Time tracking software digitally records working hours and fulfills the legal obligation to track working time following the German Federal Labour Court (BAG) ruling of 2022. When selecting a solution, legal compliance, GDPR conformity, user-friendliness, and interfaces to payroll systems are crucial. Depending on company size and industry, cloud solutions, apps, or stationary terminals may be the best fit.

What Is Time Tracking Software?

Time tracking software is a digital tool for documenting and managing working hours. It replaces manual methods such as timesheets or Excel spreadsheets and records the start, end, and duration of daily working time automatically or through employee input.

Unlike traditional time clocks, modern time tracking software offers additional features: it manages overtime, breaks, leave requests, and absences centrally in one place. Many solutions integrate directly with existing HR software and payroll systems, significantly reducing the administrative burden for HR professionals.

Typical Features

Time tracking software typically includes the following core functions:

• Time recording via app, web, or terminal
• Overtime and break calculation
• Leave and absence management
• Individual working time models (flextime, shift work)
• Reporting and analysis
• Export for payroll (e.g., DATEV interface)

Why Is Time Tracking Mandatory?

The obligation to record working time in Germany is based on two landmark court decisions: the ECJ ruling of 2019 and the BAG ruling of 2022.

The ECJ Ruling 2019 (Time Clock Ruling)

The European Court of Justice ruled on 14 May 2019 (Case C-55/18 CCOO) that employers in the EU must introduce an "objective, reliable, and accessible system" for recording daily working time. The purpose of this decision: to protect employees from excessive workload and ensure compliance with rest periods.

The BAG Ruling 2022

The German Federal Labour Court (BAG) established on 13 September 2022 (Case No. 1 ABR 22/21) that the ECJ requirements also apply in Germany. According to the BAG, employers are obligated under Section 3(2)(1) of the German Occupational Health and Safety Act (ArbSchG) to introduce a time recording system. This obligation applies to all companies in Germany – regardless of size or industry.

According to the FAQ of the German Federal Ministry of Labour and Social Affairs (BMAS), all working time must be recorded, not just overtime as previously regulated in the Working Hours Act.

Current Legal Situation

Currently, there is no explicit legal regulation requiring electronic time recording. However, a draft bill from the BMAS proposes anchoring the obligation for electronic recording in the Working Hours Act. The 2025 coalition agreement reaffirms this intention. Until legislative implementation, the obligation applies based on case law.

What Types of Time Tracking Software Exist?

The market offers various solution approaches that differ by operating model and recording method.

Cloud Solutions vs. On-Premises

Cloud-based software is accessed via the internet and requires no local installation. Data is stored on the provider's servers. Advantages: quick setup, automatic updates, location-independent access. This option is particularly suitable for companies with hybrid working models and mobile teams.

On-premises solutions are installed on the company's own servers. Advantages: full control over data, customization options. Disadvantages: higher IT effort, own maintenance required. This option is preferred by companies with strict data protection requirements or existing IT infrastructure.

Recording Methods

• Web application: Employees record time on a PC via browser
• Smartphone app: Mobile recording, ideal for field service and home office
• Stationary terminal: Classic time clock alternative for fixed workplaces
• Combination: Many providers enable all methods in parallel

What to Consider When Choosing?

The choice of suitable time tracking software depends on your company's individual requirements. The following criteria help with the decision.

Core Functions

Legally compliant time tracking software should offer at least the following functions:

• Recording of start, end, and duration of working time
• Automatic calculation of overtime
• Break regulations according to the Working Hours Act
• Absence management (leave, illness)
• Evaluations and reports

Depending on the industry, additional functions may be useful: project time tracking for agencies and consultancies, shift planning for production and retail, GPS tracking for field service.

