Background: What has happened?

The legal situation in Germany up until now

Up to now, companies have only been partly obliged to record time. The most well-known example is probably the provision of sec. 16 para. 2 sentence 1 of the Working Time Act [Arbeitszeitgesetz – ArbZG], according to which companies are obliged to document working hours when the daily maximum working hours are exceeded according to section 3 sentence 1 ArbZG and in the case of working on Sundays and public holidays. Further documentation obligations can be found, for example, in sec. 17 para. 1 of the Minimum Wage Act [Mindestlohngesetz – MiLoG] or also in sec. 17c para.1, 3a of the Employee Leasing Act [Arbeitnehmerüberlassungsgesetz – AÜG].

The “time clock” verdict of the ECJ on 14 May 2019 - C-55/18

The ECJ's "time clock verdict" from 2019 caused quite a sensation. The ECJ interprets the so-called Working Time Directive (Directive 2003/88/EC) in such a way that member states must oblige companies to introduce an objective, reliable and accessible system with which the daily working time performed by each employee can be measured. This is the only way to ensure compliance with maximum working hours and minimum rest periods and thus the protection of employees' health.

Although the coalition agreement indicates that it wants to implement the ECJ verdict ("In dialogue with the social partners, we will examine the need for adjustments in the light of the case law of the European Court of Justice on working time law"), however, no specific legislative proposals have been announced.

​​​​​​​The recent ruling of the BAG on 13 September 2022 - 1 ABR 22/21

With this decision, the BAG surpassed the German legislator, although the legal dispute actually had quite a different origin:

The BAG was confronted with the question of whether a works council had a right to initiate the introduction of electronic working time recording pursuant to sec. 87, subsec. 1 no. 6 of the Works Constitution Act [Betriebsverfassungsgesetz – BetrVG]. While the Regional Labour Court affirmed such a right of initiative of the works council, the BAG declined such a right.

The BAG's reasoning, which was previously only available as a press release, caused the sensation: the works council does not have a right of initiative because companies are already obliged to record working time by law. This obligation to record is derived from the general clause of sec. 3 para. 2 no. 1 of the Occupational Health and Safety Act [Arbeitsschutzgesetz – ArbSchG], which is to be interpreted in accordance with EU law (see above no. 1.2).

The press release did not provide any specific information on the recording of working hours. Neither does the provision of sec. 3 para. 2 no. 1 ArbSchG specify any more concrete requirements.

Reasons for the BAG's decision: Do these contain more concrete requirements?

Those who had hoped that the reasons for the decision would provide legally secure options for the recording of working time or at least specify the requirements will be disappointed. The BAG's reasons do not contain any concrete specifications on how the objective, reliable and accessible time recording system required by the ECJ is to be organised.

Nevertheless, the reasons for the decision provide some interesting insights:

​​​​​​​How is the obligation to record working time derived?

The BAG discusses the derivation of the obligation to record working time in detail – over about twelve pages:

• In particular, the BAG explains why the obligation does not arise from an interpretation of sec. 16 para. 2 sentence 1 ArbZG in conformity with European law (see also no. 1.1 above; see in detail para. 25 et seq. of the decision). Neither the wording nor the statutory system nor the legislative history allow for a corresponding interpretation of the provision.
• However, these concerns do not exist with regard to the framework provision of sec. 3 para. 2 no. 1 ArbSchG:

If interpreted in conformity with EU law, this broadly defined occupational health and safety provision also contains the obligation for employers to introduce a working time recording system of the daily working time performed, which includes the beginning and end and thus the duration of the working time, including overtime. The terms of the provision of sec. 3 para. 2 no. 1 ArbSchG ("to ensure appropriate organization" and "to provide the necessary resources") can also cover the introduction and use of a working time recording system.

​​​​​​​What is the scope of working time recording?

The BAG clarifies that the time recording system must not be limited to what the ECJ calls "measurement", i.e. mere data collection. Rather, employers must collect and record data on the beginning and end of daily working time, including overtime.

The corresponding reasoning of the BAG is plausible: "Otherwise, neither the schedule of daily working hours nor compliance with the daily and weekly maximum working hours within the reference period would be verifiable [...] Otherwise, control by the competent authorities would not be ensured either [...]" (para. 23 of the decision).

