Federal Labour Court publishes judgment on the recording of working time – duty to act and co-decision right

Judgment of the Federal Labour Court of 13 September 2022 in Case No. 1 ABR 22/21

Employers must record the beginning, end and duration of the daily working time of employees, and do not have a grace period to implement a time-recording system, except where the legislators have adopted a derogation that is admissible under EU law. The works council (currently) has a co-decision right with respect to the establishment of arrangements for recording working time – subject to any future statutory rule.

Facts of the case

The dispute erupted over whether the works council of a work operated jointly by two employers had a right of initiative concerning the introduction of an electronic working time-recording system. After a conciliation committee was established to look at the question of the “adoption of a works agreement on the introduction and use of an electronic system to record working time”, the employers questioned the conciliation committee’s jurisdiction. In response, the works council brought an action under the resolution procedure to establish that it had a right of initiative in this case.

The judgment

The Federal Labour Court (Bundesarbeitsgericht, BAG) answered the application in the negative (see also the article by Lipinski/Holzapfel on the press release of the Court). In the Court’s view, the only restriction to the right of initiative for the introduction of an electronic system to record working time is the fact that the matter is prescribed by legislation (§ 87 (1), introductory half provision, Works Constitution Act (Betriebsverfassungsgesetz, BetrVG). When and to what extent a statutory provision, which is binding on the employer, regulates the subject of co-determination both finally and with respect to content, the parties will not have any flexibility concerning arrangements and the works council will not have any co-decision right. In the view of the BAG, the right of initiative cannot relate to the introduction of working time recording – the “whether”. In this respect, employers already have a statutory duty to act. Pursuant to § 3 (2) No. 1 of the Occupational Health and Safety Act (Arbeitsschutzgesetz, ArbSchG), employers are required to introduce a system that records the start, end and thus the duration of working times, including overtime at their sites. According to the Court, this derives from the interpretation of this employee protection standard in line with EU law.

At its core, the BAG judgment provides that the duty to record working time applies expressly to all employees of a work within the meaning of § 5 (1) first sentence of the BetrVG. However, the Court noted that the national legislator can adopt provisions that would exempt certain employees from the duty to record working time, providing any such provisions are in line with EU law. This could be the case where the duration of the working time cannot be measured and/or is not predetermined due to special characteristics, or where the employees themselves can set the working time. The duty is not limited to the introduction of a system to record working time, the use of which is optional for employees. Instead, the system must actually be used. However, responsibility for recording the working hours may be delegated to employees.

The BAG (initially) strengthened the co-decision and initiative rights of the works council with respect to arrangements for the protection of health under § 87 (1) No. 7 of the BetrVG. Subject to any other future rules legislators may adopt, the works council has a right of initiative for the arrangements for the system to record working time. As this also relates to the form of recording (manual or electronic) and the works council’s application in this case only covered the electronic recording of working time, the application was unsuccessful. It limited the conciliation committee to only one possible form of implementation and, therefore, the committee potentially could not issue a (comprehensive) substantive decision on the form of working time recording.

Consequences for practice

In the BAG’s view, employers are responsible for recording all working time under the current law. There is no grace period: the duty already applies. According to the reasoning of the judgment, where there is a works council, employers are also not free to decide alone whether to record working time with “paper and pencil” or electronically at the site. In the absence of any binding requirements in accordance with § 3 (2) (1) of the ArbSchG, employers have some leeway when selecting and defining the system for recording working time, as long as the legislator has (still) not adopted any exhaustive provisions. Employers can use this leeway when working with the works council in accordance with § 87 (1) No. 7 of the BetrVG to determine the particulars of recording working time, such as the “form” it should take. In this respect, the BAG rejected a right of co-decision for the “whether” while strengthening the right with respect to “how”. However, it is important to stress that the BAG assumes this is the “current” legal situation, which is subject to any further future rules adopted by legislators.

Whether the obligation to record working time also applies to executive employees is not entirely clear. The present case only concerned the question of whether the duty relates to all employees of the work within the meaning of § 5 (1) first sentence of the BetrVG. The Senate answered this question in the affirmative. Some consider that the obligation does not apply to executive employees – based on an interpretation that is in line with EU law. Whether this is correct in light of the current law and whether this is what the BAG intended, cannot be said conclusively yet. However, as the BAG explained, the fact that the legislator has not yet adopted any special rules would generally support a different view. Further, the fact that special rules apply for certain areas (e.g., employees in road haulage, the crew of vessels for inland waterways, seafarers under the Act on Employment at Sea and those working offshore) must also be considered.

Trust-based working hours can still be used. However, any trust-based system must respect the relevant legislation and working time must be recorded.

Practical tip

Employers should take the time now to analyse whether and to what extent there is (currently) a need to act within their operations before any expected legislative changes are adopted. Employers should ascertain which employees are currently recording working times. Depending on the outcome of this assessment, it could make sense to be cautious at the relevant sites and wait for the legislator to further elaborate on the obligation to record working time before negotiating and agreeing to a new works agreement – to the extent that there is a works council. The expected new legislation could result in changes to the scope of potential arrangements and thus to the co-decision right as well. This would make the “half-life” of any hastily negotiated works agreement on recording working time rather short. A draft bill for the legislation should be presented in the first quarter of 2023. There is also currently no risk of direct fines in the case of an infringement of the duty to record working time under § 3 (2) No. 1 of the ArbSchG because it (currently) does not constitute an offence.

Dr Sebastian Kroll