Whether they have a works council or not: Companies are required to systematically record working hours.

 The Federal Labor Court confirms the time clock ruling of the ECJ.

Whether they have a works council or not: Companies are required to systematically record working hours.

What began with a dispute over the rights of the works council when introducing a system for recording working hours has now ended with the clarification that companies of all sizes are required to systematically record working hours. We describe the consequences of the ruling by the Federal Labor Court (BAG) dated September 13, 2022 for employers, new work and home office. (Ref.: 1 ABR 22/21)

The current decision of the Federal Labor Court clearly states that companies of all sizes are required to record the working hours of their employees, effective immediately. This applies despite the fact that the legislator is behind schedule with the revision of the Working Hours Act in the implementation of what is known as the “time clock” ruling by the European Court of Justice (ECJ) . In May 2019, Luxembourg judges ruled that companies are required to record and monitor working hours. However, the ECJ decision leaves the specific implementation open.

Lacking framework for the implementation of time recording

According to the German Working Hours Act, documenting overtime and work on Sundays rather than all working hours was regarded as adequate. As we have previously reported, the Federal Minister of Labor, Hubertus Heil, failed to push through a draft law for “changes to marginal employment” in February. This draft states that eleven sectors, such as the construction industry, building cleaners, freight forwarders or the hotel and catering industry would be required to record both the duration and the end of each day’s working hours electronically and in a tamper-proof manner. The amendment of the Working Hours Act continues to remain only a matter for discussion. According to the coalition agreement, the coalition members intend to enter into a dialog with social partners to examine the necessary amendments in view of the case law of the European Court of Justice regarding working time law. Flexible working time models such as trust-based working time would have to remain possible.

The press release issued by the Federal Labor Court also does not provide any indications of the freedom employers may have when introducing a system for recording working time. The grounds for the decision has to be awaited.

Nonetheless, our advice from spring continues to apply: Employers need to be proactive and seek a practical and data protection-compliant technical system for time recording which suits their specific company. Although ECJ case law indicates that paper documentation is also essentially sufficient, it is also clear that digital time recording is more efficient and, therefore, more advantageous for employers.

Return to the time clock and end of trust-based working time?

The extent to which new work concepts such as trust-based work and mobile work from home will be affected primarily depends on how practicable the requirements of the new Working Time Act will be. The freedom employers may have when implementing these requirements will be another factor. The common practice of delegating the time recording obligation to employees when they work from home is no longer adequate.

Employers are relieved: No right of initiative for the works council

The good news for employers is that the works council does not have a right of initiative with regard to introducing technical systems for recording working hours. This ruling deviates from the decision by the previous instance of the Hamm Regional Labor Court and alleviates the fears of a number of companies. The works council only has a right of co-determination pursuant to Section 87 (1) of the Works Constitution Act (BetrVG) if a statutory regulation or collective agreement does not exist. However, the BAG has stated that the statutory regulation exists in the form of Section 3 (2) no. 1 of the Occupational Health and Safety Act (ArbSG): If this requirement is interpreted in accordance with ECJ case law, then employees are legally obliged to record the working hours of employees.

However, the Federal Labor Court has not ruled that employers are permitted to implement the electronic recording of working time themselves without involving the works council, in particular in accordance with Section 87 (1) no. 6 of the Works Constitution Act (BetrVG). In this case, the works council can co-determine the implementation.

Companies still do not know how to actually implement the time recording obligation as required by the ECJ and the Federal Labor Court. The legislator urgently needs to clarify the current ruling. Companies are also under pressure to take action if they have not already done so yet. HR managers need to implement data protection-compliant technical systems for documenting working hours without delay. Given that the coalition agreement explicitly states that it does not intend to endanger models such as trust-based work, the current decision is unlikely to usher in the end of new work.