Since the publication of the Federal Labour Court’s press release on its decision (13 September 2022, 1 ABR 22/21) regarding the obligation to record working time, there has been much anticipation ahead of the publication of the grounds for the decision. Now they are available. So what do they tell us?
Background: ECJ requirements (CCOO) and legislative plans
On 14 May 2019, the European Court of Justice handed down a decision (C-55/18, CCOO) relating to Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time. It ruled that Member States must require employers to implement an objective, reliable and accessible system enabling the length of time worked daily by each and every worker to be measured. This decision called for a response from the German legislator. Aside from a few exceptions, under German law the only obligation to record working time is for time worked beyond regular daily working hours and on Sundays and public holidays (section 16(2) Working Hours Act (Arbeitszeitgesetz, “ArbZG”)). In its coalition agreement, the German government agreed it would review whether “any changes were needed in light of the European Court of Justice’s ruling”, emphasising that “flexible working arrangements (e.g. trust-based working time)” should “continue to be possible” (cf. Coalition Agreement of 24 November 2021, p. 68). So far, however, there has been no bill – and on 13 September 2022, the Federal Labour Court moved on its own (see also the upcoming Gleiss Lutz Newsletter Arbeitsrecht, issue 01/2023).
Federal Labour Court’s decision of 13 September 2022
The press release on the decision (PR no. 35/22 of 13 September 2022) makes it clear that employers already have an obligation to record the hours worked by their workers. The (now confirmed) rationale behind the decision was also already apparent: Employers are obliged under section 3(2), no. 1 Occupational Health and Safety Act (Arbeitsschutzgesetz, “ArbSchG”) to introduce a system for recording workers’ hours. This the Federal Labour Court concludes from its EU law compliant interpretation of the provision. Other than this clear and unambiguous message, no details of the obligation to record working time have transpired so far.
The following key messages can be taken from the grounds:
- Employers already have an objective legal duty to track and record the daily working time (beginning and end and therefore the length of working time, including overtime) of their workers. Simply introducing a system of this kind is not enough – it must actually be used. The obligation follows from section 3(2), no. 1 ArbSchG; section 16(2) ArbZG and other provisions of the ArbZG are not open to EU law compliant interpretation.
- (So far) no requirements have been imposed as to the type of system to be used for recording working time. Neither European law nor any other legislation stipulates that working times need to be recorded electronically. It may suffice if records are kept manually (in paper form), for example. As far as the type of system is concerned, much depends on the kind of work done by the workers and the nature of the business (in particular its size).
- Employers can still delegate the recording of working time to their workers, but cannot merely provide a system for workers to use “as and when they see fit”. The system must actually be used. Though the Federal Labour Court does not directly address this point, trust-based working time (meaning that workers are basically free to choose the timing and duration of their working hours) therefore remains possible, provided that the hours are documented.
- Works councils have no right to initiate the introduction of an electronic system to record working time, though under section 87(1), no. 7 Works Constitution Act (Betriebsverfassungsgesetz, “BetrVG”) they do have a right of initiative and co-determination when it comes to how the system is designed.
- The guiding principle when choosing and designing the system should be to “improve health and safety at work”, and “considerations of a purely economic nature may not take precedence” over these objectives.
- The decision is not entirely clear on whether working time has to be recorded for all workers. The Federal Labour Court states that the employer’s obligation to record working time extends to “all workers employed in its business within the meaning of section 5(1), sentence 1 BetrVG”. The Court refers to the right to derogate under Article 17(1) of Directive 2003/88/EC. In light of the ECJ decision, the obligation to record working time applies “notwithstanding Article 17(1)”. Consequently, the recording of working time need not extend to workers for whom the national legislator provides for exceptions, e.g. because the specific characteristics of the activity concerned means that their working time is not measured and/or predetermined or can be determined by the persons concerned themselves. The Directive describes examples of this (managing executives or other persons with autonomous decision-taking powers; family workers and persons officiating at religious ceremonies in churches and religious communities). However, the Federal Labour Court states in the grounds for the decision that – aside from sections 18 to 21 ArbZG – the legislator has not enacted any special rules “to date” for workers within the meaning of Article 17(1) of Directive 2003/88/EC. It therefore remains unclear whether working hours of managing executives, for instance, currently fall under the obligation to record working time by virtue of section 3(2), no. 1 ArbSchG, subject to future statutory provisions. Strictly speaking, this is not the case.
- All of these provisions are subject to further specification by the legislator. The Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales, “BMAS”) had announced that it would await the publication of the grounds and then make “proposals for the design of working time recording systems” (BMAS, Recording Working Time – Q&A, 28 September 2022 (Arbeitszeiterfassung - Fragen und Antworten - Stand 28. September 2022), p. 5). It is to be hoped that the legislator will act upon the Federal Labour Court’s decision and make regulatory proposals in the near future.
In practice
The messages from the grounds for the decision are clear and compelling: Employers already have an obligation to record working time. They should review their time recording systems in light of the decision and will have to consider how best to meet their obligation, especially for workers working from home. It is important to note that an electronic system is not mandatory. The system can be designed to accommodate the specific nature of the business and may make allowances for the kind of work performed by the workers. The works council must be involved in this process; however, it has no right to initiate the introduction of an electronic system. It is positive to note that the Federal Labour Court is retaining the rule that employers can delegate the recording of working time to workers. The question of whether managing executives also come under the obligation to record working time unfortunately remains open; the German legislator should clarify that they do not. The Federal Labour Court does not comment on the possible consequences (in terms of fines) of the lack of – or the lack of a proper – system for the recording of working time, arguing simply that it must be possible on the basis of the records for the competent authorities to check compliance with the maximum daily and weekly working time. The ArbSchG does not (yet) provide for the payment of fines for violations of its section 3(2).
The decision also continues to put the onus on the legislator. There are several places where this becomes apparent. That is why some of the things the Federal Labour Court says in its decision apply subject to a change in the law to be expected in the future (such as the works council’s right of co-determination, provided that the legislator imposes precise requirements as to the obligation to record working time).
Legally, action needs to be taken now that the Federal Labour Court has handed down its decision – though there is still much room for manoeuvre. Given that bill is expected, companies should be aware that if they make changes to their time recording systems in the short term, they run the risk of having to make further changes after the law comes into force. This is extremely unfortunate, considering the amount of time, effort and cost involved in modifying such systems. But we may soon see the first reliable indications from the legislator signalling what adjustments employers will need to make.
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