In its ruling dated September 13, 2022 (1 ABR 22/21), the Federal Labor Court (Bundesarbeitsgericht – BAG) ruled that Section 3 (2) No. 1 ArbSchG (Arbeitsschutzgesetz or Act on the Implementation of Measures of Occupational Safety and Health to Encourage Improvements in the Safety and Health Protection of Workers at Work) obliges the employer to introduce a system to record employees’ working hours. Interpreting this provision in accordance with Union law, the employer is legally obliged to record the working hours of employees.
On May 14, 2019, the ECJ had already ruled (C-55/18) that member states must require employers to set up a system to measure daily working time.
Both German lawmakers and general practice have assumed until recently that there is not yet a corresponding legal obligation under national law requiring employers in Germany to do so. The Federal Ministry of Labor is therefore already working on a legal bill. The BAG takes a different view, seeing precisely this obligation in Section 3 (2) No. 1 ArbSchG.
Employers may therefore no longer wait for a special legal regulation to be implemented. The obligation to record working hours exists with immediate effect. It is not yet clear how far this obligation goes, as currently only a press release of the BAG ruling has been published. We expect that the reasons for the decision will provide more information.
A suitable system must be implemented with immediately. It should not matter whether this is done on paper, by means of a time card system or simply with an excel spreadsheet. It should also be possible to instruct the employee within the scope of the right of direction to record the working times in this system every day. It is not yet possible to predict how far an employer’s obligation to check goes and what concrete effects this ruling will have on trust-based working time, home office and mobile working.
We will come back to this as soon as the reasons for the BAG’s decision are available.
The amendment to the Act on notification of conditions governing an employment relationship (hereinafter Act) was made to implement the EU Directive on Transparent and Reliable Employment Conditions. The aim of this directive is to promote transparent and predictable employment while ensuring the adaptability of the labor market.
I. Legal situation to date
So far, employers were obliged to put the following essential contractual terms in writing and had to hand the document over to the employee within one month. This did not apply to employees hired on a temporary basis for a maximum of one month.
- Name and address of the contracting parties
- Date of the beginning of the employment relationship
- Duration of the employment relationship in the event of a fixed term
- Work location
- Name or description of the activity
- Composition and amount of remuneration
- Working time
- Duration of the annual recreational leave
- Notice periods
- General reference to collective agreements, works agreements and service agreements applicable to the employment relationship.
If the employer did not comply with this obligation, the employee could demand a record of the essential contractual terms from the employer that met the requirements of the Act. In individual cases, the employee could be entitled to damages if he or she suffered direct financial loss as a result of the employer’s breach of duty. So far, an employer’s violation of the Act was not punishable by a fine.
II. New legal situation
As of August 1st, 2022, the scope of the Act includes all employees. The exception for employees hired on a temporary basis will no longer apply.
Employers are required to put the following terms in writing in addition to the above metioned ones:
- End date of the employment relationship
- If applicable, free choice of the place of work by the employee
- If agreed, the duration of the probationary period
- The composition and amount of remuneration, including overtime pay, bonuses, allowances, premiums and special payments, as well as other components of remuneration, each of which shall be stated separately, further to their due date and method of payment
- The agreed working time, agreed rest breaks and rest periods and, in the case of agreed shift work, the shift system, the shift rhythm and the conditions for shift changes
- If agreed, the possibility of ordering overtime and its conditions.
- Any entitlement to continuing education provided by the employer
- If the employer promises the employee a company pension through a pension provider, the name and address of this pension provider; the obligation to provide evidence does not apply if the pension provider is obliged to provide this information.
- The procedure to be followed by the employer and the employee when terminating the employment relationship, at least the written form requirement and the time limits for terminating the employment relationship, as well as the time limit for bringing an action for protection against unfair dismissal; Section 7 of the Act on Protection against Unfair Dismissal shall also apply in the event that the time limit for bringing an action for protection against unfair dismissal is not properly demonstrated.
The previously applicable deadlines will be shortened.
For employment contracts entered into on or after August 1st, 2022, the employer shall provide the employee with the following information in writing,
at the latest on the first working day
- Name and address of the contracting parties
- Compensation and its composition
- Working time
within seven days
- Time of the beginning of the employment relationship
- Duration of any agreed probationary period
- If agreed, the possibility of ordering overtime and its conditions.
- In the case of work on call pursuant to Section 12 of the Part-Time and Fixed-Term Employment Act: work to be performed according to the workload, the minimum number of hours to be paid, the time frame specified for the performance of work, the period within which the employer must notify the location of the working hours in advance.
All further terms according to the Act are to be provided to the employee in writing no later than one month after the agreed start of the employment relationship.
The terms specified in the Act are usually part of the employment contract, however this is not mandatory. It is also possible to provide the employee with an appropriate document (information sheet, etc.) regarding the terms.