Data Protection and GDPR

Working time data is personal data and subject to the GDPR. When selecting, you should pay attention to the following points:

• Server location: Prefer providers with servers in the EU or EEA
• Certifications: ISO 27001 and ISO 27018 confirm high security standards
• Purpose limitation: The software should only collect necessary data
• Access rights: Clear regulations on who can view which data
• Deletion periods: Automatic deletion after expiry of the statutory retention period

Interfaces

Integration with existing systems saves time and reduces errors. Important interfaces include:

• DATEV: For collaboration with tax advisors and payroll accounting
• ERP systems: SAP, Microsoft Dynamics, SAGE
• HR software: Personio, HRworks, rexx systems
• Project management: For project time tracking (Asana, Jira, Monday)

Costs and Pricing Models

Most providers work with monthly fees per user. Typical price ranges:

• Basic version: €5-10 per user/month
• Extended features: €10-15 per user/month
• Enterprise solutions: Individual pricing

Some providers tier by company size or offer flat rates. Free versions exist but are usually functionally limited or only suitable for very small teams.

Frequently Asked Questions About Time Tracking Software

Is time tracking mandatory in Germany?

Yes, since the BAG ruling of 13 September 2022, all employers in Germany are obligated to record their employees' working hours. The legal basis is Section 3(2)(1) ArbSchG in conjunction with the 2019 ECJ ruling. The obligation applies regardless of company size or industry.

What must be documented in time tracking?

According to the BAG, the start, end, and duration of daily working time must be recorded – including overtime. The recording must be objective, reliable, and accessible to employees. Break times should also be documented to prove compliance with the Working Hours Act.

Must time tracking be electronic?

Currently, there is no legal obligation for electronic recording. Paper-based documentation is still permitted. However, the BMAS draft bill provides for mandatory electronic recording. Digital solutions are more efficient, less error-prone, and facilitate evaluation.

Which time tracking software is suitable for small businesses?

Small businesses benefit from cloud-based solutions without IT overhead. Criteria: easy operation, quick setup, low costs (from €5-10 per user/month), mobile access via app. Look for DATEV interfaces for straightforward payroll processing.

Can trust-based working hours continue?

Yes, trust-based working hours remain possible as a working model. However, working hours must still be recorded – the BAG explicitly confirmed this. Recording can be delegated to employees themselves, but responsibility for correct documentation remains with the employer.

How does mobile time tracking work in the home office?

Employees record their working hours via smartphone app or web application. Important: The software should be offline-capable for unstable connections. The Working Hours Act also applies in the home office – maximum working hours and rest periods must be observed.

What should you consider regarding GDPR?

Pay attention to server locations in the EU/EEA, certifications such as ISO 27001, clear access rights, and defined deletion periods. Personal data may only be collected for specific purposes. Particularly strict requirements apply to biometric systems (fingerprint, facial recognition).

Which interfaces are important?

The DATEV interface is indispensable for most German companies as it enables export to payroll. Depending on the company, further integrations may be useful: ERP systems, HR software, project management tools.

Conclusion

Choosing the right time tracking software has not been optional since the BAG ruling of 2022 – it's a legal requirement. Crucial for the selection are legal compliance, GDPR conformity, suitable interfaces, and user-friendliness for your team. Cloud-based solutions offer the best balance of functionality and implementation effort for most companies.

Before deciding on software, define your requirements: Which recording methods do you need? Which systems need to be connected? How large is your team? Most providers offer free trial periods – use these to test daily operation.

Are you interested in other HR tools to optimize your HR work? Discover how data-driven aptitude diagnostics can improve your recruiting: Learn more about Aivy

Sources

• Federal Ministry of Labour and Social Affairs (BMAS). FAQ on Working Time Recording, 2024. https://www.bmas.de/DE/Arbeit/Arbeitsrecht/Arbeitnehmerrechte/Arbeitszeitschutz/Fragen-und-Antworten/faq-arbeitszeiterfassung.html
• Federal Labour Court (BAG). Decision of 13.09.2022, Case No. 1 ABR 22/21. https://www.bundesarbeitsgericht.de
• European Court of Justice (ECJ). Judgment of 14.05.2019, Case C-55/18 (CCOO). https://curia.europa.eu
• German Occupational Health and Safety Act (ArbSchG), Section 3(2)(1). https://www.gesetze-im-internet.de/arbschg/__3.html
• Personio GmbH. Time Tracking Systems Compared, 2024. https://www.personio.de/hr-lexikon/zeiterfassungssysteme/