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Recording working time: are your practices legally compliant?

  • Europe
  • Employment law

25-01-2023

There is no doubt that the recent global evolution of working arrangements has been significant, with many employment relationships now characterised by flexible or hybrid working arrangements. Such arrangements are often combined with trust-based working hours models. But with no or only minimal monitoring and recording of working time often going hand-in-hand with such models, are they lawful? And, if not, what are the risks?

The base-line legal position in the EU

In the EU, the European Working Time Directive 93/104/EC (the Directive) was adopted in 1993 and has become a cornerstone safety net for the protection of the health and safety of workers across Europe. The Directive has seen local implementation by the Member States since coming into force, providing minimum standards across the EU on working time, annual leave and rest periods.

The Directive was enacted at a time where the employment landscape was very different to that which exists today, with work generally being carried out “on-site”, high levels of visibility and control over working hours, and with arrangements outside the standard 9-to-5 working day being the exception rather than the norm. It is of no surprise therefore that, as the working landscape has continued to evolve, the Directive’s provisions have seen scrutiny and interpretation in both the local courts of the Member States and at an EU level.

The Directive is silent regarding the recording of working time. However, in Federación de Servicios de Comisiones Obreras v Deutsche Bank SAE, the European Court of Justice ruled in 2019 that Member States should set up an “objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured”. In the absence of such a system, the ECJ considered that it would not be possible to determine the hours worked, thereby compromising the effectiveness of the Directive. Member States were directed that they should take the “measures necessary” to comply, with discretion for Member States to determine the specific arrangement for implementing a system for recording working time.

Varied practices across the EU

Despite the Deutsche Bank decision, local laws and practices continue to vary significantly across the EU in terms of employers’ obligations to record the working time of their employees. In many cases, these local laws and practices risk being deemed non-compliant with the more purposive interpretation of the Directive as suggested by the Deutsche Bank case. That is particularly the case with regard to workers with flexible or hybrid working arrangements, where the oversight of working time is often less controlled.

A recent example of the local application of the Deutsche Bank decision is a ruling of the German Federal Labour Court (Bundesarbeitsgericht, BAG) of 13 September 2022 (1 ABR 22/21). Confronted with the question of whether a works council had a right to initiate the introduction of electronic working time recording, the Court decided there was no such right on the basis that companies are already obliged to record working time by law pursuant to a general provision in the German Occupational Health and Safety Act (Arbeitsschutzgesetz, ArbSchG), as interpreted in line with the Deutsche Bank decision.

In its detailed reasons, the German Federal Labour Court stated that the obligation to record time extends to all employees working in a business and made clear that time recording systems should collect and record data on the beginning and end of daily working time, including overtime. Further, the obligation to introduce a system for recording working time also means that employers must actually use it - it is not sufficient that employers put in place a system and then give employees the option of using it. In addition, although the actual recording of working time can be delegated to employees, the establishment and running of a working time recording system is the responsibility of the employer. Companies must therefore ensure that recording takes place accurately.

This was a surprising decision for many employers in Germany, who had previously been working on the basis that they were obliged to record time only in a narrow range of circumstances, such as when the daily maximum working hours are exceeded and in the case of working on Sundays and public holidays. Moreover, it was previously assumed that no wider obligation to record working time would exist unless and until the German legislature specifically enacted a legal obligation. Companies operating in Germany must now assume that they are already obliged to introduce a system to record the working time of all employees.

Although many countries in the EU have laws in place regarding working time, in some cases there remain questions whether such laws comply with a more purposive interpretation of the Directive.

For example in the Netherlands, where, pursuant to the Dutch Working Hours Act (Arbeidstijdenwet) employers are required to keep a registration of work and rest periods, an obligation which in practice means that start and finish times must be recorded, together with the breaks in between and sick leave and holiday. However, the registration requirements and the substantive rules concerning working hours do not apply to employees who earn at least three times the minimum wage. Similarly in Sweden, there is an obligation to keep records of working time, but only for on-call hours, overtime hours and additional time (additional time being hours worked by part-time employees in excess of their regular working time). And in the UK, employers are required to maintain adequate records to show compliance with the 48-hour limit on a working week, but this does not require the recording of daily hours of work and rest periods.