The obligation to introduce a system for recording working time also implies that employers actually apply it and thus use it. It is not sufficient that employers make such a system available to their employees for their optional use (para. 23 of the decision).

​​​​​​​Are all employees covered? Are there exceptions?

The BAG states that the obligation to record time extends to all employees working in the business within the meaning of sec. 5 para. 1 sentence 1 BetrVG (para. 55 of the decision).

The BAG does not clearly clarify, however, whether the working time of managing employees is also to be recorded:

• There are some arguments to support the view that this is not the case: If the obligation to record working time is established at all by an interpretation in conformity with Union law, Union law should also be taken into account in other respects. The Working Time Directive allows member states to provide for an exception for managing employees. The German legislator has implemented such an exception in sec. 18 para. 1 no. 1 ArbZG.
• However, the BAG's statements also allow the opposite conclusion, i.e. that the working time of managing employees is to be recorded. Thus, in para. 57 of the decision, the BAG states in excerpts: "the provisions provided for in §§ 18 to 21 ArbZG are not relevant" and "the legislator has not (so far) made any further special regulations for employees - which are in principle possible according to Art. 17 para. 1 of Directive 2003/88/EC".

As said, this question remains unanswered even after the publication of the reasons for the decision. Therefore, a clarification by the legislator is urgently needed, according to which managing employees are excluded from the recording of working time.

​​​​​​​What is the role of the works council?

According to the decision of the BAG, the works council does not have the right of initiative to introduce the recording of working time ("if") pursuant to sec. 87 para. 1 no. 6 BetrVG.

However, the works council's co-determination rights are still to be taken into account in other respects, i.e. in the organisation ("how") (see in detail para. 58 et seq. of the decision): According to the BAG, the works council – subject to any other future regulations by the legislator – has a right of initiative for the organization of the recording system for the beginning and end of the daily working time pursuant to sec. 87 para. 1 no. 7 BetrVG in connection with sec. 3, para. 2 no. 1 ArbSchG (para. 60 of the decision). However, the right of initiative must not be limited to time recording in an electronic form (see below under no. 2.5).

​​​​​​​By hand or electronically?

The BAG does not impose a specific form for the recording of working time. Rather, as long as the legislator does not provide a form requirement, there remains a leeway for companies. Companies should be allowed to take into account the particularities of the respective areas of activity of the employees concerned and their own specificities (e.g. their size). The BAG refers to the opinion of the Advocate General at the ECJ, which stated that time recording may take place in paper form, electronically or by other appropriate means.

​​​​​​​Can working time be delegated to employees? Trust-based working time still possible?

According to the BAG, the delegation of the working time recording to the employees is allowed.

Thus, nothing should stand in the way of trust-based working time (= employees can freely choose the beginning, time and end of working time, companies refrain from monitoring), even though the BAG does not make any explicit statements in this regard. However, from now on, the working time of employees will be visible. In this respect, the BAG has significantly interfered with trust-based working time, as the lack of control is an essential element of it.

In connection with the power of delegation, the BAG also notes that the establishment and running of a working time recording system is the responsibility of the employer. It is therefore important for companies to ensure that the proper recording of working time is controlled and monitored on a sampled basis. The company remains the addressee of occupational health and safety and the correct recording of working time.

​​​​​​​Conclusion

The reasons for the decision provide some insights, but they have not shed any light on the matter.

Although some questions are answered, e.g. regarding co-determination rights of the works council, the form of recording working time or the possibility of delegation to employees.

The decisive question, though, was expectedly not clarified: What does an objective, reliable and accessible working time recording system required by the ECJ look like?

The objective now is to find practicable approaches that meet these requirements - however, there will not be a one-size-fits-all solution.

Action required: Where do companies go from here?

Due to the clear directive of the BAG, companies must assume that they are already obliged to introduce a system with which the working time of all employees is to be recorded. The BAG derives the obligation to record working time from an interpretation of an already existing legal norm in conformity with EU law. From a compliance point of view, it is therefore no longer advisable to wait for the German legislature to implement the ECJ ruling.

What companies are now required to do and how an objective, reliable and accessible working time recording system can be implemented in a legally secure manner despite the lack of specifications by the BAG and the German legislator, we will share with you in our webinar (in German).

We look forward to your participation!

Written by: Kimberly Makino.