CJEU decision tightens working time regulations

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EU employers must now keep detailed records of their employees’ working hours, following a recent ruling by the Court of Justice of the European Union (CJEU). National lawmakers face the challenge of ensuring compliance across diverse industries and varying local working practices.

The CJEU ruling, delivered on 14 May 2019, requires each employer "to set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured". To ensure that "the fundamental right of every worker to a limitation of maximum working hours and to daily and weekly rest periods" is respected, national lawmakers now have the task of ensuring that employers set up a timekeeping system that meets the CJEU’s requirements. This is not a straightforward task, as our round-up of issues in key jurisdictions shows.

Germany

By Carsten Domke, Partner, Benjamin Borschel, Associate, CMS Frankfurt

More bureaucracy and the end of trust-based working hours?

The CJEU’s decision may have a significant impact on German labour law. Until now, German law has set out only minor requirements for the recording of working time, breaks, and rest periods.
Trade unions have welcomed the CJEU ruling, emphasising the role of German lawmakers in initiating suitable regulation. For some, this looks like a return to the time clock system of ensuring the strict recording of working times and overtime. If so, the ruling could spell the end of trust-based working time – and threaten the modern working arrangements that give many employees the flexibility they want and need. To master this challenge, employees would have to be included in the process of time documentation.

German lawmakers have enough leeway here. Each EU Member State is free to decide on the details of implementation in its jurisdiction, including the appropriate form for recording daily working hours. The CJEU judges also emphasised that it is possible to take special circumstances into account. For example, the size of the company or the nature of the work may justify exceptions to the strict time recording guidelines. And, under Article 17 of the EU Working Time Directive 2003/88/EC, Member States have the option of deviating from the requirements of the directive – including the obligation to set up a timekeeping system and the need for breaks and rest periods – if "on account of the specific characteristics of the activity concerned, the duration of the working time is not measured and/or predetermined or can be determined by the workers themselves". In order to guarantee modern forms of work, German lawmakers must explore these possibilities.

Further legislative development is uncertain in Germany. The Federal Minister for Economic Affairs, Peter Altmaier, has announced that he initially sees no need for adjustments or for transposing CJEU requirements into national law. In his view, Germany already has a comprehensive system to meet documentation obligations under national law.

In contrast, Federal Minister of Labour, Hubertus Heil, wants to implement the CJEU ruling in a new legislative proposal by the end of the year and has restated his intention to reduce bureaucracy. How he will be able to reduce bureaucracy at the same time remains unclear.

Spain

By César Navarro, Partner, Maria José Ramos, Associate, Eloy Martín de Lucía Llanas, Associate, CMS Madrid

Spanish employers already implementing stronger working time regulation

Spain is ahead of the curve. A new regulation (Royal Decree 8/2019) requiring companies to record working hours daily came into force on 12 May 2019. Under the new rule, employers must set up a reliable, objective and accessible system enabling the registration of the time worked each day by employees.

But the new regulation has not had a smooth introduction. It has been a source of uncertainty for Spanish companies and has sparked opposition from employers over a lack of clarity on how they should implement the change and the specific requirements that should be met by the registration system. The new regulation is also likely to have an impact on salaries and overtime payments.
It is expected that these initial ambiguities will disappear in the coming months once the Labour Inspection Service criteria become clearer and, eventually, regulatory developments take place.

The current regulation sets out several requirements for companies, including:

What should be recorded?

  • Companies must record the start and end of each working day, every day. Records produced after the day in question are invalid.
  • Breaks and rest periods in the workplace can be excluded from the daily working hours calculation. This means companies may implement a working hours policy that regulates what should be considered as effective working time. Otherwise, all the time recorded between the start and the end of each working day could be considered as effective working time.
  • The obligation to record overtime remains, as set out in the Spanish Workers’ Statute.

Are all employees affected by the new regulations?

  • Employers should register the working hours of all employees – the Royal Decree does not distinguish between employee types. However, the Ministry of Employment has drafted some interpretation guidelines which state that the special employment relationship of senior executives (“relación de alta dirección”) is excluded from this obligation.

How should the registration system be implemented?

  • The Royal Decree does not set out any specific systems or methods to be used in the recording of working hours. Hours may therefore be recorded manually or digitally, but must use a system which guarantees the reliability and consistency of the data collected.
  • The recording system must be agreed through collective bargaining or corporate agreement. In the absence of a sector-wide collective bargaining agreement, the system will be implemented directly by the employer following non-binding consultation with the employees' representatives. Although there is no legal obligation to reach an agreement, an agreed approach would be prudent in order to avoid future discrepancies concerning the assurance of the chosen system.