Where local thresholds apply regarding the recording of working time, where exemptions or flexibilities operate beyond those anticipated by the Directive, or where there are potential gaps in local legislation or practice as a result of case law interpretations, there is a heightened risk of arrangements being deemed to be non-compliant with the Directive.

The risks of non-compliance

High profile cases in the courts together with an increase in Labour inspections focusing on working time have resulted in many companies, particularly those whose operations also cover Europe, taking a fresh look at their working time arrangements to assess compliance and risk. In addition, as was seen in the German Federal Labour Court case, employers may see pressure from worker representative bodies to implement suitable time recording systems.

Labour inspectorate enforcement and penalties vary significantly by jurisdiction; however the burden of proof will consistently lie with the employer to prove that they complied with the requirements. Many countries operate a capped fine system per breach, although in some jurisdictions fines are only triggered following a breach of an enforcement order. Countries such as Ireland and France apply fines based on the number of impacted employees, rather than the single breach. Where this method of calculation applies, fines can be significant.

Failing to properly record working hours risks not only enforcement action and fines, but can also impact other elements of working time, resulting in potential liability and litigation risk. For example, in some jurisdictions there is a link between working hours and payment, meaning that any hours worked over and above certain specified or statutory limits can automatically trigger a requirement to pay a premium on the rate of pay. For example in France, where work performed over the weekly working time of 35 hours must be paid at a compulsory overtime rate (125% or 150%) and can also give rise to an entitlement to compensatory rest. Where there is an absence of time recording or where the system adopted is not reliable, this can have a knock-on effect on potential latent liability for wages.

With the additional risk of reputational damage, the impact of failing to comply with local requirements can be considerable.

Rolling-out a new time recording system

Rolling-out a new or updated time recording system requires careful planning and clear communication to reduce employee relations and legal risk.

From a communication perspective, any changes to time recording can often raise questions about any long-term purpose behind the change, the status of existing flexibilities, and how the time recording must take place in practice, including any possible deviations. In addition, where arrangements have previously been less controlled, changes can trigger requests for additional paid overtime.

In addition, the implementation of any new time monitoring and recoding system can trigger a requirement to consult with works councils or other employee representative bodies. Detailed planning, as well as having in place a cross-functional project team and devising a consolidated and coordinated global plan, will be key to a project’s success and minimising any risk.

Practical actions

  1. The starting point should always be to determine whether there is any gap in each operating location between the legal obligations regarding the recording of working time and how time recording is operated in practice. That assessment should also include the risks of local laws or practices being deemed inconsistent with EU requirements. Where there is a potential gap, an assessment should then take place to determine whether that gap is tolerable in relation to the company’s overall risk strategy.
  2. Where it is determined to put in place a new time recording system, or to adjust an existing one, it will be important to have in place a dedicated team to prepare and roll-out the global plan, to include any information and consultation requirements with works councils or other representative bodies.
  3. It will be key to ensure that a detailed communication strategy is devised as part of the wider plan, ensuring that time and expertise is invested in preparing the communications at each stage of the project, to include FAQs and roll-out strategy. Managers should receive training in relation to that strategy, including on addressing disputes and system misuse.
  4. Any new or updated time recording system should pay particular attention to employees working remotely, in particular:
    • to ensure that expectations around working hours are clearly understood by both employer and employee;
    • to ensure that any varied working patterns don’t infringe daily and weekly working limits, and ensure adequate rest breaks;
    • to maintain regular contact with employees, ensuring that any issues around working time can be quickly identified and addressed.

See also our separate briefing on the German Federal Labour Court decision: Legal obligation for time recording: Consequences of the BAG decision of 13.9.2022

How we can help

Our extensive global footprint means that we are well placed to support global employers in their current and future HR plans, wherever they have a presence. Our lawyers are not only experts in the complexities of different laws, but also in the management of projects spanning jurisdictions and driving those projects to maximize the strategic aims and benefits.

Our team can help with advice on working time recording obligations across all jurisdictions, as well as comprehensive risk assessments and practical action plans.