The BAG's decision will require a significant rethink on the part of companies operating in Germany
"Careful what you wish for": An employer goes to the Federal Labor Court with a question about her works council's right of initiative and gets comprehensive time recording for Germany.
The Federal Labor Court (BAG) sees a comprehensive duty to record working hours in Germany. The ruling is already being described as a "drumbeat" and will require far-reaching changes. It will be necessary to examine what leeway now remains, how occupational health and safety authorities will react and whether the German government will come to the rescue after all by amending statutory law. On May 4, 2022 (see our blog post), the judges in Erfurt had deliberately left this question open in a decision in connection with the burden of proof in legal disputes in the area of overtime pay.
What is the future of a possible obligation to record working hours? This question went into the second round at the Federal Labor Court today and ended with a dramatic ruling for employers.
The ruling of the Federal Labor Court on the significance of the recording of working hours in the burden of proof in the context of overtime compensation (BAG dated May 4, 2022 - Case No. 5 AZR 359/21) had not brought the hoped-for clarification as to how the recording of working hours can be structured in Germany in the future. On September 13, 2022 (Case No. 1 ABR 22/21), the Federal Labor Court now addressed the question of whether a works council has a right of initiative to introduce electronic time recording. This question is not only important for the scope of co-determination at the workplace, but also for the existence of an obligation on the part of employers to comprehensively record working time and the possibility of using trust-based working time without any recording of working time.
The Federal Labor Court has now gone so far as to deny a right of initiative - while confirming a comprehensive legal obligation to record working time. The ruling is likely to be a "game changer" for many German employers who have so far relied on trust-based working time and have deliberately refrained from monitoring their employees.
The legal proceeding to date
In the proceedings in dispute, the employer and the works council negotiated the conclusion of a works council agreement on the recording of working hours from 2017. The negotiations failed and the works council requested the establishment of a conciliation board. As the existence of a right of initiative of the works council with regard to the introduction of the recording of working hours was questioned in this context, the works council subsequently sought a corresponding confirmation of its right of initiative.
The works council justified its request with the interest of the employees in the introduction of electronic time recording - this existed in particular with regard to the precise recording of working time and overtime. The employer did not see any right of initiative on the part of the works council.
After the Minden Labor Court initially rejected the application, the Hamm Regional Labor Court granted it on appeal by the works council.
Status of case law and literature
The legal question of the right of initiative has recently been the subject of heated debate in case law and literature. Opponents of the right of initiative repeatedly referred to a decision of the Federal Labor Court of November 28, 1989 (Case No. 1 ABR 97/88). There, the judges based their decision on the defensive function of the right of co-determination. However, it would contradict this purpose of the right of co-determination if the works council could demand the introduction of a technical control system.
However, recent case law has partially accommodated the works council in connection with the recording of working hours: For example, on May 6, 2003 (Case No. 1 ABR 13/02), the Federal Labor Court ruled that the works council needed to know whether the regular weekly working hours had actually been exceeded or not in order to check compliance. Employers could also not argue against the request for information that they deliberately do not record the actual working hours of employees due to the trust-based working time applicable in the company.
A turning point in German working time law: The BAG's decision
In its appeal on points of law, the employer sought the reinstatement of the first-instance decision. In response to the plaintiff's appeal, the Federal Labor Court has now rejected the existence of a right of initiative on the part of the works council. The reasoning, however, is quite different from that in the 1989 ruling: The works council can only have a say in matters where the employer's scope of action is not already conclusively defined by law. However, the judges of the Federal Labor Court see such a legal requirement in Section 3 Paragraph 2 No. 1 ArbSchG: accordingly, there would be no decision-making scope for employers and thus no right of initiative resulting from co-determination.
More importantly, however, the Federal Labor Court interprets the German legal situation in light of the case law of the ECJ on the recording of working time (Federación de Servicios de Comisiones Obreras [CCOO] v. Deutsche Bank SAE, May 14, 2019 - Case No. C-55/18) to the effect that employers are obliged to introduce a system with which the working time worked by employees can be recorded in full. And this obligation applies in this respect also beyond the recording of working time exceeding eight hours per day as well as work on Sundays and public holidays, which is expressly required by the German Working Time Act.
The federal government has so far still promised: trust-based working time is to remain
Until now, statutory recording obligations only existed for working hours exceeding eight hours per day and, for example, for activities relevant to minimum wages and in the area of temporary employment. No adjustment was made as a result of the ECJ ruling. In its coalition agreement, however, the parties in the current government made it clear that the ruling should also be implemented by law in Germany. At the same time, however, the option of agreeing trust-based working time should be retained. One of the key elements of such agreements is that no time recording takes place.
"Careful what you wish for": The employer in the BAG case may not have suspected that it would ask a question about its works council's right of initiative and then suddenly get comprehensive time recording.
The ruling will now require a significant rethink on the part of companies operating in Germany. Back to the "time clock" will be the motto. In this respect, the employer has won the case, but the bottom line is that all employers who currently rely on trust-based working time will have to prepare themselves for massive changes. And employees who previously enjoyed the freedom and trust of their employers not to have to fully document their working hours will now also have to change this practice and face more control.
It will be necessary to examine what leeway the ruling still allows, how closely the occupational health and safety authorities will now check the existence of working time recording and whether the German government can still keep its promise in the coalition agreement to save trust-based working time.