An employee time tracking system documents the start, end, and duration of employees' daily working hours. Since the Federal Labour Court (BAG) ruling in September 2022, employers in Germany are required to implement such a system – regardless of company size. Electronic time tracking will become the standard with the planned legislative changes in 2026.

What Is an Employee Time Tracking System?

An employee time tracking system is a technical or organisational tool for the systematic documentation of working hours. It records when employees start work, take breaks, and end their workday. Unlike pure project time tracking, which allocates working time to specific tasks or clients, employee time tracking primarily serves to ensure compliance with labour law requirements.

These systems range from simple handwritten timesheets and Excel spreadsheets to cloud-based software solutions with mobile apps. As part of the ongoing digitalisation in recruiting and across the entire HR sector, more and more companies are adopting electronic solutions that enable automatic evaluations, interfaces with payroll systems, and legally compliant documentation.

Legal Basis for Time Tracking Requirements

The obligation to record working time has developed over several years – from a fundamental European ruling to binding implementation in Germany.

ECJ Ruling 2019: The Starting Point

In May 2019, the European Court of Justice (ECJ) ruled in Case C-55/18 (CCOO v. Deutsche Bank) that all EU member states must require employers to implement a system for recording daily working time. According to the ECJ, the system must be "objective, reliable, and accessible." Only in this way can compliance with maximum working hours and rest periods be verified – a central element of employee protection.

Federal Labour Court Ruling 2022: Implementation in Germany

The Federal Labour Court (Bundesarbeitsgericht, BAG) specified the European requirements in its decision of 13 September 2022 (Case No. 1 ABR 22/21). The court clarified that employers in Germany are already obligated under existing law to introduce a time tracking system. This obligation derives from Section 3(2) No. 1 of the Occupational Health and Safety Act (Arbeitsschutzgesetz, ArbSchG) when interpreted in conformity with EU law.

In concrete terms, this means: the start, end, and duration of daily working time must be recorded – for all employees, not just for overtime or Sunday work as previously regulated in Section 16(2) of the Working Time Act (Arbeitszeitgesetz, ArbZG).

Current Legal Situation 2025/2026

The coalition agreement between CDU/CSU and SPD from 2025 provides for the mandatory introduction of electronic time tracking. A specific law has not yet been passed, but a draft bill from the Federal Ministry of Labour and Social Affairs (BMAS) exists. This draft includes:

• Electronic recording of the start, end, and duration of daily working time
• Recording on the same day the work is performed
• Fines of up to €30,000 for violations
• Staggered transition periods based on company size

Requirements for a Legally Compliant Time Tracking System

Minimum Legal Requirements

According to the case law of the ECJ and BAG, a time tracking system must meet the following criteria:

• Objectivity: The recorded data must be traceable and verifiable
• Reliability: The system must be tamper-proof and store data correctly
• Accessibility: Both employees and authorities must be able to access the data

At minimum, the start, end, and duration of daily working time including breaks must be recorded. A general note such as "worked 8 hours" is not sufficient – specific times are required.

Technical Options: Analogue, Digital, Cloud-Based

Currently, there is no legal requirement regarding the form of time tracking. The following options are generally permissible:

With the expected legislative changes, electronic recording will become the standard – analogue methods will no longer be sufficient for most companies.

Who Does the Time Tracking Obligation Apply To?

Exceptions: Senior Executives and Special Cases

The time tracking obligation generally applies to all employees. However, exceptions exist for:

• Senior executives under Section 18 ArbZG: Managers with special powers such as hiring or dismissal authority are exempt from the Working Time Act
• Certain industries: Collective bargaining agreements may provide for different documentation requirements
• Managing directors and board members: As corporate bodies, they are not considered employees under the law

Transition Periods by Company Size

The BMAS draft bill provides for staggered transition periods:

• Large companies (250+ employees): 1 year after entry into force
• Medium-sized companies (50-249 employees): 2 years
• Small companies (11-49 employees): 5 years
• Micro-enterprises (up to 10 employees): Exempt from the electronic recording requirement, but documentation obligation still applies

Implementation in Practice

Trust-Based Working Hours and Remote Work

Trust-based working time (Vertrauensarbeitszeit) remains possible under the new legal framework. The key difference: working time must still be documented. Employees can record their own hours – for example, via app or web interface. However, the responsibility for correct recording remains with the employer.

