For many employers and HR teams in Germany, the obligation to track time remains a source of uncertainty. As a small business with a few employees, you may wonder if you need to comply with the tracking requirements stipulated by German labor laws.
The short answer is: yes. The obligation to record working time applies from the very first employee. The planned reform of the Working Time Act will primarily clarify how time must be recorded (especially electronically), rather than whether it should be.
Important note: This article is for general informational purposes only and should not be considered a substitute for individualized legal advice.
TL;DR
- Working time recording is already mandatory for all employers in Germany. Since the BAG decision of 13 September 2022, all working time must be recorded — regardless of company size, industry, or working model.
- The obligation applies from the first employee, but electronic recording will have thresholds and transition periods. The current draft legislation anticipates that electronic time tracking will become the standard from around 2025/2026, with micro-enterprises of up to ten employees likely being allowed to continue using non-electronic methods.
- From 2026, you should expect stricter rules on digital time tracking. Employers will be required to record the start, end, and duration of daily working time, typically on the same day, in a tamper-proof system, and maintain these records for a minimum of two years.
- Trust-based working time remains possible but with documentation. Employees can still work flexibly and focus on results, while recording their hours themselves; ultimate responsibility for correctness and completeness always remains with the employer.
- Digital tools such as Timebutler make compliance easier, especially for small and mid-sized companies. Browser-based systems are quick to roll out, support GDPR compliance, streamline payroll, and provide reports for HR, management, and works councils.
Legal Background: Why Working Time Recording is Already Mandatory
1. ECJ ruling 2019: Objective and Reliable Working Time Recording
In May 2019, the European Court of Justice (ECJ, case C-55/18) ruled that EU member states must require employers to implement an objective, reliable, and accessible system for measuring employees’ daily working time. The purpose is to enforce rest periods, maximum working time, and health protection for employees. This ruling is the European backbone of the German time tracking obligation.
2. BAG Ruling 2022: General Obligation for all Employers
On 13 September 2022, the Federal Labour Court (Bundesarbeitsgericht, BAG – case 1 ABR 22/21) decided that German employers are already legally obliged to record the working time of their employees. The duty follows from the Occupational Health and Safety Act (§ 3 (2) no. 1 ArbSchG) as interpreted in line with EU laws.
The BAG clarified in particular:
- All working time, including overtime, must be recorded.
- The obligation applies across all sectors and company sizes.
- Employers must ensure a suitable system — not necessarily a specific technology, but one that is reliable and usable in practice.
The Federal Ministry of Labour and Social Affairs (BMAS) explicitly confirms in its FAQ that employers may not wait for a new law; the obligation already applies today.
3. The Planned Reform of the Working Time Act (ArbZG)
To translate the ECJ and BAG rulings into statutory law, the BMAS has drafted a reform of the Working Time Act (Arbeitszeitgesetz, ArbZG). The draft (ArbZG-E) provides, among other things, that:
- Employers must record the start, end, and duration of daily working time.
- Recording should usually take place on the same day.
- Electronic recording becomes the standard, with exceptions allowed by collective agreement and for small employers, as well as transition periods based on company size.
At the time of writing, the final law and exact date of entry into force are still subject to the legislative process. However, most current analyses assume that:
- The general obligation to record working time is already in force (via BAG).
- Electronic recording requirements will gradually become binding from approximately 2025/2026, with transitional arrangements in place.
How Many Employees Does The Time Tracking Obligation Apply to in Germany?
The obligation to record working time applies from the first employee.
Under the BAG ruling, there is no minimum company size and no general or minimum threshold. This means the duty applies to:
- Large corporations
- Medium-sized enterprises
- Small businesses with only a few staff
- Startups
- Associations and nonprofits
- Family businesses
Only solo self-employed individuals and entrepreneurs with no staff are exempt from this employer obligation. Some categories, such as certain senior executives, may also be partially exempt from recording obligations, depending on how the final law is drafted.
