German Federal Labour Court: Legal Obligation for Employers to Record Working Time?

September.14.2022

This may have been a pyrrhic victory for one employer before the German Federal Labour Court that may lead to effects on all employers: While the highest German labour court found that German works councils (Betriebsräte) do not have a right of co-determination in electronic time recording, i.e., works councils cannot enforce introductions of such systems, the court may have found that all employers are legally obliged to introduce a system for recording working time anyway.

Co-determination on the introduction of electronic time recording

In the case decided by the Federal Labour Court, the employer and the works council argued about the conclusion of a shop agreement (Betriebsvereinbarung) on electronic time recording. In the course of the previous negotiations about such shop agreement, the employer decided not to introduce electronic time recording after all and the negotiations were broken off. In the court-appointed conciliation board concerned with this issue, the employer was of the opinion that the works council did not have the right of initiative to introduce electronic time recording. The works council then went to court to enforce the employer to agree to such a shop agreement.

Legal obligation to introduce time recording, nonetheless?

Contrary to the previous decision by the Regional Labour Court, the Federal Labour Court rejected a right of initiative of the works council to introduce a shop agreement on electronic time recording.

What's unexpected is the reasoning behind this decision. The Federal Labour Court is of the opinion that such obligation to record all working time already exists by statutory law, albeit only after interpretation in line with European law. Thus, a right to co-determination of the works council is not necessary.

Whereas the German Occupational Health and Safety Act merely stipulates that the employer must ‘ensure appropriate organization and provide the necessary resources’ to guarantee adequate occupational health and safety, the European Court of Justice decided in a Spanish case in 2019 that an obligation to record working time exists for employers. However, the German Federal Government and legislation did not change the current German law, which explicitly only requires to record overtime as well as work on Sundays and public holidays. While many legal pundits had doubts if the German system was in compliance with the decision of the European Court of Justice, the recent developments in employment law – towards more working from home and more flexible working hours – have caused the decision to be somewhat overlooked.

What employers should and shouldn't do now

While some pundits have already shared opinions that previous working-time models should now swiftly be replaced by electronical time recording, we recommend not to draw any hasty conclusions. The detailed reasons for the decision are not yet available and, in our opinion, it is not yet foreseeable with certainty from the press release alone what kind of action, if any, employers should take now. In any case, the government and legislature can hardly ignore this decision and may now change corresponding provisions on the recording of working time in an amendment to the Working Time Act, that was planned anyway.

Thus, we see the following Dos and Don'ts for German Employers:

  • Do check if and how working time and overtime is recorded at your company in the first place. If the recording of overtime is not done reliably, the introduction of a professional time recording system may be a good idea. However, if overtime recording, e.g., on a trust-based system works well, it should be waited for the time being to see whether this system may already meet the requirements of the working time recording model established by the Federal Labour Court.
  • Don't use this decision to stop all trust-based overtime recording for employees working on flexitime or from home.
  • Don't put modern working models on hold if they otherwise work well.

If you would like to know more about how to prepare for time recording requirements, please get in touch with our German Employment Law Team.