Other obligations and penalties

  • Companies must retain their working hours records for four years, making them available to the employees and their representatives, as well as to the Labour and Social Security Inspection, at all times subject to request.
  • Failing to fulfil the obligation to record working hours represents a serious infringement punishable with administrative fines. Repeated infringements where previous sanctions have been imposed could lead to greater fines.

Because Spain has already implemented its regulation on the recording of working time, the CJEU decision is unlikely to lead to major changes.

Poland

By Katarzyna Dulewicz, Partner, and Rachwal Aleksandra, Associate, CMS Poland

Major changes expected to task-based working

The CJEU ruling may have significant implications for Polish employers. Until now, not all of them were obliged to set up a special system to measure the daily working time of their employees. It looks likely that this situation will have to change soon.

Under the Polish Labour Code, employers are generally obliged to register the working time of their employees, i.e. the exact number of hours worked each day. However, the law provides for some exceptions. Exact working hours do not have to be recorded for certain groups of employees, including CEO level managers or staff working in a task-based working time system.

The task-based system is very popular among Polish employers, especially in the IT sector, because it allows for greater flexibility in an employee’s work schedule. The task-based system focuses on tasks entrusted to the employee and the time it takes to complete them, rather than on exact time periods when the employee should be at the employer’s disposal.

The main feature of this working time system is that the employer does not have to keep a register of employees’ working hours. The employer consults the employee and sets the time required to carry out the tasks in question. The task-based system therefore allows for flexibility and less overtime, provided employees are not required to work fixed office hours and can independently allocate their working time. However, employees should objectively be able to perform the tasks within 8 hours a day, and an average of 40 hours a week. The task-based system therefore does not entirely exclude overtime work risk. Employees may still claim overtime if they prove they were forced to work extra hours due to the workload.

The CJEU may therefore lead Polish lawmakers to introduce changes to the Polish task-based working time system. Employers may be required to set up a time recording system for all their employees, including employees previously working under the task-based system. This is likely to be a bureaucratic and economic burden for employers who operate a task-based working system for most or all of their employees. Operating expenses in Poland could increase significantly, and task-based working may become unpopular among Polish companies, who may suffer losses due to the change.

Italy

By Fabrizio Spagnolo, Partner, CMS Italy

Privacy concerns to the fore

Italian law already includes the possibility of requiring an employer to use a system for recording the times its employees enter and leave the workplace. However, the regulatory system does not generally require employers to put in place instruments to monitor working time; this obligation is provided for only in specific cases.

The immediate effects of the CJEU ruling are likely to be seen in the context of data collection and privacy.

Introducing an obligatory system for recording working time can be considered to comply with Italian regulations on "audio-visual equipment and other control instruments"1. The regulations allow the "recording of access and attendance" of employees, even without an agreement with the employees’ representatives. Under Italian law, the information collected may be used for all purposes related to the employment relationship – provided that the employee is given adequate information on how the data is controlled, and the use must comply with the rules on privacy.

For the purposes of European and national legislation on privacy, the use of tools to register entering and exiting the workplace must be legitimate. In light of the CJEU decision, the collection of data relating to the presence of employees, when used to monitor working hours, should be carried out for compliance with a legal obligation, in line with the provisions of Article 6 of the GDPR (General Data Protection Regulation).

When employees’ access control systems use biometrics to identify staff, or photographs to allow the issue of badges, or the identification of people by the company’s surveillance systems, this data, as well as other sensitive data, can be processed. The prohibition in Paragraph 1 of Article 9 of the GDPR ceases to apply if the "processing is necessary for the purposes of carrying out the obligations and exercising specific rights of the controller or of the data subject in the field of employment and social security and social protection law in so far as it is authorized by Union or Member State law or a collective agreement pursuant to Member State law providing for appropriate safeguards for the fundamental rights and the interests of the data subject"2.

However, the company, as data controller, must provide a "data protection impact assessment" in compliance with the GDPR. In Italy, the personal data protection Authority has drawn up a list of the kind of processing operations which are subject to the requirement of a data protection impact assessment – this includes the collection of biometric data. In addition to the impact assessment, adequate information to employees must be provided.

France

By Caroline Froger-Michon, Partner, and Madeleine Benistan, Associate, CMS Paris

French working time regulations already comply with the CJEU decision

Under French law, the standard working time is 35 hours per week. Any hour worked above 35 is deemed to be overtime. However, more flexible systems may be implemented under certain conditions.

French law includes different working time regulations to cover a range of possible working time organisations used by companies. Each of these regulations provides for the obligation for the employer to monitor employees’ working time.