Many small teams that already use Timebutler report that they are relieved to have clarified their obligations early, rather than waiting for audits or disputes to arise.
Electronic Time Tracking: Planned Thresholds And Exemptions
While the obligation to record working time applies to all employers, the form of recording (electronic vs. analog) is treated differently in the draft law:
- Electronic recording will be the rule. The ArbZG draft requires employers to record working time electronically, with data stored in a way that is durable and tamper-proof.
- Micro-enterprises with up to ten employees are expected to be exempt from mandatory electronic recording. According to current drafts and commentaries, companies with a maximum of ten employees may continue to record time in non-electronic form (e.g., on paper), even after electronic recording becomes the standard.
- Transition periods will vary depending on the company’s size. Drafts currently foresee implementation periods of up to five years for companies with fewer than 50 employees and shorter periods for larger employers.
For your communication, this distinction is crucial:
- Obligation to record working time: from the first employee, already in force.
- Obligation to record electronically: expected with exemptions for micro-enterprises and transitional phases.
For many small and mid-sized employers, it’s worth adopting a digital time tracking solution now to reduce administrative effort and compliance risk.
What Will Change in 2026 With Digital Time Tracking?
Here is what to expect as stricter time-tracking regulations take effect in 2026.
Which Data Must Be Recorded?
According to the draft Working Time Act and current legal commentary, employers will be required to record at least:
- Start of daily working time
- End of daily working time
- Duration of daily working time per calendar day
- Breaks (either as separate entries or via clear rules that can be verified)
Recording must usually happen on the same day and be kept for at least two years. The data must be accessible in case of inspections (for example, by authorities) and in labor law disputes.
Manual Excel sheets or handwritten notes will no longer be sufficient as the primary system, especially where the law explicitly requires electronic, tamper-proof recording. In that case, it makes sense to use a simple, browser-based tool like Timebutler for digital time tracking.
Who May Enter The Working Times?
The draft law follows the BAG decision and allows for flexible responsibilities. Working time can be recorded by the employer, the employee, or a third party (for example, a supervisor, team lead, or external service provider).
However, legal responsibility always remains with the employer. They must ensure that the system works reliably, entries are complete and correct, and violations of working time regulations can be detected and prevented.
Digital systems like Timebutler support this by offering roles, approvals, and automatic plausibility checks.
Anchoring In Occupational Safety Law
The time tracking obligation is primarily connected to occupational health and safety, rather than to pay. The goal is to protect employees from excessive working hours, ensure rest periods, and make workloads visible and manageable.
Consequently, authorities may interpret systematic failure to record working time not only as a formal violation, but also as a risk to employee health.
Trust-Based Working Time And Time Tracking: How They Fit Together
Many organizations fear that time tracking will undermine trust-based working time. In practice, the opposite is true.
Trust-based working time remains possible under the draft Working Time Act and the BAG ruling. The key change is that working time must still be documented.
In concrete terms, this means:
- Employees continue to work flexibly. They decide when and where they work within agreed frameworks.
- Output and results remain the focus. Time recording is not meant to encourage micromanagement, but to provide a legal safety net.
- Working time is still recorded (transparently and without minute-by-minute control), through quick clock-in/clock-out in a web or mobile app.
Digital systems like Timebutler make this balance much easier. They record the necessary data in the background, ensure legal compliance, and still leave freedom for individual work patterns and hybrid models.
Many teams report that transparency reduces conflict (for example, regarding overtime and availability) and clarifies expectations on both sides.
Co-Determination: The Role Of The Works Council
Introducing or changing a time tracking system in Germany is subject to co-determination under § 87 (1) no. 6 of the Works Constitution Act (BetrVG), as it concerns the introduction and use of technical devices designed to monitor employees’ behavior or performance.
For employers, this means:
- Involve the Works Council early: present legal background, planned processes, and the intended system as early as possible.
- Decide jointly on the digital tool: The Works Council should have a say in selecting the solution, especially regarding data protection and transparency.
