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Recording Working Time: What Startups Need to Know

According to a ruling by the European Court of Justice (ECJ), EU Member States must require companies to set up an objective, reliable and accessible system to record daily working time. What the ruling means exactly for German employers remains unclear. What is clear is that it is causing uncertainty among companies and startups. We spoke with an expert on recording working time.

General reporting of working time has not been required by law in Germany until now. The Working Hours Act has only required that companies record employees’ overtime, i.e. anything beyond the daily working time of eight hours. There are also specific rules for individual industries: The total working time for road transport, for example, has to be recorded.

There are also further regulations: The Minimum Wage Act requires the documentation of the total working hours for specific employees, such as workers in minor employment. This is meant to verify compliance with the provisions of the Minimum Wage Act. Mini-jobbers in private households are excluded. In specific industries that are particularly vulnerable to undeclared work, the Minimum Wage Act also requires that the total working hours are recorded. According to the Act to Combat Undeclared Work and Unlawful Employment, this includes construction, the catering and hotel business, the haulage, transport and associated logistics sectors and industrial cleaning. The scope of the Posted Workers Act also includes recording requirements.

The ECJ ruling on recording working time

In addition to all this, we now have the ECJ ruling of May 2019. In a Spanish case, Luxembourg-based judges ruled that the implementation of the EU Working Time Directive requires companies to set up a system that records the daily working hours of their employees. According to the Luxembourg judges, however, there is considerable room for maneuver. For example, under the pending revision the specifics in respective fields of activity can be taken into account, as can characteristics of specific companies, such as their size.

What that means exactly for the legal situation in Germany, however, is unclear. The German newspaper Süddeutsche Zeitung reported in January on a legal opinion for the Ministry of Labor, which considers modifications to German working time legislation necessary and presents a corresponding proposal. What exactly is to be modified in working time legislation, however, is still unclear — partly because a second legal opinion was commissioned by the Ministry of Labor that hasn’t been published yet. The only statement from the ministry so far is that coordination within the coalition is not yet complete.

“The details of what needs to be amended by law to implement the ECJ ruling are a matter of dispute,”

explained Dr. Frauke Kamp, Head of Employment and Social Security Law at the Chamber of Industry and Commerce (IHK) for Munich and Upper Bavaria. That is why it is also difficult for employers to prepare for the pending revision of recording working time. Moreover, the parties in the government coalition want to link these amendments with additional wishes and projects, such as a right to work from home. Yet that is also still completely open because government officials first need to come to an agreement.

What startups need to know

 “In general, the legal maximum working time as well as the anticipated recording requirements according to the European Working Time Directive apply to all employees. As employers, business owners must comply with the working time requirements and — after implementation of the relevant legislative measures — ensure the recording of working hours for their employees. Owners, however, do not need to observe maximum working hours or recording requirements for themselves. In cases in which external consultants or partners work based on a contract for services or work, they are not employees and are therefore not covered by the European Working Time Directive,”

elaborated Dr. Kamp. Once a startup has grown to the point that it hires additional staff, the regulations apply. Because the exact terms for the anticipated new legal revision of recording working time are still unclear, Dr. Kamp recommends being patient:

“The ECJ specifically emphasized in its decision that differentiated regulations are possible based on the size of the company.”

What the ruling doesn’t say

For employees, an uninterrupted period of eleven hours of rest each day is already stipulated. This also applies to emails sent in the evening or calls with international partners beyond standard working hours. The IHK expert made clear that the ECJ ruling only applies to recording requirements; rest and maximum work periods remain unaffected. Amendments could, however, still be made if lawmakers tackle them as part of the revision:

“The ECJ ruling and the implementation necessary for that ruling in German law only pertain to recording requirements. The stipulated maximum working and rest periods are not affected. Whether and to what extent a revision of the Working Hours Act might abstain from recording requirements for specific employee groups for practical reasons or allow for a de minimis limit for very short periods of activity remains to be seen.”

If you would like to learn more about recording working time or other topics concerning employment law, information is available on the website of the Chamber of Industry and Commerce (IHK) for Munich and Upper Bavaria. The Labor Inspectorate also provides information as the competent authority.

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