Electronic Time Tracking During Short-Time Work – Obligations, Practice & Tips

During short-time work (Kurzarbeit), employers are required under § 320 of the German Social Code III (SGB III) to document all hours actually worked and all hours lost to reduced operations – regardless of whether this is done electronically or manually. Electronic time tracking systems significantly simplify BA-compliant documentation and reduce the risk of repayment demands during audits. Records must be retained for a minimum of 2 years.

What Does Electronic Time Tracking During Short-Time Work Mean?

Electronic time tracking during short-time work refers to the use of digital systems to document the hours actually worked and the hours lost during a short-time work period. It is not an end in itself, but a legal necessity: any employer receiving short-time work allowance (Kurzarbeitergeld, KUG) must be able to demonstrate to the Federal Employment Agency (Bundesagentur für Arbeit, BA) exactly which hours were worked and which were not.

General Time Recording Obligation vs. Short-Time Work-Specific Documentation

An important distinction is often confused in practice:

The Federal Labour Court (BAG) ruling of 13 September 2022 (Case No. 1 ABR 22/21) generally obliges employers to systematically record their employees' working hours. This general obligation applies to all employment relationships and arises from the Occupational Health and Safety Act (ArbSchG) in conjunction with the EU Working Time Directive (2003/88/EC).

The short-time work-specific documentation obligation under § 320 SGB III is independent of this and applies specifically to the period in which short-time work allowance is being claimed. It ensures that the actual extent of the work reduction can be correctly evidenced – because this is exactly the basis on which the BA calculates the allowance to be paid.

Both obligations overlap: anyone registering short-time work must not only maintain general working time records, but also keep short-time work-specific documentation in addition.

Legal Framework: What Does the Law Require?

§ 320 SGB III – The Core Recording Obligation

§ 320 of the German Social Code III (SGB III) requires employers to keep records of both the hours actually worked and the hours lost while claiming short-time work allowance. These records must be made available to the Federal Employment Agency on request and form the basis for post-payment audits.

This provision is not optional: anyone who fails to maintain adequate documentation risks repayment demands – even if the short-time work arrangement was substantively justified.

The BAG Ruling 2022 and Its Relevance to Short-Time Work

In September 2022, the Federal Labour Court ruled that employers are obliged under § 3 para. 2 no. 1 ArbSchG to introduce a system for recording working time. The ruling gives concrete form to the requirements established by the European Court of Justice in the CCOO case (2019), which derived from the EU Working Time Directive an obligation to record working time in an objective, reliable and accessible manner.

For short-time work, this means: the existing obligation under § 320 SGB III is not replaced by the general time recording requirement, but supplemented by it. A company that already operates an electronic time tracking system is well positioned for short-time work – provided the system can separately record lost hours.

EU Directive and the National Legislative Process

The EU Working Time Directive (2003/88/EC) forms the European legal framework. At the time of publication of this article, a national Working Time Recording Act codifying the BAG case law is still going through the legislative process. HR professionals should monitor further developments, as the specific requirements may still change.

What Must Be Documented During Short-Time Work?

Actual Hours Worked and Lost Hours: What Exactly Must Be Recorded?

The documentation must cover two dimensions:

Actual hours worked comprise all hours genuinely performed – that is, the hours in which employees worked despite the short-time work arrangement. The contractually agreed target working hours are not the relevant figure; what matters is what was actually performed.

Lost hours are those hours that were not worked due to the reduction in operations. This is the basis on which the Federal Employment Agency calculates the short-time work allowance: the higher the proportion of lost hours, the higher the KUG payment.

The following details must be recorded for each employee:

• Name and personnel number
• Date and day of the week
• Start and end of actual working time
• Total hours worked
• Total lost hours
• Signature of the employee (or digital confirmation)

Checklist: BA-Compliant Time Tracking During Short-Time Work

The following points help to establish audit-proof documentation:

• Time tracking begins on the first day of short-time work – not only at the point of payroll processing
• Actual hours worked and lost hours are recorded daily and separately from each other
• Records are individually traceable for each employee
• Data is arranged chronologically and is complete (no gaps)
• Records are stored or archived in a tamper-proof manner
• Monthly summaries can be exported (for submission to the BA)
• The minimum retention period of 2 years is observed

Electronic or Manual – What Is Permitted?

Requirements for Electronic Systems

The law does not prescribe any particular form of time tracking. Electronic systems are permitted, but not mandatory. Anyone opting for a digital tool should pay attention to the following criteria:

Tamper-proof integrity (Revisionssicherheit): Once recorded, data must not be altered without a corresponding audit trail entry. Systems that can be manipulated are problematic for BA audits.

Separate recording of lost hours: Not every time tracking application automatically distinguishes between actual hours worked and lost hours. This function must be explicitly available or configurable.

GDPR compliance: Since working time data constitutes personal data, the system must meet the requirements of the General Data Protection Regulation.

Export function: For the monthly settlement with the BA, a structured export option must be available (e.g. PDF or Excel).

Is Excel Sufficient for Time Tracking During Short-Time Work?

