New employers’ obligation to introduce a system recording working hours: what do directors need to know?

Written on 22 May 2019

The latest decision of the Court of Justice of the European Union (CJEU) will result in obligations on companies to introduce systems to monitor the time worked by employees. Managing directors and executive board members should take note of these new obligations, in order to comply with their supervisory obligations – particularly in Germany, under the German Administrative Offences Act (Sec. 130) – and avoid fines and potential imprisonment.

The case

In Federación de Servicios de Comisiones Obreras (CCOO) v Deutsche Bank SAE (case number: ECJ – C-55/18), the Spanish trade union CCOO sought a declaration that Deutsche Bank must introduce a system for recording working time. According to the CCOO, such a system should be introduced in particular to check compliance with the agreed working time. This is required under not only Spanish law, but also the Charter of Fundamental Rights of the EU and the EU Working Time Directive (which the Spanish law implements).

The CJEU’s decision

On 14 May 2019, the CJEU ruled that in order to ensure the effectiveness of the rights provided for in the Working Time Directive and the Charter, Member States must require employers to set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured.

The Court noted, first of all, the importance of the fundamental right of every worker to a limitation on the maximum number of working hours and to daily and weekly rest periods, which is enshrined in the Charter and given specific detail in the Working Time Directive. Member States are required to ensure that workers actually benefit from the rights that are conferred on them, so national implementing legislation should not be such that those rights are rendered meaningless.

The Court noted that the worker must be regarded as the weaker party in the employment relationship, such that it is necessary to prevent the employer from being in a position to impose a restriction of his rights on him. The Court held that, in the absence of a system enabling the duration of time worked each day by each worker to be measured, it was not possible to determine, objectively and reliably, either the number of hours worked and when that work was done, or the number of hours of overtime worked, which made it excessively difficult, if not impossible in practice, for workers to ensure that their rights are complied with. The objective and reliable determination of the number of hours worked each day and each week is essential in order to establish whether the maximum weekly working time – including overtime – and minimum daily and weekly rest periods have been complied with.

The Court considered therefore that a national law which does not provide for an obligation to have recourse to an instrument that enables that determination does not guarantee the effectiveness of the rights conferred by the Charter and the Working Time Directive, since it deprives both employers and workers of the possibility of verifying whether those rights are complied with. Such a law could also compromise the directive’s objective of ensuring better protection of the safety and health of workers, which is the case irrespective of the duration of the maximum weekly working time laid down in national law.

By contrast, a system enabling the time worked by workers each day to be measured offers those workers a particularly effective means of easily accessing objective and reliable data as regards the duration of time actually worked, which facilitates both the proof by those workers of a breach of their rights and also the verification by the competent authorities and national courts of the actual observance of those rights. The CJEU does not provide for restrictions for certain groups of employees in its judicature.

The consequences of this decision for compliance

This decision will require Member States that do not already require such a system for recording working hours (such as Spain and Germany) to amend their national laws to introduce such an obligation. While this task will mainly fall to HR and compliance teams, directors and senior managers should be aware of the potential to incur personal liability in certain jurisdictions if their businesses fail to comply.

For example, according to the case law of the German Federal Supreme Court on directors’ and officers’ liability, managing directors and executive board members are obliged to comply with the so-called legality obligation – the obligation to ensure that the company behaves lawfully and fulfils its legal obligations. The same is expressly stated in Section 4.1.3 of the Corporate Governance Code.

In their function as employer representatives, the management bodies must therefore take note of the new employer obligation, as implemented in the relevant national legislation, to record unrestricted working hours laid down by the European Court of Justice.

Employers will need to analyse existing company time recording systems and adapt and further develop them in the light of the requirements and evaluations of the CJEU ruling and national legislation – taking into account the changes in the participation rights of the works council, the staff representatives or the employee representatives that accompany the CJEU ruling. If necessary, compatible comprehensive working time recording systems must be newly implemented.

It is no longer sufficient to comply with the requirements for documentation of working times for special groups of employees – such as those required in Germany by the Minimum Wage Act for ‘mini-jobbers’ outside private households and for certain sectors such as, for example, sec. 2a of the German Act to Combat Illegal Employment and sec 16 (2) of the German Working Time Act concerning working time exceeding the permissible maximum working time of eight hours/day, which has only been required to a limited extent under German law up to now.