German Labour Court Ruling on Time Recording: 10 Facts Companies Should Know

Since September 2022, the obligation to record working hours has applied to companies. However, many employers are unsettled by the ruling of the German Labour Court and do not know what they have to consider in the future when it comes to time recording.

Last year, the German Federal Labour Court (BAG) confirmed the obligation to record working time in a landmark ruling. Precise requirements such as the obligation to record time electronically have not yet been implemented. Nevertheless, the ruling has far-reaching effects on the recording of working time, especially in small and medium-sized enterprises. Employers are obliged by the BAG ruling to promptly introduce a reliable working time recording system.

But which aspects must be taken into account now? How flexible can the implementation be and what opportunities does the BAG ruling on time recording offer companies? The following article provides ten facts that companies need to know regarding the recording of working time.

1. Significance of the BAG ruling for companies

The BAG ruling on time recording from September 2022 puts companies under an obligation. Employers must systematically and reliably record the daily working time of their employees. The decision has far-reaching effects on various working time models. Whether on site, from home, on the construction site or in the field: Employers must implement suitable systems and processes for recording working time.

Although electronic working time recording is not yet mandatory - it is only a matter of time. The current draft bill of the German Ministry of Labour has been available since April 2023. It is expected that the law will come into force in 2023 and that digital time recording will become mandatory for all companies.

2. ECJ ruling in 2019 lays the foundation for future case law

The 2019 ECJ decision laid the foundation for the BAG ruling on time recording. The European Court of Justice thus emphasised the importance of timekeeping to protect workers and ensure fair working conditions within Europe. Thus, it was already clear in 2019 that the Working Time Act that had been in force in Germany until then would not be sufficient. Until the ECJ ruling, also known as the "time clock ruling", companies were only obliged to record the overtime worked by their employees. The German Labour Court has now concretised this requirement. In future, the beginning, end and duration of daily working hours must be recorded.

3. Duty to systematically record working time

According to the BAG ruling, companies must systematically record the working time of their employees. All times must be reliable and accessible at all times. In concrete terms, this means that companies must implement an effective time recording system that allows for a complete record of working time.

For companies that have already implemented time recording methods, there is currently no need for action. However, there may be changes if the legislator makes concrete requirements for the recording of working time. Employers who do not record working time – for example, because they rely on trust-based working time – will now have to take action.

According to the draft law, there will be exceptions for companies with fewer than ten employees. According to the current status, they will not be obliged to record their working hours electronically.

4. Flexible ways of implementation

The way in which companies implement the recording of working time remains flexible. The BAG ruling does not give any concrete specifications for the technical implementation. Companies can therefore use different systems and technologies that meet their individual requirements. They are free to use traditional methods such as time clocks or modern electronic solutions such as time recording software.

5. Digitalisation as an opportunity

Digitisation enables companies to record working time more efficiently and accurately. Various options are available, such as digital time recording systems, or mobile apps. Modern time recording software, for example prime WebTime from primion, records working hours independently of location and automatically. The result: reduced administrative effort and less susceptibility to errors. In addition, digital solutions offer extended functions. Holiday and absence management simplify the workflow – especially for HR departments. At the same time, scalable solutions can be coupled with various systems such as access control or security management.

6. Advantages for companies

Many employers – especially small and medium-sized enterprises – are sceptical about the ruling. However, the BAG ruling and the implementation of the draft law offer many advantages to companies. If working hours are recorded accurately, employers get a transparent overview of their employees' capacities. Ideally, they use the information to optimise work processes. At the same time, they minimise the risk of labour law conflicts and improve compliance with working time regulations.

7. Impact on work culture

In addition to the benefits of improved resource planning and accurate billing, systematic working time recording can have a positive impact on work culture. By making working time transparent, companies promote a culture of trust and fairness. Employees receive clear feedback on the work they have done and are given planning security, for example by documenting overtime. On the other hand, employers have the certainty that the regulations on break and rest times, which apply anyway, can be neatly administered even with flexible remote working time models. According to experts, the BAG ruling as well as the planned adoption of the law contribute to a better separation of work and leisure time, especially when working from home.

8. The BAG ruling does not mean supervision

The BAG ruling on time recording should not be understood as an instrument of surveillance on either the employer's or the employee's side. Rather, it serves to protect workers and ensure fair working conditions. The data collected will be treated confidentially and used only for the purpose of documenting working time.

9. Data protection and information

When introducing a time recording system, companies must respect data protection. Employees must be informed about the scope as well as the exact nature of the data collected. Transparent information and communication measures eliminate possible concerns about data protection in advance. It is advisable to implement a data protection policy that describes the exact procedures and safeguards for the recording of working time.

10. Deadlines for implementation

The BAG ruling does not set specific deadlines for the implementation of the recording of working time. However, companies should take prompt action to meet the requirements of the ruling. Early implementation will allow employers to adapt to any adjustments and make the transition smooth.

The BAG ruling on time recording has far-reaching consequences for the majority of companies in Germany. The systematic recording of working time will become mandatory, whereby companies are flexible in their choice of solutions. Digitalisation offers numerous advantages – from more efficient administration to optimisation of work processes.

Companies should take the BAG requirements seriously. This way, consequences under labour law, including high fines, can be avoided. At the same time, the opportunity can be taken to optimise work processes in the company. The correct recording and documentation of working hours ultimately protects employees and guarantees compliance with the legal requirements.

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