In its highly relevant decision of 13 September 2022 (Case No. 1 ABR 22/21), the Federal Labor Court (Bundesarbeitsgericht – BAG) ruled that employers are obliged under Section 3 (2) No. 1 of the German Occupational Health and Safety Act (Arbeitsschutzgesetz – ArbSchG) to record the beginning and end of employees’ daily working hours, including overtime.
There was a high level of speculation after the corresponding press release, and now the eagerly awaited reasons for the decision have been published. These shed light on some points, but in our view some other important questions remain unanswered. In any case, there is a need for legislative action.
In this regard, one thing is clear: In the opinion of the BAG, there is a national obligation to record working hours. There is now a need for action for all companies. However, it must be taken into account that violations of Section 3 ArbSchG, which the BAG uses as the legal basis for the obligation to record working hours, are not in themselves punishable by a fine. Employers only commit an administrative offence when they intentionally or negligently violate an enforceable order of the competent supervisory authority. In the event of persistent non-compliance or endangerment of the life or health of an employee, there is even a risk of criminal liability in these cases. It remains to be seen whether and to what extent supervisory authorities will now issue orders to individual companies to establish working time recording on the basis of the BAG decision. It is also questionable whether employees will be able to enforce a claim to the introduction of working time recording under individual law on the basis of Section 618 of the German Civil Code (Bürgerliches Gesetzbuch- BGB).
Obligation to record working time follows from Section 3 (2) No. 1 ArbSchG
The setting for the decision of the BAG was actually an issue of co-determination law: A works council claimed that it has a right of initiative with regard to the introduction of electronic working time recording in the company. The BAG rejected such a right of initiative with regard to the “if” of time recording.
However, to justify this rejection, the court refers to the introductory half-sentence of Section 87 (1) of the German Works Constitution Act (Betriebsverfassungsgesetz – BetrVG), according to which a right of co-determination of the works council only exists “insofar as a statutory or collectively agreed regulation does not exist“. The BAG then states that there is already a statutory regulation obligating the employer to introduce and use a working time recording system. Accordingly, there is no longer any room for a corresponding right of initiative of the works council at the level of “if” working time recording takes place.
However, according to the BAG, the obligation to record working time does not follow from Article 31 II of the Charter of Fundamental Rights of the European Union, as this provision does not have any direct effect. An interpretation of Section 16 (2) Sentence 1 of the German Working Hours Act (Arbeitszeitgesetz – ArbZG) in conformity with Union law is also ruled out, as such an interpretation would prove to be “contra legem”. The wording of Sec. 16 (1) Sentence 1 ArbZG expressly provides only for the recording of working time performed in excess of the regular working hours.
Rather, the obligation to introduce an objective, reliable and accessible system follows from an interpretation of Section 3 (2) No. 1 ArbSchG in conformity with Union law and thus from aspects of occupational health and safety law. Section 3 (1) ArbSchG obligates the employer to take the necessary occupational health and safety measures, taking into account the circumstances that influence the safety and health of employees at work. Based on this, Section 3 (2) No. 1 ArbSchG stipulates that the employer must ensure suitable organization and provide the necessary resources for planning and implementing the measures, taking into account the nature of the activities and the number of employees. Section 3 ArbSchG is a general clause under occupational health and safety law which does not impose any specific measures on the employer, but rather stipulates his basic obligation to create a suitable occupational health and safety organization. This basic obligation is usually concretized by standards in other laws (e.g. the Occupational Health and Safety Act) or ordinances. In view of this, it is remarkable that the BAG now reads the concrete obligation to establish a working time recording system into the general clause.
According to the BAG, an obligation under occupational health and safety law to record the entire working time can take precedence over the more narrowly defined Section 16 (2) ArbZG. The legislator intended to implement the Working Time Directive with the obligation to record overtime stipulated in Section 16 (2) ArbZG. If the ECJ now derives a general obligation to record working time from the Working Time Directive, the intention of the legislator expressed in Section 16 (2) ArbZG, to only have overtime recorded, does not prevent a corresponding interpretation of the occupational health and safety law in conformity with the Directive.
What are the requirements regarding working time recording?
In the opinion of the BAG, the obligation to record working time is not fulfilled by providing employees with a corresponding system for voluntary use. Rather, the system must actually be used. The beginning and end of daily working time, including overtime, must be recorded. The BAG explicitly leaves open how this must be done. In particular, there is no obligation to introduce an electronic time recording system; manual solutions and delegation to employees thus also remain possible.
