The German Federal Labor Court (BAG) has surprisingly ruled (BAG, 13.09.2022 – 1 ABR 22/21) that employers are legally required to record not only overtime and Sunday work, but all of their employees’ working hours.
Facts of the case
In the case decided by the BAG, negotiations with the works council seeking agreement on the electronic recording of working hours had failed. As a result the employer decided to completely forego the introduction of time recording. In response to this, the works council initiated conciliation proceedings, setting up a conciliation body and arguing that it had a “right of initiative” regarding the introduction of an electronic working time recording system pursuant to Section 87 (1) No. 6 of the German Works Constitution Act (BetrVG). The Minden Labor Court (15.09.2020 – 2 BV 8/20) rejected the claim, considering Section 87 (1) No. 6 BetrVG to be a sole “right of defence”. However, the Hamm Regional Labor Court (27.07.2021 – 7 TaBV 79/20) ruled in the works council’s favour and held that there was no such differentiation between the existence and non-existence of a right of initiative in the context of the works council’s co-determination rights.
According to the court’s press release published in this case, the BAG has overturned that decision and held that in the present case there is no scope for such a right of initiative on the part of the works council. The reasoning takes a completely new approach compared to previous decision: According to Section 87 (1) BetrVG, the works council only has a right of co-determination if and to the extent that there is no statutory or collectively agreed regulation. Such a statutory regulation exists in the present case with regard to the electronic recording of working hours. According to Section 3 (2) No. 1 of the German Occupational Health and Safety Act (ArbSchG), an employer is already legally obliged to have a system in place to record the working hours of employees.
This is a surprising decision. Until now, the prevailing view in legal practice was that employers only had a duty to record overtime and Sunday working, expressly set out in Section 16 of the Working Hours Act (ArbZG). According to the current decision (although we await the full judgment), this can no longer be relied upon. The obligation to record time electronically results from the interpretation of Section 3 (2) No. 1 of the German Occupational Health and Safety Act (ArbSchG) in conformity with EU law. The background to this interpretation is the so-called “time clock ruling” of the ECJ (19.05.2019 – C 55/18), under which employers are obliged by the respective legislator to introduce an objective, reliable and accessible system with which the daily working time worked by each employee can be measured. As is known, the German legislator has not yet complied with this requirement.
The new decision has caused quite a stir in the press and legal literature. There has been widespread talk of a thunderbolt that is now putting employers and legislators under considerable pressure to act. In our view, caution is called for here. First of all, this is only a press release, which only hints at the essential legal issues or leaves them unaddressed. In particular, the press release does not address the fact that the “time clock ruling” of the ECJ gives the member states leeway as to the form in which time recording can take place and allows for the provision of different regulations depending on the industry, size and peculiarities of the company. There is also no indication as to whether time recording can be delegated to employees – as has been the case to date under Section 16 of the ArbZG.
Any anticipatory steps on the part of employers to introduce electronic time recording now, without a clearly structured legal basis, could later prove to be an excessive response. For the time being, we recommend waiting until the BAG publishes the full text of the decision and the legislature issues clarifications on the implementation of the European legal requirements, if necessary. Although the press release states that the court assumes that employers have a duty to record working hours in accordance with Section 3 (2) No. 1 ArbSchG, apart from in relation to some regulated sectors such as temporary employment, there is no threat of sanctions if employers take no action for the time being due to the currently unclear legal situation.
This article is also available in German.