What is the current legal situation?

Until the ruling on 13 September 2022, German law did not provide for an obligation to record working time (with some exceptions). Since the ruling of the BAG, which follows the so called "time clock decision" (14.5.2019, C-55/19) of the European Court of Justice (ECJ), employers are obliged to introduce a suitable system to record working time. So far, the specific requirements for the system to be implemented have been unclear. The only specification that was known originated from the ECJ, which stated in its ruling that an "objective, reliable and accessible" system, that is intended to ensure the practical effectiveness of the Working Time Directive, must be implemented. Due to the uncertainties, it was hardly practicable for employers to have already introduced a new system to record working time.

It will take some time for the Draft Bill to be passed by the government, which means that the current legal situation will not change for the time being. However, the Draft Bill shows the key aspects of the new provisions and allows employers to prepare for the legislative changes.

How should recording working time be implemented?

The legal requirements to record working time shall essentially be implemented via an amendment and supplement to the Working Time Act ("ArbZG"), in particular Section 16 ArbZG.

Employers will be obliged to electronically record the beginning, end and duration of the daily working time of their employees on the day that the work is performed. The legislator thus prescribes the manner in which working time is to be recorded and logged. According to the explanatory memorandum to the Draft Bill, "electronic" is to be understood to mean not only common time recording tools and apps, but spreadsheet programs as well. Therefore electronic time recording does not necessarily mean automatic time recording and it should still be possible to use Excel. The records must be stored for at least two years. Working hours can be recorded by the employee or a third party, e.g., a supervisor or the hiring company of temporary workers, but the employer remains ultimately responsible for the proper recording of working hours.

Upon the employee's request, the employer shall inform the employee about the recorded working time and provide a copy of the records. According to the explanatory memorandum to the Draft Bill, the information requirements may also be fulfilled by allowing employees to view the records relating to them in the electronic working time recording system and to make copies.

Are trust-based working time models (Vertrauensarbeitszeit) still possible?

According to the Draft Bill, it will still be possible for employees to determine the schedule of their working hours themselves. Recording working hours can generally be delegated to the employee. The employer must only take appropriate measures to be able to monitor the working time and prevent any violations of the statutory provisions on the duration and location of working hours and rest periods. This was already the case under the previous legal situation. There was already an obligation for the employer to ensure that the statutory requirements, in particular those relating to maximum working hours and rest periods, are complied with, if trust-based working time is agreed upon. In this respect nothing will change. With electronic time recording, it should be particularly easy to meet the requirements, for example by means of automatic notifications.

What are the consequences for employers?

The Draft Bill provides for a transitional period between one and five years to implement the legal requirements for electronic working time recording, staggered according to the size of the company. All companies, regardless of size, are given at least one year to implement the electronic system. Companies employing between 50 and less than 250 employees have two years to implement the regulations, and companies with less than 50 employees will be given five years' time. Companies with up to 10 employees are to be completely exempt from the obligation to record working hours electronically. Thus, the requirements to record working hours will not have to be implemented immediately as of the day on which the Act becomes effective. However, if working time is not yet recorded electronically, the employer needs to ensure the recording in a different manner, for example in writing.

The Draft Bill also provides for a collective agreement exemption option. According to this provision, exceptions to the above requirements to record working hours may be agreed in a collective bargaining agreement or in a works agreement. In this respect, recording working hours in non-electronic form or on a day other than the day on which the work is performed (after seven days at the latest) can be introduced. By collective agreement, certain groups of employees may also be exempted from the obligation to record working hours.

Violating the obligation to electronically record working hours and the information requirements will constitute an administrative offense in the future, punishable by a fine of up to EUR 30,000. However, with a transition period of at least one year, the Draft Bill provides enough time to implement the new regulations.

What do we expect next?

The new Draft Bill mainly takes the interests of employees into account and unfortunately fails to adapt the outdated Working Time Act to the requirements of modern professional life. However, the Draft Bill is only a first draft of the Federal Ministry of Labor and Social Affairs and will certainly undergo some discussions and amendments. The Draft Bill has now been forwarded to the Federal Cabinet for further approval and will subsequently be submitted to the Parliament (Bundestag) for reading and subsequent voting. We do not expect the Draft Bill to be passed quickly. Either way, employers should familiarize themselves with electronic applications available in the market, as the employer's obligation to record working time electronically will most likely come into effect. As the Federal Labor Court stated that the obligation to record working time is already current law, companies might be forced to take measures if employees, the works council or authorities, claim the implementation of a time-recording system.