In a recent decision dated May 22, 2023, the LAG ruled that works councils have a right of co-determination with regard to the "how" of recording working hours.
With its decision, the LAG (Case No.: 4 TaBV 24/23) substantiates the scope of works council’s co-determination rights with regard to the recording of working hours. The court affirmed a right of co-determination with regard to the "how" of the recording, after the BAG had rejected such a right with regard to the "whether" of the recording last year.
The case’s background
The employer had a group works agreement concerning the recording of working time using SAP for its office staff. However, the recording of working hours for field staff was not regulated in the company. The works council therefore wanted to negotiate a works agreement with the employer on the organization of time recording for these employees, for which it invoked its right of initiative. The employer rejected this because it first wanted to wait for pending statutory regulations on time recording and a planned opening up for collective bargaining. The employer also hoped that field service would not be subject to the recording obligation.
The LAG’s decision
The LAG confirmed the first-instance decision of the Munich Labor Court, which affirmed the works council's right of initiative with regard to the "how" of recording working time and appointed a conciliation body for the question of the co-determination-legal structure of time recording.
The reasons for the decision are not yet available, so it remains to be seen how the LAG will substantiate this decision.
Background: Federal Labor Court (“BAG”) and German Federal Ministry of Social Affairs and Labor (“BMAS”) force to record working time
The decision of the LAG was preceded by the highly regarded decision of the BAG (1 ABR 22/21) from September of last year. In the case underlying this decision, the petitioning works council saw a right of initiative for the introduction of a working time recording system, i.e. the "whether" of the recording, and wanted to have its right of co-determination established by the courts. However, the federal judges in Erfurt rejected this and justified the decision by stating that there was no right of co-determination with regard to the "whether" of the recording of working time, since there was already a legal obligation to introduce working time recording systems anyway. This was surprising insofar as such an obligation cannot be explicitly derived from the labor laws and they have not been interpreted to that effect so far. However, the BAG interpreted the relevant standards of the Labor Protection Act in conformity with European law, in particular taking into account the "time clock ruling" of the European Court of Justice (“ECJ”) (Case No.: C-55/18). You can find more details on the BAG’s ruling in our newsletter article: Update on working time recording: the obligation for electronic time recording is coming | WTS Germany.
The court made no explicit decision on the "how" of recording working time within the scope of this decision. However, it is clear from the decision’s reasons that the BAG assumes a right of co-determination in this respect.
As a result, the legislature was called upon to create a legal basis for the recording of working hours, which the BMAS now intends to implement. A corresponding draft bill was published at the end of April 2023 (we reported in our newsletter article: Update on working time recording: the obligation for electronic time recording is coming | WTS Germany). According to this draft bill, employers will be obliged to electronically record the start, end and duration of daily working hours via an amendment to the Working Hours Act. It is not yet possible to predict when this draft will be implemented.
Consequences for business practice
The decision is not yet legally binding and its implications cannot yet be conclusively assessed. Employers with a works council should, however, be prepared for the intervention of a right of co-determination with regard to the "how", i.e. the concrete design of the recording of working hours.
On the other hand, the question is whether and to what extent this right of initiative will have a practical impact in the long run. If the draft were to become law in its current form, it would be clear that working time must be recorded electronically on a daily basis (apart from exceptions under collective agreements). In this case there wouldn’t be much room for the works council's right of initiative. At best, the parties to the agreement could have some leeway with regard to the precise electronic method of recording (choice of specific software tool, such as SAP system/Excel, etc.). It remains to be seen whether the "how" of time recording also covers the specific process of recording, subsequent correction options, integration into HR information systems, and access to employees' working time accounts.
Employers are advised to analyze their existing works agreements with regard to working time recording regulations and adapt them if necessary. In addition, further developments should be monitored closely, especially since the draft bill provides for staggered implementation deadlines for time recording and fines for violations. Particularly in smaller companies with fewer than 250 employees, the recording obligation does not take effect immediately after the law comes into force, depending on the number of employees, so that works councils could still request the conclusion of a company agreement for the concrete design of working time recording until the implementation obligation. In the event of intentional or negligent violations of the recording obligation, the draft provides for fines of up to EUR 30,000. For more details, see our newsletter article: Update on working time recording: the obligation to record time electronically is coming | WTS Germany.
