Germany: Working Time Tracking – Legal and Criminal Risks for Employers | iGlobal Law

In Germany, employers are required to implement a system for recording employees’ working time, including the start and end of each working day and any overtime, following recent case law. Employees may input their own hours, including under trust‑based or remote working arrangements, but the employer remains responsible for ensuring that the system is objective, reliable and accessible.

In many organisations, working time is still recorded on a rough or estimated basis, with rounding practices, unrecorded overtime or standardised deductions for breaks. While often seen as pragmatic, these approaches can create significant legal risk, including potential personal liability for management and board members.

In practice, employers must ensure that systems record actual working time, not just contractual or scheduled hours. Informal or incomplete tracking is unlikely to meet this standard.

Importance of Accurate Recording

If working time is not properly recorded, employers face exposure across multiple areas:

Employees may be underpaid where actual hours worked exceed those recorded, which can lead to wage claims.
If total pay falls below the minimum wage when assessed against the hours actually worked, this can result in significant fines.
Without accurate records, employers may be unable to demonstrate compliance with limits on working hours and required rest periods.
Underpayment of wages can lead to underpayment of social security contributions, resulting in back payments, surcharges and potential further investigation.

Social Security Exposure

Incorrect time recording can also create substantial social security risk. Where employees are underpaid, contributions to health, pension, long‑term care and unemployment insurance may also be underpaid.

Employers are generally liable for the full amount of unpaid contributions, including the employee’s share. Additional penalties apply where contributions are paid late, increasing the financial exposure over time.

Criminal Liability

The most serious risk arises where unpaid social security contributions are treated as being withheld. In Germany, this can give rise to criminal liability.

Crucially, liability does not attach to the company itself but to the individuals responsible, including managing directors and board members. This means relatively small inconsistencies in time recording can escalate into personal risk where they lead to underpayment of contributions.

Practical Steps for Employers

In practice, the issue is how working time is recorded day‑to‑day. Employers should focus on ensuring that systems reflect actual working patterns and are consistently applied. This typically includes:

implementing reliable time‑tracking systems that capture actual hours worked;
ensuring managers understand and enforce time recording requirements;
setting clear rules on overtime and recording practices; and
carrying out periodic checks to identify inconsistencies.

Where there is any indication that past time recording may be inaccurate, this should be addressed promptly.

This is a high-level general update only. Legal advice should be obtained on specific circumstances.