- Define access rights and reporting clearly: who has access to which data? How are reports used? When are individual evaluations permitted?
This joint process often leads to greater acceptance among employees, because rules and use cases are discussed and documented. Many works councils explicitly welcome solutions that are transparent and easy to understand, clearly comply with GDPR, and limit unnecessary performance monitoring.
Practical Implementation: 5 Steps To Introduce Digital Time Tracking
1. Choose The Right System
A modern time tracking system should:
- Be browser-based and GDPR-compliant, so no local installation is required.
- Work on all standard devices (PC, tablet, smartphone).
- Offer clear user roles, approvals, and export options (for example, for payroll).
Many companies prefer employee time tracking tools like Timebutler because they can be set up quickly and are intuitive enough to use without extensive training.
2. Define Rules And Configure Them In The System
Clear rules create security for everyone:
- Core working hours and flexibility windows
- Break regulations and automatic break deductions (if permitted and transparent)
- Handling of overtime, on-call duty, and travel time
- Rules for home office and mobile work
Ideally, these rules should be documented in company agreements or policies and directly configured in the time tracking system (for example, maximum daily hours, warnings, and mandatory fields).
3. Inform And Train Employees
To increase employee adoption of time tracking systems:
- Explain why time is being recorded (legal requirements, health protection, fairness) and what it is not used for (for example, constant performance monitoring).
- Show in a short introduction how to use the tool in everyday work.
- Provide guides or FAQs for typical questions, such as recording business trips or breaks.
Particularly in teams with trust-based working time, good communication helps avoid the feeling of “surveillance” and instead highlights transparency and protection.
4. Make Getting Started As Easy As Possible
Digital systems are most likely to be accepted when they integrate smoothly into daily routines:
- One-click clock-in/clock-out via dashboard or smartphone
- Bookmarkable or “always open” tabs in the browser
- Integration with other HR or payroll tools (where available)
Many companies using Timebutler report that the simplicity of the interface is a key factor in successful adoption, especially in teams that are not particularly IT-savvy.
5. Use Reporting And Analysis
Once working times are recorded digitally, companies can derive real value:
- Transparency for HR and management: overtime, underutilization, and absences.
- Early detection of overload: peaks in working hours become visible and can be addressed.
- Support for payroll and billing: exportable reports reduce manual work and errors.
Timebutler provides standard reports that can be used directly for payroll, internal coordination, or discussions with works councils without the need for complex spreadsheets.
Legal Consequences Of Non-Compliance
The draft Working Time Act provides for administrative fines of up to EUR 30,000 if employers intentionally or negligently fail to record working time correctly, completely, in the correct form, or promptly, or if they do not fulfill their information obligations toward employees.
In addition, missing documentation has serious consequences in practice:
- In labor court disputes (for example, regarding overtime compensation), employers are at a significant disadvantage if they cannot present reliable working time records.
- In audits by authorities (for example, supervisory authorities or customs in certain sectors), incomplete or missing time records can trigger further inspections and sanctions.
A digital time tracking system, therefore, not only fulfills a legal duty, but also serves as an important evidence and risk management tool.
Conclusion: Why It Pays To Act Now
The time tracking obligation in Germany already applies from the first employee. Electronic recording will become the norm from 2025/2026, with only limited exemptions for micro-enterprises and transitional periods.
Companies have a limited window to review their current processes, select and introduce a compliant system, and align internal rules and communication with the new legal framework.
A digital time tracking solution offers exactly what most organizations need:
- Legal security through complete and verifiable documentation
- Transparency for employees, HR, and management
- Less administrative work in payroll and controlling
- More fairness and clarity around working hours and overtime
Many companies that are already switching now report how quickly a simple digital solution brings structure and calm to everyday work — without complex technology or high training effort.
If you want to prepare your organization early and with minimal friction, you can try Timebutler free of charge. Register, invite your team, and start a legally compliant, digital working time recording process together.