Employees who were already employed before August 1st, 2022 have the right to request their employer to inform them about the essential contractual and working terms. Essential contractual terms must be provided to the employee in writing within seven days, all other terms need to be provided within one month. An amendment or supplement to the employment contract is not mandatory for this purpose. Here, too, the notification can be made by means of an information sheet.
A strict written form requirement applies to the documentation of the terms specified in the Act. This means, for employment contracts, that they must be printed out, signed by both parties personally and handed over or sent by mail to each party.
If the terms are part of the employment contract, a digital signature, as is already common practice in many companies, is not sufficient. The electronic form (qualified electronic signature) is also excluded. The same applies if the documentation is provided by means of an information sheet. The information sheet must be signed in original by the employer and handed over to the employee. The receipt of the original document must be acknowledged by the employee, as this is the only way to prove that the written form has been observed.
Furthermore, starting August 1st, 2022, a violation of the Act, will be punishable by fine up to € 2,000 per violation.
Employees are therefore urgently advised to provide the relevant information in full and in due form and time.
III. To-Dos for the Employer
Employment contract templates used from August 1st, 2022 shall be supplemented with the above-mentioned additional terms. A information sheet in written form (“wet ink”) should then be prepared and handed over to the employee if employment contracts are only concluded in text form or in electronic form. The receipt of the information sheet should be acknowledged by the employee for evidence purposes.
For employees who were already employed prior to August 1st, 2022, an appropriate information sheet should be prepared to allow for timely written notification.
In addition, if significant working conditions change during operation, the employer is obliged to inform the workforce in writing on the day of the change.
Compliance with the written form requirement must be ensured in all cases.
TCI partner Stephan Schmidt (Mainz), together with the Düsseldorf law firm MUTTER & KRUCHEN (M&A, corporate law), advised the shareholder of it relations GmbH on the sale to ALVARA | Digital Solutions.
ALVARA | Digital Solutions (a brand of ALVARA Holding GmbH) continues to grow. It relations GmbH is new to the corporate group of specialists for track & trace software solutions for the cash cycle and logistics. ALVARA | Digital Solutions adds an IT specialist that has been carrying out innovative IT projects for 25 years and, among other things, stands for the successful development of innovative and intuitively operated cash register systems. The intelligent branch checkout systems used by large bakery chain stores, restaurants, bars and retailers can be individually adapted and, in addition to central data maintenance and POS synchronisation, are also GDPD/GOBD-compliant and fiscally secure. The Coffeeboard system enables current discounts, promotions or image advertising to be effectively staged as an image or video via separate monitors in the checkout area so advertising can be centrally planned and managed.
Shortly before its 10th anniversary, the Mainz team of the law firm TCI has been strengthened with the experienced in-house lawyer and former general counsel Sabine Brumme as a full-time partner as of May. As a founding member of the firm, she was previously of counsel at TCI and will join the firm in full in the future. Previously, Sabine Brumme was General Counsel at the innovative AI provider arago GmbH and Deputy General Counsel at an international consulting firm.
Brumme started her legal career in 1997 at a savings bank association and was already active in IT and Internet law at that time. This continued at Bayerische Landesbank. She then spent more than 15 years at the consulting firm BearingPoint in various positions and held the position of Deputy General Counsel with legal responsibility for the software division there together with her team. In 2019, she moved to arago a provider of AI-powered cloud applications.
In addition to legal operations, her focus was on IT law, which she has been involved in since the beginning of her professional career. Brumme is experienced especially in complex, international negotiations of software, outsourcing and cloud contracts. In addition, she has been intensively involved with LegalTech in recent years.
Brumme has been associated with TCI for a long time: She is a founding partner of TCI and also previously worked with parts of the Mainz and Munich teams as of counsel at teclegal from 2009.
She has been a guest lecturer for the Institute of Information Law at the h_da University of Applied Sciences in Darmstadt and has supervised Bachelor and Master students there as well as at the Frankfurt University of Applied Sciences in the course of their final theses. She continues to be associated with the h_da through her work on the advisory board of the Institute for Information Law. She also sits on the advisory board of the “Intellectual Property Magazin”.
Brumme will support the team in the areas of IT law, data protection, international contract law and competition law. She will also expand the LegalTech, Legal Operations and Legal Outsourcing practice areas. She will build on existing international mandates.
Stephan Schmidt, TCI founding partner comments on the change: “We are very pleased that our long-time companion Sabine Brumme has decided to support us in the future as a partner with all her strength in the exciting subject area of IT law and to contribute to the fact that we can continue to advise our clients at the highest level, especially in the area of licensing and outsourcing.”
TCI is represented as a group of law firms with 14 partners and 3 associates at the offices in Berlin, Mainz and Munich since 2011. TCI’s industry focus is on “Technology”, “Communication”, “Information”, on which the short name and brand “TCI” is based. The legal focus is on technology-related contract law and litigation including arbitration, IT law, telecommunications law, public procurement and antitrust law, franchise and distribution law, employment law, copyright law and intellectual property law.