R.I.P. trust-based working - Will the expected law on recording working time be the death of flexible work?

Better safe than sorry? It has been clear since 2019: the obligation to record working time is coming. At the time, the European Court of Justice (or ECJ) ruled that all member states are obliged to create the necessary legal framework for employers to record and monitor the working hours of their employees. However, the legal situation in Germany has still not changed - a long wait for corresponding legislation is to be expected.

In the following, we will explain why the recording of working time is already gaining importance, how you can prepare for the expected law change and what it means for trust-based working.

The current legal situation

In fact, the ECJ ruling is far from introducing a time recording law, as it merely represents a guideline for EU member states to enact corresponding legislation. So far, however, not much has been done. Nevertheless, employers are well advised to already get used to the obligation to record working time. If other courts follow the course of the Emden Labour Court and agree on seeing an obligation for employers to record working time, employers should not wait for the national law to change.

In two rulings, the Emden Labour Court, following the ECJ ruling, confirmed the direct obligation of employers to introduce a system for recording working time. In the first case, a construction worker successfully sued his employer for overtime pay, which he was able to prove with the help of a self-managed overview. In the second case, the court awarded an employee EUR 20,000.00 for overtime worked, which she documented in the time recording system provided by the employer. The employer could not successfully plead that he had not checked the recorded times previously because of the company’s trust-based working policy. However, the second ruling is not yet final.

Therefore, the situation continues to be intriguing since the trend is clearly moving towards compulsory working time recording, as the draft of the law on mobile work confirms.

But what does this mean for trust-based working?

With the threat of compulsory time records now looming on the horizon, many may ask themselves: "Do I now have to waive the trust-based working policy in my company?"  

In the case of so-called trust-based working, work hours are not recorded and employees independently regulate the beginning as well as the end of their work day. Employers often specify a time frame and define the necessary availability. Especially in times of the Corona crisis, with many employees working from home, flexible work models such as trust-based working or mobile work are becoming increasingly popular, as they allow employees to organise their days independently. Especially employees with children or roommates may benefit from this system. 

Will the expected law on recording working time be the death of flexible work models such as trust-based working ? 

Not necessarily. 

First of all, such a regulation would only mean that employers are obliged to record and monitor working hours. This may mean a fundamental change for many companies. Even though in Germany the obligation to keep records had already been in place prior to the ECJ ruling (§ 16 para. 2 ArbZG). However, this only applied to overtime.

Moreover, unfortunately, trust-based working does not only cause positive results.

After all, the aim of trust-based working is to focus on achieving set goals instead of creating pressure by constantly monitoring working hours. In theory, of course, this sounds attractive to employees because it leaves them with a generous amount of freedom, while the employer is spared effort.

Unfortunately, reality may look different. The focus on goals increases the responsibility of employees to deliver results independently and on time. This has been proven to lead to more overtime, which is then usually not recorded by the employer. Additionally, trust-based working often leads to employers neglecting their obligations under occupational health and safety law, which is not only illegal but can also have serious consequences for employees' health. 

An obligation to record working time could counteract these consequences by recording the actual hours worked and thus making them more transparent. This would ensure, for example, that rest periods are respected - less overtime would be worked and agreed goals would be achieved more efficiently. If overtime is still incurred, it is documented accordingly and can be fairly remunerated or compensated with time off. Additionally, the employer is protected from possible lawsuits and expensive penalties. 

At the same time, this does not mean that working time cannot be arranged flexibly, since a future law would most likely only require the control of working hours. 

Instead, the ruling offers the opportunity to continue trust-based working in a safer manner for employees and employers.

How can I prepare? 

Although corresponding laws are still pending, as previously explained, immediate preparation is advisable if you want to avoid legal consequences.

Here is how to be ready:

1. Modify contractual regulations and internal guidelines

In general, it is advisable to check employment contracts to see whether effective clauses on working hours and overtime have been formulated.
If necessary, the contracts should be adapted with an amendment agreement. For example, many employment contracts contain no or inadmissible clauses on the compensation of overtime, because a lump-sum compensation of all overtime with the agreed salary is invalid. Without a clear definition, there is a risk of disputes or even expensive court cases. Especially in the case of trust-based working, considerable problems of proof arise:  
Was overtime ordered?
Were the hours documented by the employee and tolerated by the employer?
According to the judgement of the Emden Labour Court, is it sufficient to merely inspect the working time records?

Trust-based working can also be contractually stipulated, by formulating reservations that allow the employer to set certain meetings, for instance.
In separate agreements, such as internal guidelines, details on the concrete design of different working time models (e.g. on-call duty, shift systems, flexitime models) and the type of documentation can be defined, shared with employees and adjusted from time to time.

2. Time recording tool

If framework conditions are set for trust-based working and overtime, there is no reason not to record working time. According to the ECJ, the system must be objective, reliable and accessible, which means that it should be transparent for employees as well as employers and record all working hours including breaks and overtime.
A digital system would be the more modern and efficient alternative to an analogue one. Most HR management tools offer corresponding functions. A positive effect that may not be immediately visible: if working hours (including overtime) are recorded and linked to agreed work targets, feedback rounds, priorities and performance appraisals can be established, tracked and optimised accordingly in a centralised system.

3. Raise awareness & communicate transparently

Employers should take advantage of the opportunity not only to establish an internal system, but also to refresh the topic of working time in general, raise awareness among managers and provide regular training. If legal requirements and internal agreements are observed, this can lead to more security and satisfaction. Serious compliance with employer obligations not only minimises risks, but also focuses on the health of employees.

Burnouts, frequent illnesses, corona-related and challenging work in the home office, missed breaks and a lack of balance may damage the company in the long run because employees are unbalanced. Worse still, they may feel exploited if the company neglects occupational health and safety, overtime is not remunerated and their efforts are taken for granted. Transparent communication and raising awareness on the topic of working time, soliciting feedback and suggestions for improvement from the team and a concrete implementation of "recorded trust-based working" will ensure a healthy corporate culture. Employees should feel involved and see that their employer takes the issue seriously, thus valuing their work - this creates trust and strengthens the company in perspective.
A win-win.

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