However, the decisive point is that every employer must introduce a time recording system and order and monitor its use.
Exceptions for certain employees?
Whether the obligation to record working time applies to all employees covered by the ArbZG is not clearly elaborated by the BAG. In this respect, the decision merely states that the recording of working time extends to all employees employed in the “company within the meaning of Section 5 (1) Sentence 1 BetrVG“. In addition, the BAG refers to the possibility of the legislator to establish special regulations for certain groups of employees in accordance with Art. 17 (1) of Directive 2003/88/EC.
Our opinion: If the obligation to record working hours is derived exclusively from an interpretation of Section 3 (2) ArbSchG in conformity with the Directive, then the restrictions inherent in the Directive must also apply to this obligation. The purpose of recording working hours is to verify and ensure rest periods (Art. 3 of the Directive), rest breaks (Art. 4 of the Directive) and the maximum weekly working time (Art. 6 of the Directive). Art. 17 (1) of the Working Time Directive provides for exceptions to these rules for groups of workers for whom “working time is not measured and/or predetermined or can be determined by the workers themselves because of the special characteristics of the activity carried out,” in particular for “managerial or other persons with autonomous decision-making powers.”
The exceptions that exist here go far beyond the exclusion of executive employees and certain groups of persons, which the German legislator has made use of in the ArbZG. The Netherlands, for example, has implemented the Directive by defining a wage limit above which the regulations on maximum working hours and rest periods do not apply.
Of course, there is primarily a compelling need for legislative action here: the German legislator should, on the one hand, redefine the group of employees not fully covered by the ArbZG and define it more broadly than before and, above all, also make broader use of the opt-out provision in Art. 22 of the Directive, according to which certain groups of people can be exempted from the regulations on maximum working time. The Austrian Working Time Act, for example, permits a weekly working time of up to 60 hours and a daily working time of up to 13 hours, irrespective of the occupational group.
Until the legislator takes action, the employers and the parties in the company must live with the decision of the BAG. We are convinced that, with appropriate company regulations, they can exclude groups of people for whom exceptions to the maximum working time and rest periods are possible under Art. 17 of the Working Time Directive without violating occupational health and safety law.
Works council’s right of initiative with regard to the design of the working time recording system
The BAG denies a right of initiative of the works council with regard to the “If” of time recording, but affirms a corresponding right with regard to the design of the time recording system (“How”). A corresponding auxiliary request of the works council was not granted only because the works council had limited its request to the design of an electronic time recording system. Since the Directive does not necessarily require time recording in electronic form, the works council’s right of initiative under Sec. 87 (1) No. 7 BetrVG with regard to the design of such a time recording system cannot be limited to this.
As long as there is no specific legal regulation and the employer hence still has considerable flexibility regarding the design of a working time recording system, the works council has a comprehensive right of co-determination with regard to the “how” of time recording.
We expect a flood of company regulations on this topic in the coming months. Contrary to what many people think, the BAG decision does not mean the end of trust-based working time. It merely has to be combined with a recording of working time by the employee. This recording does not necessarily result in an obligation to remunerate every hour worked. The BAG only deals with the aspects of working time under occupational health and safety law, which, however, are not always congruent with the perspective under remuneration law. It is not yet foreseeable whether and to what extent the decision will ease the burden of proof for employees in lawsuits regarding the remuneration of overtime – most recently, the BAG had adhered to the already established graduated distribution.
This is not the first decision where the BAG has acted as a substitute legislator. Whether it hereby fulfills its obligation to further develop the law in conformity with the Directives under Art. 288 AEUV in conjunction with Art. 4 (3) EUV or whether it exceeds the national methods of interpretation remains to be seen. We believe that the BAG would have been better off waiting for the legislature, because in the course of introducing an obligation to record working time, the legislature can also clearly regulate the margins and exceptions of the Working Time Directive and establish a democratically legitimized consensus on this. In combination with the rigid regulations of our ArbZG, the decision of the BAG has a toxic effect because many industries are now faced with the question of whether they should document their working time violations or continue without recording. Germany also finds itself at a massive competitive disadvantage compared to other European countries, as the regulations in Austria or the Netherlands that we have described show. The legislator must now quickly reform the ArbZG.
Our Practice Group HR Compliance and Occupational Health and Safety will be happy to advise you on this topic.