Update Employment Law June 2019
European Court of Justice (ECJ): Member states must require employers to systematically record working hours
Facts of the case
Spanish working time law only requires that employers systematically measure their employees’ working hours in case of overtime. The Spanish National Court questioned whether these regulations were in compliance with the Charter of Fundamental Rights of the European Union and the Working Time Directive 2003/88/EC (Directive concerning certain aspects of the organization of working time) and Directive 89/391/EEC (Directive on the introduction of measures to encourage improvements in the safety and health of workers at work). It therefore presented the case to the European Court of Justice (ECJ) for preliminary ruling.
On May 14, 2019, the ECJ confirmed the concerns and ruled that the Spanish regulations were not in compliance with the aforementioned directives. Member States must require employers to set up an “objective, reliable, and accessible system” for measuring the duration of time worked by each employee as of the first working hour. This will provide employers with an effective means through which compliance with the maximum weekly working time prescribed by European law could be ensured. Furthermore, this is the only way to ensure that the (minimum) rest times specified in Directive 2003/88/EC are actually complied with.
Implementation of the decision in German law
So far, in Germany, comprehensive documentation obligations regarding hours worked only exist in specifically defined scenarios. This is the case, on the one hand, for “mini job” employees, i.e., employees working very short hours or for low pay within the meaning of the German Social Security Code, Sec. 17(1) s. 1 German Minimum Wage Code (Mindestlohngesetz; MiLoG) in conjunction with Sec. 8(1) German Social Security Code IV (Sozialgesetzbuch; SGB). It applies on the other hand to employers who have employees in the industrial sectors specified in Sec. 2a German Act to Combat Illegal Employment (Gesetz zur Bekämpfung der Schwarzarbeit; SchwarzArbG). This includes in particular the construction industry but also the forwarding and haulage sector. Beyond these sectors, Sec. 16(2) German Working Time Act (Arbeitszeitengesetz; ArbZG) only specifies a documentation obligation and two-year retention period for “overtime” worked. Accordingly, employers are only required to record working time to the extent that the employee’s working time exceeds the maximum working time of eight hours on any given working day permissible under Sec. 3 ArbZG.
Consequences of the decision
We believe that the ruling does not have any direct legal consequences. German labor law regulations concerning working time should not be subject to directive-compliant interpretation merely due to the unequivocal wording. At the same time, however, this proves that the law applicable in Germany does not meet the requirements of the Directives either and is therefore in violation of EU law. Given these facts, the ruling is in particular a call for the legislator to revise the German legal framework in such manner that it is in compliance with the Directives. It remains to be seen in which way this will unfold. The legislator does indeed have a rather broad discretionary scope. We are of the opinion that it is possible that the documentation obligations would only apply for companies with a certain minimum number of employees. Another alternative would be to exclude certain groups of employees, for example executives.
While the ruling solely discusses ensuring compliance with public law working time requirements, a discussion has been initiated dealing with the question of whether the - currently stringent - presentation obligations and burden of proof in labor law proceedings regarding alleged overtime worked could shift in such manner that they favor the employee. This could be the case, for example, if the employer does not provide any system to record working time and thus violates EU law in any case. Due to the current clear legal regulations and the general procedural principles regarding presentation obligations and the burden of proof, we believe, however, that such a shift would not be correct.
Given that it cannot currently be anticipated at all which specific changes in laws can be expected, we believe that there is no requirement solely based on this ruling to modify the existing trust-based working time recording system. In particular, employers who do not provide a working time recording system meeting the ECJ requirements are not acting irregularly. A sufficiently reliable legal basis is lacking for this to apply.
Employers who are currently considering relaxing documentation obligations in existing time-recording systems should leave sufficient room for subsequent modifications with regard to expected adjustments.