In principle, manual or spreadsheet-based recording is also permissible – the law does not require a digital solution. An Excel spreadsheet may formally suffice, but has significant disadvantages in practice:

Excel files are not tamper-proof. Data can be altered after the fact without this being documented. In the event of a BA audit, this can cause problems if the immutability of the records cannot be demonstrated.

It is therefore advisable to use a dedicated time tracking system that records lost hours separately and enables tamper-proof exports. When selecting a system, HR professionals should also consider the broader legal context of the German Working Hours Act (Arbeitszeitgesetz) as a supplementary legal framework.

Retention Periods and Audits by the Federal Employment Agency

Under § 320 SGB III, employers are required to retain time tracking data for at least 2 years after the end of the short-time work allowance claim period. For tax law reasons (§ 147 German Fiscal Code, AO), a retention period of 4 to 5 years is advisable in practice, to ensure protection in the event of tax audits as well.

The Federal Employment Agency may conduct audits after short-time work allowance has been paid out. During these audits, the documented actual hours worked and lost hours are cross-checked against the submitted payroll claims. Common audit triggers include implausible lost-hours ratios, missing or incomplete records, and inconsistencies between different documents.

Tips for audit preparation: archive records monthly, obtain employee signatures (or digital confirmations), and store all relevant documents centrally and accessibly.

Frequently Asked Questions About Electronic Time Tracking During Short-Time Work

Are employers required to record working time during short-time work?

Yes. § 320 SGB III explicitly mandates the recording obligation. Both the hours actually worked and the lost hours must be documented. This obligation exists independently of the BAG ruling of 2022, which establishes a separate, general basis for working time recording.

What must the time tracking records contain during short-time work?

The records must contain, for each employee, the name, date, start and end of actual working time, total hours worked, and total lost hours. In addition, a signature or digital confirmation from the employee is required.

Is Excel sufficient for time tracking during short-time work?

Formally yes – the law does not prescribe any specific form. In practice, however, Excel is error-prone and not tamper-proof. Electronic systems with export functionality and tamper-proof integrity are significantly better suited for BA audits.

How long must time tracking data be retained during short-time work?

At least 2 years after the end of the short-time work allowance claim period, as stipulated by § 320 SGB III. For tax law reasons, a retention period of 4 to 5 years is recommended.

What happens if time tracking records are incorrect or missing?

The Federal Employment Agency can demand repayment of short-time work allowance that was paid out without entitlement. In serious cases – particularly where false information was provided intentionally – a criminal complaint for subsidy fraud under § 264 of the German Criminal Code (StGB) may follow. Fines for administrative offences are also possible.

Does the BAG ruling on time tracking also apply during short-time work?

The BAG ruling of 13 September 2022 (Case No. 1 ABR 22/21) applies to all employment relationships and therefore also to short-time work situations. However, the specific obligation under § 320 SGB III exists in addition. Both obligations overlap: short-time work documentation does not automatically fulfil all requirements of the BAG ruling.

What software is suitable for time tracking during short-time work?

Relevant selection criteria include: a BA-compliant export function (monthly overview with actual hours and lost hours), tamper-proof integrity, GDPR compliance, and the ability to record lost hours separately. The specific software choice depends on company size and the existing HR system.

Conclusion

Electronic time tracking during short-time work is not optional – it is a legal requirement. § 320 SGB III obliges employers to document actual hours worked and lost hours without gaps throughout the entire period of short-time work allowance. Anyone who neglects this obligation risks repayment demands from the Federal Employment Agency and, in serious cases, criminal consequences.

Electronic systems offer clear advantages over manual records: they are tamper-proof, enable structured exports for BA payroll submissions, and significantly reduce administrative workload. The decisive factor is that the chosen system can record lost hours separately and is GDPR-compliant.

HR professionals should also monitor further developments regarding a national Working Time Recording Act – the legal landscape may become more concrete with the transposition of the EU Directive. For current information on digital HR documentation, visit the Aivy HR Blog.

Would you like to find out more about how modern HR technology makes recruiting processes more objective and efficient? Learn more about the Aivy platform.

Sources

• § 320 SGB III – Recording and Retention Obligations. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/sgb_3/__320.html
• § 95 ff. SGB III – Short-Time Work Allowance, Eligibility Requirements. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/sgb_3/__95.html
• BAG Ruling of 13 September 2022, Case No. 1 ABR 22/21 – Obligation to Record Working Time. Federal Labour Court, 2022. https://www.bundesarbeitsgericht.de/presse/einfuehrung-eines-elektronischen-zeiterfassungssystems/
• Leaflet 8a – Short-Time Work Allowance for Employers. Federal Employment Agency, 2024. https://www.arbeitsagentur.de/datei/merkblatt-8a-kurzarbeitergeld_ba015385.pdf
• FAQ on Working Time Recording. Federal Ministry of Labour and Social Affairs (BMAS), 2023. https://www.bmas.de/DE/Arbeit/Arbeitsrecht/Arbeitnehmerrechte/Lohn-Gehalt/Zeiterfassung/zeiterfassung.html
• Directive 2003/88/EC of the European Parliament and of the Council concerning certain aspects of the organisation of working time. European Union, 2003. https://eur-lex.europa.eu/legal-content/DE/TXT/?uri=CELEX:32003L0088