act, fines can only be imposed if the occupational health and safety authority has previously issued a specific order and this order is not complied with.
Nevertheless, employers should already start now to deal with the numerous questions that will inevitably arise sooner or later in connection with the introduction of a working time recording system. In the medium term, they will not be able to avoid the introduction of a working time recording system. If company regulations on the recording of working time already exist, the main focus should be on any need for adaptation with regard to the requirements formulated by the Federal Labour Court. Working time recording systems that have been introduced for compensation purposes are not suitable without further ado. In companies with a works council, the works council should be involved in the considerations.
However, wild actionism is not advisable. This is because the Federal Ministry for Labour and Social Affairs (BMAS) has already announced that it will take action. According to announcements by the Federal Ministry for Labour and Social Affairs, a draft law on the recording of working hours is to be presented as early as the first quarter of 2023. This should clarify many points that are currently still unclear and (hopefully) facilitate practical handling. In addition, more specific requirements from the legislator cannot be ruled out. In any case, it is worth keeping an eye on the legislative process.
Premature, costly measures that may have to be tightened up or even corrected at a later date therefore appear to make little sense. In view of the obligation to act that already exists, transitional solutions that can be changed again at short notice and without major expense should be at the forefront of considerations.