We want to keep you informed about the draft bill of the Federal Ministry of Labour and Social Affairs from 18 April 2023, that outlines employer’s obligations to record the working time of their employees. This draft bill aims to implement the requirements of the rulings of the European Court of Justice (ECJ) of 14 May 2019 and the Federal Labour Court (Bundesarbeitsgericht – BAG) of 13 September 2022.
Once passed, the bill will introduce an obligation to record working time electronically. It’s crucial to note that violations of the obligation to record working time can lead to high administrative fines (up to EUR 30,000 per violation) once the transitional periods for the electronic time recording (generally 1 year and then between 2-5 years depending on the company size) have expired.
Employers should continue to monitor the legislative process and start working on implementing an electronic time recording system that meets the requirements of the draft bill and can then be adjusted to the final bill. It’s advised that employers develop a uniform procedure that will be communicated to employees. Procedures for checking the recorded times must also be put in place; otherwise, there is a risk that violations of the Working Time Act will be documented for years to come.
Summary
- In order to implement the requirements of the rulings of the European Court of Justice (ECJ) of 14 May 2019 and the Federal Labour Court (Bundesarbeitsgericht – BAG) of 13 September 2022, the Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales – BMAS) has adopted its long-awaited draft bill on the recording of working time.
- The draft bill amends several provisions of the Working Time Act and other laws.
- Apart from the introduction of an obligation to record working time electronically (a novelty), the draft bill does not contain any major surprises and mainly implements the requirements of the ECJ and the BAG.
- Furthermore, it is now clear that violations of the obligation to record working time can lead to high administrative fines (up to EUR 30,000 per violation) once the transitional periods for the electronic time recording (generally 1 year and then between 2-5 years depending on the company size) have expired.
- Foreign employers should be aware of the fact that the records must be kept in German and kept available in Germany in case of a control.
- The draft bill has not yet gone through the normal legislative process, but it is expected to be passed in the next few months and could come into force in summer 2023.
- Employers should continue to monitor the legislative process and start working on implementing an electronic time recording system that meets the requirements of the draft bill and can then be adjusted to the final bill.
- Employers are advised to develop a uniform company procedure that will be communicated to the employees.
- Procedures for checking the recorded times must also be put in place. Otherwise, there is a risk that violations of the Working Time Act will be documented for years to come.
So, what does this draft bill mean for employers?
- The obligation to record working time will soon be based on new legislation.
- All employers will be obliged to record the working time of their employees and most companies will be required to have an electronic working time system.
- Violations of the obligation to record working time may result in heavy administrative fines after the transitional periods have expired.
- All employers must continue to follow the legislative process closely and start to implement an (electronic) working time recording system that meets the legal requirements.
- Employers are advised to develop a uniform company procedure that will be communicated to the employees.
- Procedures for checking the recorded times must also be put in place. Otherwise, there is a risk that violations of the Working Time Act will be documented for years to come.
- Foreign companies must implement a working time recording system that is bilingual or can be switched from English to German.
- Employees, and especially managers, need to be made aware of what constitutes working time in a legal sense and how it should be recorded. This applies in particular to periods outside the classic full-time working hours, such as travel time, business meals with customers, seminars or trade fairs at the weekend, etc.
- The way overtime is paid in the company should also be reviewed. In principle, flat-rate compensation is permissible, but it must be effective. Recording all times will also increase the chances of success in overtime disputes.
The detail
- Employers are obliged to record begin, end and duration of their employees‘daily working time. Break times do not need to be recorded but it is possible to draw conclusions about break times by comparing the begin and end of the working time on the one hand and the duration of the working time on the other hand.
- Working time must be recorded on the day the work is performed. Subsequent corrections are permitted but should be made in good time.
- Working time must be recorded electronically. A specific type of electronic recording is not required, so this can be done using Excel, electronic tools or applications (apps). There is an exception for small companies with up to 10 employees, which can also choose a non-electronic form of working time recording.
- The following transition periods apply to the introduction of the electronic time recording:
- Companies with 10-49 employees: transition period of 5 years.
- Companies with 50-250 employees: transition period of 2 years.
- Companies with 251 and more employees: transition period of 1 year.
- The employer is responsible for recording working time, but he / she can delegate this to the employees or third parties (examples: line managers or customers in case of employee leasing).
- However, the employer can be held responsible for the reliability of the records. He / she must therefore inform the employees about the obligation to record working time and needs to check the accuracy of the records at least on a sample basis.
- According to the draft law, it will still be possible to work on the basis of trust, i.e. the employer does not need to monitor whether employees comply with the contractually agreed working time and its distribution.
- Nevertheless, working time must be recorded and the employer must monitor compliance with the working time legislation (such as for example maximum daily working time of 10 hours and break times).
- This could be achieved if the electronic time recording system is programmed so that the employer receives an automatic alert when the legal limits are exceeded. In addition, the employer must carry out spot checks to ensure that working time is recorded correctly.
- Employees also have a right to information against the employer about the recorded working time. Employers must provide an (electronic) copy upon request. It is also sufficient for employees to access the relevant electronic records themselves and make copies.
- The works council may also inspect the working time records upon request in order to fulfil its obligations under section 80 subsection 1 of the Works Constitution Act (BetrVG).
- According to the draft, deviations from the legal requirements for recording working time (e.g. different form of recording; no daily recording) are only possible if they are provided for in a collective agreement and the employer is bound by this collective agreement. The collective agreement may itself contain the derogation or leave it to the parties.
- In the case of employers who are not bound by a collective agreement, there is therefore no possibility of derogation, even if the employer and the works council consider it appropriate.
- The works council has a right of co-determination in the design of the working time recording system (section 87, subsection 1, no. 7, Works Constitution Act (Betriebsverfassungsgesetz – BetrVG)), e.g. which type of electronic system is to be used.
- In addition, the works council is likely to have a right of co-determination in the design of the electronic system under section 87 subsection 1 no. 6 BetrVG, 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.
- Finally, it should be noted that not only the employees, but also the works council must be shown the records upon request.
- The works council has a right of co-determination in the design of the working time recording system (section 87, subsection 1, no. 7, Works Constitution Act (Betriebsverfassungsgesetz – BetrVG)), e.g. which type of electronic system is to be used.
- In addition, the works council is likely to have a right of co-determination in the design of the electronic system under section 87 subsection 1 no. 6 BetrVG, 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.
- Finally, it should be noted that not only the employees, but also the works council must be shown the records upon request.
- The draft bill constitutes administrative offences punishable by a fine of up to EUR 30,000 per violation if employers
- wilfully or negligently fail to keep records of hours of work, or fail to keep them accurately, completely, in the manner prescribed or in a timely manner or
- fail to keep, keep incompletely or keep for at least two years or
- fail to keep records, or keep them incompletely or for the period prescribed; or
- fail to provide information about the recorded working time or fail to provide workers with a copy of the record.
- The obligation to record working time does not apply for executive employees or legal representatives.
