Working time – a constant topic

After the European Court of Justice (ECJ), also the Federal Labor Court (BAG) commented on the recording of working time in September this year. Following the initial press release issued by the BAG, the full text of the decision is now available. What initially appeared to be a success for employers (the BAG rejected the works council’s requests) proves to be a Pyrrhic victory. But why?

In its much-noticed decision (BAG decision dated 13 September 2022 – 1 ABR 22/21), the BAG decided that employers are obliged to record the beginning and end of employees’ daily working hours. The background to the proceedings before the BAG was that a works council of a joint operation wanted the court to state that it had a right of initiative to introduce an electronic time recording system within the framework of its co-determination rights according to Sec. 87 of the Works Constitution Act. As a reminder: if the works council has an enforceable right of co-determination, i.e. if the employer is dependent on the consent of the works council for the implementation of a measure, it also has a right of initiative with regard to the measure subject to co-determination. It therefore does not have to wait for action by the employer, but can take the initiative himself.

While the Regional Labor Court ruled in favor of the works council, the BAG denied a right of initiative. Although the employer prevailed in this respect, this is of little help to him in practice. In its decision, the BAG confirmed the works council’s right of co-determination in principle and only rejected the requests because they exclusively covered an electronic system and were therefore too specific.

What has happened so far?

The decision of the BAG was preceded by the ECJ’s time recording decision (ECJ decision dated 14 May 2019 – C-55/18), which the BAG also refers to in its ruling. Following the submission of a Spanish court, the ECJ had ruled that occupational health and safety to be observed by employers is only guaranteed if employers record the entire working time (not just “overtime”). The general opinion on this ruling was that it had no direct legal impact for German working time law, as there is no German transposition law for the Working Time Directive (EU Directive 2003/88/EC).

However, this turned out to be a false conclusion insofar as, in the opinion of the BAG, the obligation to record working time already follows directly from German occupational safety and health laws (and not from working time laws) when interpreted in conformity with EU law. The BAG clarifies that according to the clear wording of Sec. 16 para. 2 sentence 1 of the German Working Time Act, employers are only obligated to record “overtime”, i.e. those hours exceeding the regular working time. An interpretation of the provision in the sense that there is an obligation to record the entire working time would extend the law’s wording.

What are the key statements of the BAG?

  • According to Sec. 3 para. 2 no. 1 Occupational Safety and Health Act, employers are obliged to record the duration, beginning and end of the daily working hours of employees.
  • The working time recording system must be objective, reliable and accessible. With regard to the concrete design of the system in accordance with these requirements, the employer has a wide scope for action. For example, time recording does not necessarily have to be done electronically.
  • Further concrete contents of the working time documentation have not yet been made. For example, the BAG left open in its decision whether break times must also be recorded. This is to be assumed, as this is the only way to achieve reliable recording. However, it remains to be seen whether the German law makers will implement such guidelines. The Federal Ministry of Labour and Social Affairs (BMAS) has already announced a proposal to amend the Working Hours Act for the first quarter of 2023 (see FAQ of the BMAS on working time recording).
  • Since the recording obligation arises directly from the law, it applies to all employers with immediate effect.
  • Employers can delegate time recording to their employees. However, it is not sufficient to merely provide the system for recording working time to employees. Employees actually have to record their working hours. This must also be controlled by the employer.
  • Within the framework of its co-determination rights under Sec. 87 Works Constitution Act, the works council has no right of initiative with regard to the “if” of the introduction of a system for recording working time, as there is already a legal obligation to do so. With regard to the concrete design (the “how”) of the system, there is a comprehensive right of co-determination. A corresponding right of initiative follows from this. However, the works council cannot limit this right of initiative to the design of the recording system in electronic form alone.

What happens if the obligation to record time is not complied with?

The Occupational Safety and Health Act does not provide for direct fines for violations of the obligation to record working hours. However, the competent health and safety authority can order the introduction of a time recording system if the employer does not comply with their obligation. According to the FAQ of the BMAS in the event of violations, for example, improvements of the system can be demanded or, if necessary, fines may be imposed, the amount of which is adapted to the severity of the respective violation in individual cases. It also remains to be seen whether the supervisory authorities will make use of this option on the basis of the BAG decision.

Regardless of the threat of fines, further disadvantages are to be expected in the event of non-compliance with the Occupational Safety and Health Act. There is a risk of atmospheric disturbances in operation and negative publicity. Compliance, especially in connection with ESG (occupational health and safety), is also becoming increasingly important.

Are executives covered by the obligation?

This also remains to be seen. Executive staff are employees who partly perform specific employer tasks and have their own scope for decision-making. However, not every manager is automatically an executive, so this must always be assessed on a case-by-case basis. On the one hand, the Occupational Safety and Health Act applies in principle to all employees. On the other hand, executives are exempt from the provisions of the Working Time Act. In addition, the Occupational Safety and Health Act must be interpreted in accordance with the Working Time Directive (EU Directive 2003/88/EC), which also provides for exceptions for executives. It is to be hoped that the legislator will also create legal certainty here.

What do employers need to do to be compliant?

Although no direct sanctions are currently to be expected, every employer should introduce a system for recording working time as soon as possible, if such a system is not already used. Companies that already use a time recording system should check it with regard to the case law’s above-mentioned requirements.

If employers delegate the recording obligation to their employees, they must ensure that employees actually use the system. To this end, employers should commit their employees in writing to use the recording system properly, check the use on a random basis and document this.

Trust-based working time in the sense that employees can organize their working time independently and freely is still possible as long as a proper recording of working time is ensured.

In the first quarter of 2023, the BMAS would like to present a proposal for the concrete requirements of working time recording. It is to be hoped that the open questions, in particular on the obligation to record break times and possible sanctions, will be regulated by law. Due to the existing co-determination rights, employers should nevertheless actively approach their works councils.

Photo of Walter Born Walter Born

Walter Born is a partner in the Frankfurt office. He advises clients on a variety of legal and business issues, with an emphasis on restructuring measures and the negotiation of reconciliation of interests and social plans, outsourcing transactions and German TUPE provisions, employee…

Walter Born is a partner in the Frankfurt office. He advises clients on a variety of legal and business issues, with an emphasis on restructuring measures and the negotiation of reconciliation of interests and social plans, outsourcing transactions and German TUPE provisions, employee data protection, dismissals (mass lay-offs) and related litigation, internal investigations, employee benefits and ERISA litigation. Walter counsels clients on employment advice, including drafting employment, managing directors’ and board members’ contracts and settlement agreements. He also has experience advising on collective labor law matters, and counsels on immigration matters, social security law, enforceability of post-contractual non-compete covenants and many other related matters. Walter Born is Managing Partner for Legal Personnel of the Frankfurt office.

Photo of Dr. Nadine Kramer Dr. Nadine Kramer

Dr. Nadine Kramer is a special counsel in Covington’s labor and employment law and executive compensation and employee benefits department. She has many years of experience in advising on labor law aspects with respect to M&A transactions, complex HR topics and reorganizations, especially…

Dr. Nadine Kramer is a special counsel in Covington’s labor and employment law and executive compensation and employee benefits department. She has many years of experience in advising on labor law aspects with respect to M&A transactions, complex HR topics and reorganizations, especially with a focus on negotiations with works councils, and a corresponding networking within the law firm as well. Furthermore, she has a great experience in drafting of social plans, evaluating of pension liabilities and managing labor law-related proceedings, especially with regard to wrongful termination litigations at all levels of seniority and management participation programs.