The same requirements apply to remote work and home office as to work in the office. Digital time tracking systems with mobile apps significantly facilitate implementation in these cases. Compliance with maximum working hours and rest periods must also be ensured and documented when working from home. A positive candidate experience begins with transparent working conditions – this includes clarity about working time regulations.

Works Council Co-Determination

The works council (Betriebsrat) has a co-determination right when introducing a time tracking system under Section 87(1) No. 6 of the Works Constitution Act (BetrVG). This relates to the design of the system – the "how," not the "whether." According to the BAG ruling, there is no right of initiative for introduction, as the obligation is already regulated by law.

In practice, early involvement of the works council is recommended to create acceptance among employees and avoid conflicts.

Frequently Asked Questions About Time Tracking

Is time tracking mandatory in 2025/2026?

Yes, the obligation to record working time has been in effect since the BAG ruling of 13 September 2022. The legal basis is Section 3(2) No. 1 ArbSchG, interpreted in conformity with EU law. Electronic recording is expected to be enshrined in law in 2026.

How must working time be recorded?

The start, end, and duration of daily working time including breaks must be recorded. The system must be objective, reliable, and accessible. Currently, there is no requirement regarding form – analogue or digital is possible. With the legislative change, electronic recording will become the standard.

Are there exceptions to the time tracking obligation?

Senior executives under Section 18 ArbZG are exempt from the Working Time Act. Longer transition periods are planned for small businesses with fewer than 10 employees. Deviations through collective bargaining agreements are possible in certain industries.

Is trust-based working time still permitted?

Yes, trust-based working time remains possible – but with a documentation requirement. Employees can record their own hours, but the employer remains responsible for correct documentation.

What penalties apply for failure to track time?

Currently, there are no direct fines, but authorities can order the introduction of a system. The draft bill provides for fines of up to €30,000. Additionally, there is a disadvantage in the burden of proof in overtime disputes.

What must a time tracking system be able to do?

A legally compliant system must be able to record the start, end, and duration of working time, document breaks and overtime, ensure tamper-proof storage, and be accessible to employees and authorities.

Does the works council have co-determination rights?

Yes, the works council has a co-determination right in the design of the system under Section 87(1) No. 6 BetrVG. There is no right of initiative for introduction according to the BAG ruling. Co-determination covers the type and extent of technical monitoring.

Conclusion

The time tracking obligation is no longer a future concern – it already applies today. Companies should use the remaining time before the final legislative change to implement a legally compliant system. The choice between analogue and digital solutions increasingly favours electronic systems: they offer legal certainty, reduce administrative burden, and enable flexible working models such as remote work.

For HR professionals, this means: act now, involve the works council, and choose a system that fits your company's requirements. The investment in a modern time tracking system pays off through transparency, compliance, and more efficient processes.

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Sources

• Federal Labour Court (Bundesarbeitsgericht): Decision of 13.09.2022 – 1 ABR 22/21. https://www.bundesarbeitsgericht.de/entscheidung/1-abr-22-21/
• European Court of Justice: Judgment of 14.05.2019 – C-55/18 (CCOO). https://curia.europa.eu
• Occupational Health and Safety Act (Arbeitsschutzgesetz, ArbSchG), Section 3(2) No. 1. Federal Government, 2024. https://www.gesetze-im-internet.de/arbschg/__3.html
• Working Time Act (Arbeitszeitgesetz, ArbZG), Section 16(2). Federal Government, 2024. https://www.gesetze-im-internet.de/arbzg/__16.html
• Federal Ministry of Labour and Social Affairs: FAQ on Working Time Recording, 2024. https://www.bmas.de/DE/Arbeit/Arbeitsrecht/Arbeitnehmerrechte/Arbeitszeitschutz/Fragen-und-Antworten/faq-arbeitszeiterfassung.html
• Berlin Chamber of Commerce and Industry (IHK Berlin): Time Recording Obligation for Employers, 2024. https://www.ihk.de/berlin/service-und-beratung/recht-und-steuern/arbeitsrecht/arbeitszeiterfasung-5666426
• Aivy HR Blog – Current topics in human resources