The obligation on companies to fully record working time – “Downgrading” workplace 4.0?

In the view of the European Court of Justice (Judgment of 14 May 2019 in Case No C-55/18), the Member States must establish national rules, which require companies to record the working time actually worked each day by individual employees. Does the obligation on companies mean a “downgrade” of workplace 4.0? At first look, the judgement is not one to be welcomed from an employer perspective. A more careful reading reveals the opportunity for employers to be involved in the shaping of a modern national law. Will it no longer be possible to use flexible models, such as the trust-based working time in its present form?

Background: Spanish union v Deutsche Bank

A Spanish union filed a suit against Deutsche Bank. The aim of the action was to establish that Deutsche Bank had an obligation to implement a comprehensive system for recording working time.

ECJ: Obligation on companies to record the effective daily working time – no mention of a time clock

Member States of the EU must “require employers to set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured” (ECJ judgment of 14 May 2019 in Case No. C-55/18). For the Judges of the ECJ, the obligation on employers to record only “overtime” (to use a non-technical term – has been prescribed under German law until now) was insufficient.

Playing room for national implementation

Member States of the EU must establish rules, which require companies to set up a system for recording the duration of time worked each day by each worker. As far as the specific modalities for the implementation of such a system to record working time are concerned, the Member States have some leeway with respect to

• the form of the System,
• how the special features of the area of activity concerned are to be taken into account and
• what allowances are to be made for certain company characteristics (company size).

In addition, exceptions from the obligation to record working time (pursuant to Article 17 (1) of Directive 2003/88) continue to apply, providing

• the duration of the working time is not measured on account of the specific characteristics of the activity concerned and/or
• is not predetermined or
• can be determined by the workers themselves.

The ECJ leaves a lot of questions unanswered: Is trust-based working time still possible?

The judgment does not clearly state whether transferring the record-keeping obligation to employees (as is currently allowed in Germany), will satisfy the ECJ’s requirements. The system for recording working time should be “objective” according to the Judges of the ECJ. Is it “objective” in the view of the ECJ for the employees to record their working time themselves (and to provide these records to the employer each month)? From one perspective, this might not be seen as “objective”. On the other hand, the “time clock” system still requires employees to act and “operate the time clock”.

To what extent the recording of specific times (possibly via apps or other modern time recording tools in the future) by employees would not be “objective” yet the use of a time clock by employees at specific times would be, is not evident. According to this assessment, the trust-based working time model is not “dead” but it still raises questions, which the German legislators will have to address.

Special features/exceptions

It is also unclear to what extent any exceptions from the obligation to record working time established under national laws will be retained, particularly for

• employers working in specific fields of activity and
• companies of a certain size.

It also remains unclear, which exceptionis from the obligation to record working time, other than those included in the non-exhaustive list in Directive 2003/88 (e.g. for managing executives or family workers), will still be possible under national laws. The Judges in Luxembourg rightly stress that national laws can foresee exemptions from the obligation to record working time, but don’t provide any further detail. This is another important possibility for employers to actively participate in the shaping of a modern national law.

The eight most important practical consequences for companies

1. The judgment itself does not give rise to a direct obligation on companies in Germany to act. In any case, the obligations will arise at the latest when the legal position in Germany is aligned with the judgment.
2. The ECJ judgment affects working time under employee protection law, in particular on business trips, which may differ from the working time under remuneration law. Companies should clearly differentiate between the two.
3. Systems for the recording of total working time will need to be implemented based on new national laws.
4. Existing systems for the recording of total working time will need to be assessed as to whether they record the working time “in accordance with employee protection law”. Where necessary, adjustments will have to be made.
5. Any existing works council will need to be involved in both of these cases (introduction and adjustment of a system for recording working time).
6. Those companies, which do not yet employ a system for the comprehensive recording of working time, in particular, can expect increased red tape.
7. Depending on the arrangements, a system for recording working time could affect the remuneration of overtime and facilitate overtime claims; in this respect, it should be kept in mind that the recording of the working time under “employee protection law” is not necessarily the same as the documentation of working time under remuneration law in all sectors, and certain conditions must still be fulfilled for the remuneration of overtime.
8. For this reason, employers should also take the judgment into account when drafting employment agreements. This applies in particular to any clauses on the payment of overtime.

Summary

The ECJ has not yet sent the trust-based working time model “to the scrapheap in the sky”. National legislators will have to decide if this is appropriate. National rules may still be effectively implemented using flexible working time models such as trust-based working time. Employers should try and work towards such a rule that is in keeping with the times for the good of the modern workplace. Hubertus Heil, the German Federal Minister for Labour and Social Affairs, has already announced that new legal provisions will be introduced this year and has welcomed discussions with employers on this issue.

If you have any questions related to this topic, please feel free to contact Dr Wolfgang Lipinski (Lawyer, Licensed Specialist for Labour Law) and Florian Denninger.

^{Tip: For more information, you can also read a viewpoint written by the same authors in the Betriebs-Berater (https://betriebs-berater.ruw.de/), published on 20 May 2019 and titled “The obligation on all companies to comprehensively record all working time is coming – does that really mean one ‘time clock for all’?” ("Verpflichtung von Unternehmen zur umfassenden Arbeitszeiterfassung kommt – heißt das wirklich 'Stechuhr für alle'?").}