On April 18, 2023, the Federal Ministry of Labor and Social Affairs unveiled the highly anticipated draft bill for Time Tracking Germany Law, outlining the precise guidelines for fulfilling the requirement to track employees’ working hours.
This Draft Bill comes in response to a crucial ruling by the Federal Labor Court (BAG) in September 2022, which stated that all employers, regardless of their company’s size or the presence of a works council, must maintain records of their employees’ working hours (Ref.: 1 ABR 22/21).
Until now, there was no specific legislation outlining this obligation, leaving many details and statutory provisions uncertain. Let’s take a closer look at the key points of the Draft Bill and how it impacts employers.
Prior to the September 13, 2022 ruling, German law did not generally require the recording of working hours, except for some specific cases. Following the decision by the Federal Labor Court (BAG), which aligned with the “time clock decision” of the European Court of Justice (ECJ) on May 14, 2019 (C-55/19), employers are now obligated to implement a suitable system for recording working time.
However, the precise system requirements have remained uncertain. The only guidance came from the ECJ, which emphasized the need for an “objective, reliable, and accessible” system aimed at ensuring the practical effectiveness of the Working Time Directive. Due to these ambiguities, many employers found it challenging to adopt new time-recording systems.
It’s important to note that the Draft Bill will require some time to pass through the legislative process. As a result, the existing legal framework will remain unchanged for the time being.
Nevertheless, the Draft Bill offers valuable insights into the core elements of the upcoming regulations, enabling employers to prepare for the upcoming legislative changes.
In a specific case, a clinic’s works council aimed to enforce the implementation of electronic time recording. The Federal Labor Court rejected the lawsuit, arguing that the works council lacked the initiative right to introduce a time recording system.
The court clarified that the works council’s right to initiate such changes exists only when “the operational matter of works agreement is not already regulated by law.” Since the clinic was already legally obligated to record working hours comprehensively, the court concluded that the works council’s right to initiate such a system was not applicable in this instance.
As a result of this ruling, it’s now clear that there’s an immediate and universal obligation in Germany for all employers to record working hours electronically. While the court doesn’t prescribe a specific method of timekeeping, it emphasizes that the systems used must be objective, reliable, and easily accessible.
Inken Gallner, President of the BAG, based her judgment on the ECJ ruling and argued that if the German Occupational Safety and Health Act aligns with the ECJ, there’s a clear mandate for all employees to document their working hours thoroughly. Karl-Josef Laumann, Labor Minister of North Rhine-Westphalia, is urging swift implementation of the BAG’s ruling.
Trust-based working hours shift the emphasis to an employee’s performance. Here, employees have the freedom to organize their work. Employers place their trust in the employees to fulfil their agreed-upon working hours and forego any need for stringent control over when or where work is done.
What matters most is that tasks are completed accurately and on time, regardless of the specific time and location of the work. This approach empowers employees to independently manage their responsibilities, with the central focus being task completion rather than employee monitoring.
To make trust-based working hours successful, employees must exhibit personal responsibility and take proactive measures. In return, employers must establish a high level of trust and provide clear objectives for employees to follow.
In practice, the trust-based work model varies depending on a company’s size and industry. Trust-based working hours can be established through an employment contract or outlined in a company agreement.
While some companies allow for completely flexible task completion without specific timeframes, most prefer to define a certain time window for work performance by executive employees. This shift schedule helps ensure that a sufficient number of employees are available during desired hours.
To enforce the legal requirement of recording working hours, amendments to the Working Time Act (ArbZG), especially Section 16 ArbZG, will be implemented. Employers will have the duty to electronically record their employees’ daily working hours, including start, end, and duration.
This electronic recording doesn’t necessarily mean fully automated systems and can include tools like spreadsheet programs. Employers must retain these records for at least two years. While employees or third parties, such as supervisors or temporary workers hiring companies, can record working hours, the ultimate responsibility falls on the employer to collectively record working time.
Upon an employee’s request, the employer should provide information about the recorded working hours and share copies of these records. This can be accomplished by allowing employees to access and copy their recorded working time data in the electronic time recording system.
Advances in technology have made it easier to implement electronic time tracking. Companies can use various systems and tools to record their employees’ working hours.
Working time recording is possible with just a few clicks, particularly through mobile applications or cloud-based services. TimeTrack allows any internet-enabled device to be used as an electronic time-recording terminal. Employees can easily and promptly record working time electronically and document their working hours while on the go via smartphone or on a PC in the office.
As per the Time Tracking Germany Law, employees will still have the flexibility to determine their own working hours schedule. Recording working hours can generally be entrusted to the employee, with the employer only needing to implement measures for monitoring working hours to ensure compliance with legal requirements regarding working hours and rest periods.
This requirement existed in the previous legal framework as well. When trust-based working hours were in effect, employers were already obligated to ensure adherence to statutory regulations, particularly those concerning weekly maximum working hours and rest periods. In this regard, the new electronic time recording system should make it easier to fulfill these obligations, potentially through automatic notifications.
The draft law includes several exceptions to the electronic time recording requirement. Smaller companies with up to 10 employees are proposed to be exempt from this obligation.
Furthermore, exceptions are provided for situations where, under a collective bargaining agreement, both parties to a collective agreement can mutually agree upon alternative time recording methods, including the use of paper forms.
Depending on the specific industry, different approaches to working time recording may be considered acceptable. It’s worth noting that deviations from the daily recording requirement might also be allowed.
According to the draft, hours must be recorded and electronically documented within one week after the work has been completed, offering a certain degree of flexibility in meeting this requirement. These provisions are intended to account for variations in business size, industry needs, and practical recording methods.
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The Draft Bill outlines a transitional period for implementing the electronic working time recording requirements, which can vary from one to five years based on a company’s size. All companies, regardless of their size, will have at least one year to transition to the electronic recording system.
For businesses with 50 to less than 250 employees, two years is provided, while companies with less than 50 employees will be granted a more extended five-year period to comply. Companies with up to 10 employees are entirely exempt from the electronic recording obligation.
This means that businesses won’t be required to immediately adopt electronic recording on the effective date of the Act. However, alternative recording methods, in paper form, such as written records, must be implemented if electronic recording is not yet in place.
Furthermore, the Draft Bill introduces a provision for collective bargaining agreements and agreements, allowing exemptions from the electronic recording requirements. This can include non-electronic methods or delayed recording up to seven days after the work is performed. Collective agreements may also specify certain groups of employees exempt from the recording obligation.
The Draft Bill emphasizes that failing to comply with the employer’s obligation to record working hours and provide required information electronically will be considered an administrative offense in the future, subject to a fine of up to EUR 30,000. The transition period of at least one year provides companies with ample time to adjust to the new regulations, fostering a smoother transition.
The new Working Hours Act )=(Time Tracking Germany Law) brings a significant change, as it now mandates companies to record employees’ working hours diligently. As per the draft bill by the Federal Labor Court, this recording should be precise, digital, and a daily routine, encompassing specific details like start and end times, as well as break periods.
The BAG ruling marks a pivotal shift in the working landscape, emphasizing the critical importance of accurate timekeeping. It not only safeguards the rights of employees but also promotes a more transparent and equitable work environment.
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