The ECJ ruling from May 2019, also known as the “time clock ruling”, has far-reaching consequences (ECJ, judgment of 14.05.2019 – C-55/18).

The background to the ruling was a referral from the Spanish National Court of Justice, which was to decide, among other things, whether Deutsche Bank SAE was obliged to use a time recording system. Legislation in Spain only required employers to record overtime hours, a list of which had to be sent to employees at the end of the month. The Spanish National Court of Justice was uncertain as to the compatibility of this regulation with EU law. After the ECJ dealt with the issue, it was decided that employers must in future record their employees’ working hours electronically in accordance with the EU Working Time Directives.

Need for action for employers

What does the ruling of the European Court of Justice mean for German employers? So far, the German legislator has remained inactive with regard to a specific obligation. However, employers are generally advised to address the issue now in order to avoid being caught off guard by an expected change in the law and coming under time pressure.

The ECJ did not set a deadline for the member states to implement the case law, but the German legislator will have to comment on this in the future and the labor courts must already take the ECJ ruling into account in their case law.

Business owners should therefore find out which solutions are currently available for the most accurate time recording possible in order to select the optimum solution for their individual business needs. The introduction of new systems in this area represents a considerable amount of additional bureaucracy.

It is important for the use of electronic time recording options that they meet data protection requirements.

However, the ruling does not affect the legally permitted working hours, which will continue to be regulated by the existing Working Hours Act. It is merely a question of the modalities of recording for each individual employee. At the moment, it only has to be recorded as soon as 8 hours of daily working time are exceeded. However, this is the flaw in the regulation, because if the first eight hours are not recorded, how is the employer supposed to know when these are exceeded?

In some occupational fields, the ECJ ruling will hardly change anything, as there is already an obligation to record to the second: For professional drivers and employees in the minimum wage sector, the start and end of work must already be meticulously recorded.

The threat of high fines

Violations of a future recording obligation will count as an administrative offense, meaning that in extreme cases a fine of up to €15,000 can be expected. There is also the possibility that authorities will confiscate the economic advantage gained through the violation. In this respect, the economic advantage consists of the “saved” wage payments that were not paid for unrecorded overtime. However, employees would still be entitled under the new regulation, so there is a fear that unrecorded working time will have to be paid twice in the future. Depending on how long the overtime was not recorded, a large amount may have accumulated which will then be due. This can have considerable economic consequences, especially for small and medium-sized companies that have previously relied on trust-based working hours. In Emden, just one year after the ECJ ruling, an employee was awarded a monetary claim of € 20,000 for unrecorded overtime (Emden Labor Court, judgment of 24.09.2020 – 2 Ca 144/20).

Strengthening employee rights

For employees, on the other hand, the ruling represents an important strengthening of their legal position. Time recording to the second ensures that the statutory maximum working hours are adhered to. Recording their working hours is also more reliable and clearer, while trust-based working hours demonstrably lead to more unpaid overtime.

Here is a small calculation example: An employee with a regular 40-hour office job from 8 a.m. to 4.30 p.m. and an hourly wage of €20.00 works on a trust basis, but stays approx. 5 minutes longer each day. These 5 minutes are not recorded and therefore not remunerated. That is 30 minutes of extra work per month, i.e. 6 hours and €120.00 per year – which the employer does not pay.

The only conceivable disadvantage for employees is the possible loss of flexibility, although here too we will have to wait for a specific regulation from the German legislator. However, according to the state of the art, it should be very possible to record flexible working hours accordingly.

Focus on working time recording

In our thematic focus “Working time recording according to the Federal Labor Court“, we deal with the legal and practical structure of working time recording according to the latest European and supreme court rulings. So far, this series has included a presentation of the ECJ ruling on working time recording, the subsequent ruling of the Federal Labor Court and the consequences of this case law for operational practice.