For example, the French Labour Code provides that when employees work in a team and have the same working time schedule, it is mandatory for the employer to indicate when the work starts and when it stops. The same applies for employees working in the same team but with different working time schedules: the employer must set up a daily or weekly computing system to record their working time. This can be done through a time clock system, for example.

French law also allows companies to organise employee working time through so-called “lump-sum agreements”. This system is generally used when, given their professional category and duties, employees have some autonomy over the organisation of their working time. In this case, employees receive a lump-sum in compensation for a pre-set number of hours or days. Possible overtime is thus already included in this total compensation.

Employees whose working time is computed on the basis of a fixed number of hours worked per month or year – “lump-sum agreement in terms of hours” – are subject to a daily recording of their working time.

Under French law, it is also possible to organise working time on the basis of a number of days worked per year – “lump-sum agreement in terms of days”. As employee working time is calculated in terms of days and not in hours, it could be argued that this type of working time organisation does not comply with the CJEU’s decision.

However, the French Labour Code gives guarantees to employees who are subject to this kind of working time organisation. For example, the employer operating this type of lump-sum agreement must regularly ensure that the employee has a reasonable workload. The employer must ensure that these employees distribute their working time appropriately, and mandatory rest periods must be strictly observed.

CJEU decision provides a new argument in litigation relating to working time

The CJEU states in its decision that “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”. French law already requires employers to do this. But the CJEU decision means that, in practice, employers should now ensure they are compliant.

Indeed, in employment litigation, employees often challenge the validity of flexible working time arrangements – such as lump-sum agreements – on the basis of a lack of proper monitoring by their employers, and subsequently claim for the payment of overtime. Employers who fully comply with French law and implement the CJEU decision should be safe from the charge of a “lack of proper monitoring” in any such claims.

The Netherlands

By Katja van Kranenburg-Hanspians, Partner, CMS Netherlands

Spotlight on compliance with working time registration system

The Working Hours Act stipulates the maximum working hours that can be worked by employees aged 18 and older, but there are some noteworthy exceptions to this rule. Employees who earn more than three times the statutory minimum wage are exempted, as are professional athletes, scientific researchers, medical specialists and a number of other listed roles and functions. The Working Hours Act may also apply to volunteers and self-employed persons. Beside excluded roles, specific rules apply in some industries and collective bargaining agreements set out the rules for some sectors.

Under Dutch law, employers are already obliged to register the hours worked of those employees who fall under the scope of the Working Hours Act. There are no statutory requirements, provided that the system allows the employer and the employee to determine the validity of the registration of hours worked. The registration process is also meant to facilitate inspection to validate the employer’s compliance with the Working Hours Act.

However, the obligation to make a registration does not mean that all employers are fully compliant. The CJEU decision has therefore been welcomed by trade union representatives. To ensure that employees are protected against working too many hours, a transparent and accessible registration process can be helpful. A key question is whether it is possible to register all hours worked accurately in a working culture where many employees have flexible ways of working from different locations. Technology can play an important and useful role in registering hours worked, and employers who opt for this solution should bear in mind the possible limitations due to the GDPR (in Dutch AVG).

Each employer looking to implement a system to track and register hours worked must check whether the system requires consent from its works council. Consent is required if the registration system also registers attendance, behaviour and performance, which in our view is likely to be the case.

UK

By Sarah Ozanne, Partner, and Gary Henderson, Partner, CMS UK

UK employers await revised guidance on record-keeping

In the UK, regulation 9 of the Working Time Regulations (WTR) requires employers to keep “adequate records” to show whether weekly working time limits and the time limits on night working are being complied with; failure to do so is a criminal offence. However, this requirement does not cover daily or weekly rest and does not require all hours to be recorded.

The Health and Safety Executive (HSE), rather than individual workers, is responsible for enforcing the requirement for employers to take reasonable steps to keep adequate records for the purposes of the WTR. In short, we recommend that UK employers consider waiting until the HSE has issued revised guidance in light of the CJEU decision before making changes to their record-keeping arrangements.

The UK government intervened in this case and argued against the CJEU decision. Because the WTR do not now appear to comply with the implementing directive then, technically, the UK should amend the regulations to make them compatible, and could face infringement proceedings from the European Commission if it fails to do so. However, given the UK government’s opposition to this decision and the prospect of Brexit, it seems unlikely the government will amend the WTR in the short term.

There may be scope to argue that the CJEU decision should have direct effect now in the public sector, or that the WTR should now be interpreted in line with it. Again, in practical terms we recommend that UK employers consider waiting until the HSE has issued revised guidance before making changes to their record-keeping requirements.

1. Provided for by Article 4 of Law No. 300 of 1970.
2. According to Article 9, Paragraph 2, letter b of the GDPR