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Germany Launches New Time Recording Legislation for All Employees

Aug 9, 2023

Key Takeaways from the UK 2022 Autumn Statement

In the ever-evolving landscape of labour laws and regulations, organisations face new challenges in accurately recording employee working hours. The recent ruling by the Federal Labour Court (BAG) and the European Court of Justice (ECJ) obligates employers to implement reliable time tracking systems to ensure compliance and proper documentation.  

This legislation impacts employers, employees, and regulatory bodies alike, sparking debates around balancing compliance with trust-based working arrangements. At the heart of the matter lies a critical question. How can organisations strike a balance between adhering to legal requirements, maintaining company policies and fostering a positive employee experience? 

This blog explores the implications of the recent legislation, its impact on various industries, and the benefits of implementing an effective time tracking solution. We will delve into how WorkForce Software can help organisations navigate these changes while fostering a workplace culture that embraces trust, productivity, and employee well-being. 

About the Legislation

The Federal Labour Court (Bundesarbeitsgericht, BAG) decided that under Section 3(2) No. 1 ArbSchG, employers are legally required to implement a system for recording employee working hours. (Federal Labor Court, decision of September 13, 2022 – 1 ABR 22/21). This decision follows the European Court of Justice (ECJ) and their decree from 2019 that all EU Member States are obliged to implement an objective, reliable and accessible system to record each employee’s working hours. This obligation aims to ensure accurate documentation and adherence to labour laws. 

Why Does This Legislation Matter?

The recent legal obligations surrounding the recording of employee working hours have sparked debates around enforcing electronic time tracking systems. One important aspect are the significant implications for the concept of “Vertrauensarbeitszeit” in Germany. Vertrauensarbeitszeit, or trust-based working hours, is a flexible working arrangement where employees have the freedom to manage their own working hours based on trust and mutual agreement with their employers. It allows employees to have greater autonomy and work-life balance while maintaining productivity and achieving work goals. 

The main question is, how can organisations strike a balance between compliance, company policies, established processes and employee experience?  

Who is Impacted By the Legislation/Who Would Care About the Legislation?

The legislation directly impacts employers, employees and regulatory bodies responsible for labour law enforcement. Employers across all industries, regardless of their size, must comply with the recording requirements. Employees benefit from increased transparency and assurance of fair treatment, ensuring they receive proper compensation for their work. 

What Does the Impact Look Like?

This legislation holds paramount importance as it addresses critical aspects of employee rights, labor laws, and fair working conditions. It aligns with the ECJ’s emphasis on accurate working hour recording to protect employee rights and prevent potential labour exploitation. Moreover, it promotes transparency, productivity and work-life balance in organisations, fostering healthy work environments. Every company and employee will be impacted except those already using a modern workforce management solution. 

What Do Industry Specific Use Cases Look Like?

The impact of this legislation varies across industries. In sectors with traditionally flexible work hours or remote work arrangements, such as IT, consulting or services, accurate time tracking ensures proper payment, project management and client billing. Industries with shift-based work, such as healthcare, manufacturing or hospitality, can optimise workforce scheduling, monitor overtime, control fatigue and ensure compliance with labour regulations. They all have in common that the implementation of a time recording solution is mandatory. 

How Does the WorkForce Software Solution Help?

Organisations need to find ways to integrate time tracking systems that respect employees’ autonomy and trust while meeting legal requirements. This involves implementing a time & attendance solution that allow employees to record their working hours voluntarily or developing transparent reporting mechanisms that align with the principles of trust-based working hours.  

Our solution offers a comprehensive time tracking and management system. Our user-friendly interface enables employees to record their working hours accurately, while managers can access real-time data for effective monitoring and reporting. The system generates automated reports, simplifies payroll calculations and integrates with existing HR and accounting systems, minimising administrative burdens. 

What Are the Challenges/Penalties of Doing Nothing?

Penalties for non-compliance are not yet defined. It can be assumed that first legal lawsuits will be filed in the coming months. However, the benefits outweigh these challenges. By complying with the legislation, organisations demonstrate their commitment to fair labour practices, avoid penalties for non-compliance, and build trust among employees. Moreover, streamlined time tracking enhances productivity, optimises resource allocation and provides valuable insights for workforce management. 

Additional Notes / Resources:

  • The BAG deduces that employers are obliged to introduce a system with which employees can record working times. The BAG uses the ECJ ruling from 2019 as a basis, which specifically means that recording working hours is mandatory. 
  • There is already an objective legal obligation to set up an (audit-proof) system with which the start and end and thus the duration of the working hours, including overtime, of the employees in the company are recorded. Employers should therefore promptly think about how working times of employees can be documented. 

The new legislation on time recording in Germany is a significant development that will impact employers, employees, and regulatory bodies alike. By complying with the new requirements, organisations can demonstrate their commitment to fair labour practices, avoid penalties for non-compliance, and build trust among employees. Moreover, streamlined time tracking enhances productivity, optimises resource allocation, and provides valuable insights for workforce management.

Simplify compliance for your organisation with the WorkForce Suite, which caters to your unique needs by encompassing every labour law or agreement. 

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