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Client Legal Update: Judgement of the Federal Labour Court (BAG)

15 December 2022

See below this judgement from 13 September 2022 on the employer's obligation to record working time.

Summary

  • On 13 September 2022 the Federal Labour Court (BAG) surprisingly decided that already an obligation of the employer to record working time exists.
  • This decision is in line with the jurisprudence of the European Court of Justice (ECJ) who already ruled in 2019 that all EU Member States are required to obligate companies to establish an objective, reliable and accessible system for measuring the daily working time of each employee.
  • With this decision the BAG overtakes the German legislator who had not implemented the ECJ judgement from 2019 yet.
  • On 3 December 2022 the BAG published the substantiation of its decision. Large parts of the decision deal with the question - why already an obligation to record working time exists, but there are also some practically relevant statements.
  • Employers and the legislator are now called to take action.
  • The Federal Ministry of Labour and Social Affairs (BMAS) has already announced its intention to present a draft bill in the first calendar quarter of 2023.

Background and the decision of the BAG

  • So far employers were only partly obligated to record working time. Examples are:
    • The obligation to document working times exceeding the daily maximum working time of eight hours and in case of Sunday - or bank holiday work (Sec. 16 para 2 S. 1 Working Time Act, ArbzG).
    • The documentation obligations according to Sec. 17 para 1 Minimum Wage Act (MiLoG) and according to Sec. 17 c para 1, 3 Employee Leasing Act (AÜG).
  • On 14 May 2019 (C 55/18) the ECJ interpreted the Working Time Directive in such a way that Member States must require companies to introduce an objective, reliable and accessible system to measure the daily working time worked by each employee. This is the only way to ensure compliance with maximum working hours, and minimum rest periods, and thus to protect the health of employees.
  • On 13 December 2022 (1 ABR 22/21) the BAG decided that a works council cannot claim from the employer as part of its initiation right to introduce an electronic working time recording because an obligation of the employer to record working time already exists by law.
    • The BAG derived this obligation from Sec. 3 para 2 No. 1 Work Protection Act (ArbSchG) that regulates that companies must ensure suitable organization for the implementation of occupational health and safety measures and provide the necessary resources for this.
    • This includes the employer’s obligation to introduce a working time recording system to collect and record data on the entire duration of working hours (begin, end and duration, including overtime) and to make use of such a system. A mere measurement i.e. the mere data collection as designated by the ECJ is not sufficient.
    • The obligation to record working time applies for all employees except for managing employees (in the sense of Sec. 5 Works Constitution Act (BetrVG)) or legal representatives.
    • However, the working time recording system does not have to be in electronic form or be automated - untill new statutory regulations exist the design of the working time recording system is up to the employer.
    • The recording of the working time may be delegated to the employees.

Practical implications

  • The obligation to introduce a working time recording system is effective immediately. There is no transition period. However, a failure to introduce a working time recording system is not directly subject to a fine. In this case, the responsible occupational health and safety authority can issue an enforceable order to introduce a working time recording system (See Section 22 para 3 ArbSchG). If the employer violates this, this constitutes an administrative offense that can be punished with a fine of up to EUR 30,000.
  • The working time recording obligation affects all employees (including leased employees) except of managing employees or legal representatives (such as the managing directors of a GmbH).
  • The working time recording obligation applies regardless of the working time model in place which means in particular in case of trust based working time.
  • The working time recording obligation relates to the working time in the sense of the working protection laws which is not necessarily the same as the working time in the sense of The latter (in particular in relation to overtime) depends on the agreement between employee and employer.
  • The working time recording must not be electronically or be automated. It can be done for example via excel sheets and even recordings in paper form are sufficient.
  • The obligation to record working time can be delegated to the employees, but the employer needs to establish and maintain a working time recording system, and to randomly check and monitor the proper recording of the working hours. After all the employer remains the addressee of the occupational health and safety and the correct recording of working hours.
  • While the works council does not have any co-determination rights with regards to "if" a working time recording system is established it has co-determination rights regarding the "how". 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 in this regard, otherwise the conciliation body will decide. This includes, amongst other things, the fundamental question of the form in which working time should be recorded. However, the BAG clarifies that the works council cannot force a certain form of working time recording, for example an electronic recording.

To Do's for Employers

  • Employers do not need fall into panic mode but should not only rely on the legislator to pass a new law soon either.
  • Employers who do not have a time recording system in place should start to work on implementing a working time recording system to be able to deal with the numerous questions that will inevitably arise sooner or later in connection with its introduction. In the long run, they will not be able to avoid the introduction of a working time recording system.
  • For employers who already have a working time recording system the main focus should be on any need for adaptation with regard to the requirements formulated by the BAG and the EJC. Working time recording systems that exist for remuneration purposes might not be suitable without further amendments.
  • In companies with a works council, the works council should be involved in the considerations and employers should act proactively instead of waiting for the works council to become the “driver” of the working time recording.
  • In light of potential upcoming legislative updates, employers should focus on preliminary solutions that could be changed at short notice without too much effort.
  • In case employers consider an electronic working time recording system in terms of data protection, working time recording systems from Germany or the European Economic Area should be considered, as cloud solutions from providers in third countries may not guarantee a comparable level of data protection from a European perspective. Exceptions apply to countries with a so-called adequacy decision by the EU Commission. These include Great Britain, Canada, Israel and Switzerland.

Contact Thorsten Kühnel if you require more information.

Further Reading