Electronic time recording - Federal Labour Court creates clarity and uncertainty at the same time

The works council has no right of initiative regarding the introduction of time recording systems in the company. As expected, the Federal Labour Court [Bundesarbeitsgericht, BAG] confirmed its previous case law today (decision of 13 September 2022 - 1 ABR 22/21). At the same time, the BAG's decision has caused a sensation in the discussion on the recording of working hours: according to the Erfurt judges, if the German Occupational Health and Safety Act [Arbeitsschutzgesetz, ArbSchG] is interpreted in conformity with Union law, employers are currently already obliged to record employees' working hours.

In addition to the question of the beginning and end of daily working hours, the works council has a right of co-determination with regard to the introduction and use of technical equipment that is intended to monitor employees’ behaviour or performance (Sec. 87 (1) No. 6 German Shop Constitution Act [Betriebsverfassungsgesetz, BetrVG]). In its decision of 28 November 1989 - 1 ABR 97/88, the BAG had already ruled that the works council has no right of initiative with regard to the introduction of a technical control system within the scope of its right of co-determination. The BAG also did not distance itself from this position today.

Today's ruling of the BAG is based on a dispute between an employer and the works council against the background of conciliation proceedings on whether the works council can demand the introduction of an electronic time recording system even against the employer’s will. After having initially wanted to introduce an electronic time recording system, the employer ultimately refrained from using such a system and broke off the negotiations with the works council on the introduction of such a system. The works council subsequently initiated an administrative decision procedure to appoint a conciliation board. Against the background of the BAG’s previous case law, the employer complained that the works council lacked a right of initiative for the introduction of such a technical device. The conciliation board was then suspended in order to have the matter clarified in court.

While the Labour Court [Arbeitsgericht, ArbG] of Minden, following the previous BAG case law, rejected a right of initiative, the Regional Labour Court [Landesarbeitsgericht, LAG] of Hamm  surprisingly ruled in the works council’s favour. The LAG Hamm essentially based its decision on the wording of Sec. 87 (1) BetrVG, which explicitly includes the "introduction" of technical systems. Secondly, the legislator had omitted a selective restriction of Sec. 87 (1) No. 6 BetrVG with regard to the right of initiative.

No right of initiative of the works council on grounds of statutory regulations

Today, the BAG overturned the decision of the LAG Hamm and upheld its previous restrictive case law with regard to the works council's right of initiative. Nevertheless, the BAG's decision still does not allow employers to breathe a sigh of relief as, in terms of labour law, the explosive power lies in the reasoning behind today's decision: the works council only has a right of co-determination pursuant to Sec. 87 (1) BetrVG if there is no statutory or collectively agreed regulation. However, according to the interpretation of Sec. 3 (2) No. 1 ArbSchG in conformity with Union law, employers are already legally obliged to introduce a system with which employees’ working time can be recorded.

What are the practical implications of the decision for employers?

Despite the fact the BAG today rejected the work’s council’s right of initiative with regard to the introduction of an (electronic) time recording system, the decision has far-reaching consequences for employers: while we still await more detailed requirements for the recording of working hours from the legislator, the decision of the Erfurt judges is likely to render a large number of the currently practiced trust-based working time models obsolete. The BAG clearly already sees a legal obligation for employers to record the working time of employees using an objective, reliable and accessible system, without action on the part of the legislator. What this means in concrete terms remains open, at least according to the press release.

The consequences of a breach of the recording obligation also remain unclear, as the ArbSchG does not attach any direct consequences to a breach of Sec. 3 (2) No. 1 ArbSchG. It remains to be seen whether the reasons for the decision will provide more detailed information in this regard.

However, the decision could also be understood as an invitation to the legislator to issue a specific regulation on the form of working time recording systems by means of a legal ordinance pursuant to Sec. 18 (1) ArbSchG, the violation of which would then be subject to a fine pursuant to Sec. 25 ArbSchG. Here, however, the ball is now in the legislator's court.

The extent of the effects of today's ruling will be seen over the coming weeks and in the forthcoming reasons for the ruling. An effect far beyond the mere question of the technical time recording does not appear to be ruled out: conceivably, employees could directly derive a claim for damages against the employer in the event of the employer’s breach of its obligation under Sec. 3 (2) no. 1 ArbSchG, for example in burnout cases.

In this respect, the BAG has created clarity and uncertainty at the same time in one and the same decision.

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