The ECJ has decided in a judgment dated 14 May 2019 in the case C-55/18 (CCOO ./. Deutsche Bank SAE) that the Member States must require employers to install a system with which the daily working hours performed by an employee can be measured.

What does the judgment say…

The main ruling is: The burden of proof for compliance with statutes governing working hours and, thus, the existence of overtime requiring compensation, is supposed to be taken from the employee. An objective and reliable system to measure the daily working hours is supposed to become a requirement for this purpose. The details of the system can be established by the Member States, and especially specific aspects of the field of activity and also the size of the company can be taken into account.

…and what does it not say?

There is not a single word that states that this requires a return to the "recording of time 1.0 with punching the clock", as has been stated sometimes. The ECJ also does not state it is impermissible for the employee to continue to determine on its own the situation and extent of the daily working hours. This model – commonly referred to as the "honor system" – accordingly continues to be possible.

The ECJ does not expressly say whether the recording must be automatic or whether also in the future manual recording will still be permissible, be it with time sheets, be it by Excel tables individually maintained. The language ("measurement") and the reasoning in the judgment otherwise (due to easing the burden of evidence) tend to support an automated measuring system (for example, an entry system, a GPS tracker or a login data file) instead of a system operated individually.

What does this mean in practice?

The question first arises about when the new requirements for companies apply. The following is an orientation in this regard:

• Companies are not yet directly required to introduce an objective measuring system.
• The Member States are required to implement the Working Hours Directive. The German legislature will also (have to) pose the question about whether it has already sufficiently implemented the goals of the Working Hours Directive in § 16 para. 2 German Working Hours Act [Arbeitszeitgesetz, "ArbZG"]. The answer should be clear: No, a system to measure the daily individual working hours is not required; thus, the Directive has not been sufficiently implemented.
• That fact that a union – as occurred in the original case in Spain – files a complaint against the company because it has no system to record time is not to be expected in Germany. The complaint of an employee for compensation of overtime, in any event, cannot be directly based on the judgment.
• The Federal Employment Minister has announced that there will be clarification about the implementation of the judgment by the end of 2019. Only then will it become apparent whether, for example, a threshold value for the duty to have electronic recording will be required, which is expressly permitted and would take into account the limited resources of smaller and mid-size companies. It also remains to be seen whether the law will define in any further detail which groups of employees are not covered by the strict recording of time. The Working Hours Directive contains exceptions if the working hours cannot be measured and/or determined in advance due to the specific aspects of the activity or if the working hours can be determined by employees on their own, especially with regard to senior employees or other persons with the independent authority to make decisions. The basis is already set that the authority to make decisions – i.e. the level of self-determination – will be the standard for the legislature. For example, persons also below the status of a senior employee as well as members of the free professions (for example, admitted attorneys or doctors) can also be covered by exceptions. Whether the legislature will use this occasion to overall make the law on working hours more flexible, however, is probable not to be expected. But it is something we can wish for.

Can the records also continue to be made by the employees on their own?

The agreement with the employee (or the works council) about the honor system, on the one hand, and the documentation of compliance with the German Act on Working Hours must be distinguished from each other. To date, there was broad agreement that the documentation of overtime can be delegated to the employee under § 16 para. 2 ArbZG. That will also still be possible in the future, but the perspective is that this will only be by requiring use of the provided (IT) system and with regard to the total daily working hours, but not the overtime.

Whether this is useful for the employer must be analyzed in the specific situation. The documentation of working hours can also lead to a duty to pay, depending on the underlying agreement. The Federal Supreme Labor Court [Bundesarbeitsgericht, "BAG"] already held in a judgment dated 23 September 2015 (5 AZR 767/13) that the recording of working hours in a working hour account of the company without any reservation (1.) has the result that the burden of proof for any different facts lies with the employer, and (2.) a separate assertion is no longer necessary as a result of the recording and display of positive balances in working hours, so that the employer also cannot refer to exclusion deadlines and instead the entire working hours account can be the subject of the dispute.

In practice, the introduction of an IT-based recording system for working hours and overtime will be the method of choice, combined with an approval requirement for overtime recorded there, comparable with systems concerning agreements on targets which also required an "approval" of the superior.

Should new contract already be concluded with regard to recording time?

The question arises for human resources departments with regard to whether employment contracts issued today should already contain provisions about recording working hours. A contract update may also be appropriate in the case of existing contract.

However, contracts themselves will probably not yet be able to regulate the recording so long as there is no clarity about whether a system and, if so, which system will be used.

There is already the possibility today to make a provision about compensation for overtime. It is especially more advisable than ever to define a specific amount of overtime as being covered by the salary. In the case of 40 hour contract for example, 10 percent of the weekly working hours can be defined as having been covered and this is probably a reasonable and also acceptable compromise.

However, it does not make much sense to include the obligation to personally record working hours in the employment contract. In the first place, this can still be ordered under a then current contractual relationship. Secondly, however, the personal recording alone does not at all come close to satisfying the requirements under the Working Hours Directive.

What is the situation with the honor system?

Measuring time based on the honor system remains possible. However, there should be a check with regard to whether existing shop agreements might not be tightened, especially with regard to the obligation to record overtime, but also with regard to how breaks during the workday are handled.

For example, a model provision would be conceivable as follows: 

• Overtime should have to be recorded quickly (in the next month) and otherwise asserting the overtime is the responsibility of the employee.
• The employer must approve the recorded overtime. If this does not occur within a specific deadline (a further month), the approval is deemed to have been granted.
• The obligation of the employee to record interruptions during the day's work should also be examined by the parties to shop agreements. For example, the order to record every coffee break can be waived if, in turn, a minimum level of daily overtime is deemed to have been compensated.
• The employee continues to be responsible for itself determine when the working hours are performed with applicable parameters, even if the working hours are recorded. The employer first takes action if (1.) a certain average time in a certain time period is not achieved, or if (2.) on the other hand, the system reports that more than the permitted amount of working hours under the ArbZG have been worked.
• The challenge remains about the extent to which travel time and the activities outside the business premises, for example, in a home office are handled. It will be the responsibility (and risk) of the company to set the aspects for which working hours must be recorded. Will the drive to the customer already be measured and how will this be technically implemented (by means of GPS in the company car or by recording the train schedules)? Does the login at the home office constitute the start of work or is an earlier point in time already determinative?

Conclusion: Back to punching clocks or flexible working hours?

The law on working hours will arrive in the 21^st Century when it measures what it performed, namely, work in performance of the employment contract. A return to punching the clock will not occur simply because the clock does not measure itself and instead must be manually activated. It is obvious instead that the requirements must be fulfilled by electronic entry systems to the business. In the case of mobile work, systems suitable for practical use for measuring the working hours will be found. Since mobile work normally involved activating means of communication, the measurement starting with the login will probably be the method of choice, together with a responsibility to have performed overtime confirmed by the superior and a warning or even reporting system if the limits for working hours are exceeded. This could be finally much more modern and contemporary than only assigning duties to record time in general to the employee and then wondering what it finally costs in terms of money.

Dr Philipp Wiesenecker, Attorney and Specialist for Employment Law
Frankfurt am Main