BEERG Newsletter - Germany: Changes to the Working Time Act published

Dr Gerlind Wisskirchen of CMS-HS writes: After the landmark decision by the German Federal Labor Court last year, employers are required to document their employees' working hours. This issue has been widely discussed. While the Court's decision took a definitive stance on certain matters, such as the method of recording working hours, several specific issues remained unclear. The eagerly anticipated draft legislation on recording working hours has now been published by the Federal Ministry of Labour and Social Affairs (BMAS). We took a look at the key elements of the draft: 

•  Obligation to record time electronically on a daily basis: The employer is required to record the start, end and duration of the employees' daily working hours electronically on the day the work is performed. This obligation may be delegated to the employee or a third party, such as the supervisor. Upon request, the employer must inform the employee about the working time that has been recorded. Records must be retained for two years.
• Trust-based work remains permissible: However, the employer must ensure that it is aware of violations of the provisions on the duration and timing of periods of work and rest. This can be done, for example, through the appropriate reporting of an electronic time recording system.
• Impact on executives unclear: Until now, the general obligation to record working hours applied to all employees, including apprentices, interns, and trainees, but until the decision of Federal Labor Court not the executives. On the other hand, managing directors and freelancers do not have to record their time. Whether or not executive employees are subject to this obligation is controversial and the decision by the German Federal Labor Court was not clear in this respect. The new draft law doesn't mention this issue at all.
• Non-compliance with the obligation to record working time is punishable by a fine. According to the draft, it will now constitute an administrative offense if an employer deliberately or negligently fails to record working time, or if it does so in an incorrect or incomplete manner or not in the prescribed manner. The administrative offense can be punished with a fine of up to EUR 30,000.
• For all professionals, unions can grant an exemption for them: The best part of the draft: like in all other EU Member States, exemptions will be made for employees for whom working time is "not measured or determined in advance" or where employees "can determine their own working time". So far so good. 

BUT: only unions together with employers' associations can decide on so-called opening clauses that allow the waiving of time recording at company level by management and works councils. In addition to the exemption, they can 

• allow for a form of recording other than electronically and
• provide a longer deadline for recording of up to seven calendar days afterwards.

The draft regulation mentions that this exemption can be for example made for managers, prominent experts, and scientists as they have the liberty to decide on the extent and distribution of working hours and are not obligated to be physically present at the workplace at specific times. 

Resulting from the draft, two major critical points have been voiced and must be addressed by the legislator: 

• The draft is yet another attempt by the government to strengthen collective bargaining coverage rate. This time, it goes to another scale though. In its attempt to turn the trend of decreasing collective bargaining coverage in Germany, the legislator is now trying to incentivize professions to join unions which traditionally have been independent of them. Lawyers and accountants, for example, rely on trust-based working hours without being covered by CBAs in general. 

The question that arises is whether they must now agree on a collective bargaining agreement so that they can continue to be subject to trust hours? For them, to benefit from trust-based working, this would mean that their employers (e.g., law firms, consulting firms, and all professional service firms) would have to join employers’ associations to be able to be subject to CBAs. Additionally, this raises the issue that CBAs are not designed for such professions which will require a rethink of the content of CBAs.

• The Liberals have already voiced opposition and are calling for a fundamental revision of the draft law. Criticisms include the restriction of trust-based working time and the requirement that the start, end and duration of employees' daily working time must be recorded electronically as a matter of principle. In view of digitization, it is definitely the right way to introduce electronic recording of working time. 

However, this should be left to the discretion of the respective employer and not made a legal requirement (or offered a deviation only via collective bargaining agreements). Especially, the digitization strategy does not seem to be consistent as in the German Evidence Act (Nachweisgesetz) the legislator recently excluded the electronic form and enforced a strict "pen & paper" obligation. Thus, the pure electronic form for the recording of working hours does not seem very convincing.

Overall, the draft is not a breakthrough and is disappointing in several ways. Although legal certainty is established on some details, the draft legislation does not take advantage of the regulatory leeway provided by EU law. The essential requirements and problems of the German Working Hours Act are not addressed, particularly the maximum daily working hours. Hoped-for sectoral exceptions are missing, and the practical difficulties that arise from the increasingly mobile nature of the working world remain unresolved. 

However, as this is only a first draft, further developments and changes to the draft remain to be seen. As we have seen with past legislative processes, like the Whistleblower Protection Act, major changes are still possible. The hope thus is that the German legislator sees the practical problems of the current version as well as the absurd tariff promotion and uses other ways for professionals to be granted exemptions.