The end of flexible working time arrangements? New limits for start-ups?

Working life today is fast-paced. This is particularly true for start-ups, which thrive on the fast pace, creativity and drive of employees and other contributors. This is far from the prevailing image of an eight-hour workday, which ends when you leave the Office.

Thanks to digitalisation, performance is often no longer dependent on presence in an office. The same is true for the flow of ideas. Yet the judgment of the European Court of Justice (ECJ) of 14 May 2019 (Case No C-55/18) could spell the end of this freedom.

Future obligation to monitor working time

Following the judgment handed down on 14 May 2019 (C-55/18), Member States must now require employers to establish an objective, reliable and accessible system, which enables the duration of time worked each day by each employee to be measured.

For start-ups, which often handle the topic of working time very flexibly, this judgment raises numerous questions. The most important of these must be whether the judgment has put an end to flexible working time Arrangements.

Starting point

In many respects, the Working Time Act (Arbeitszeitgesetz, ArbZG) is inflexible and no longer suits today’s working and working time models. It is no secret that many employees regularly infringe the Working Time Act, in particular the provisions on the maximum number of working hours each workday, on rest periods and on rest time.

This will not always be a case of abuse and reckless employers using an emergency to exploit employees. On the one hand, employees often explicitly want to infringe the Working Time Act. Foreseeably, employees voluntarily work through breaks (infringing the break requirements), in order to be able to finish work earlier. It is difficult to make a clear-cut distinction between work and rest, particularly for start-ups. Differentiating between when one is specifically working and when one is resting or living is often quite difficult in the case of creative activities.

On the other hand, this freedom can also be considered a burden when employees exploit technical advances to demand that constant availability from their employees.

The case before the ECJ

The ECJ takes the protection of employees into account in this recent judgment. Without an obligation to document working time (beginning and end of the working time and breaks), it is difficult, if not impossible, to prove infringements of the working time rules. Accordingly, in line with the ECJ judgment of 14 May 2019 (C-55/18), Members States must compel employees to implement an objective, reliable and accessible system, which enables the duration of time worked each day by each employee to be measured.

The action brought by the Spanish union against Deutsche Bank in Spain therefore has a significant impact on current working time practices in Europe. The ECJ held that a system for the verification of compliance with the agreed working time is necessary as without such a system, it would be extremely difficult, if not impossible, for employees to assert their rights.

As in Germany, Spanish law has only required companies to keep a list of the “overtime” that was worked until now. Neither Spain nor Germany impose a general obligation to comprehensively record the working time. In other words, in general the requirement to document working time only starts when more than eight hours have been worked in a working day in Germany.

What can we expect?

For start-ups, this raises the question of whether existing working time models (such as trust-based flex-time) need to be rethought and how the working time of employees can be monitored.

The question of which form such systems for monitoring the working time must take yields some very diverse results. Solutions range from monitoring logging in and out on a computer, to iris scans, which use biometric data to monitor the way in which a computer is being used. Perhaps there is also a chance for (new) start-ups to develop and bring to fruition apps, chips, etc., which provide a lasting and complete record of working time?

There was a huge outcry. Data protection issues are often neglected in current discussions. In addition, proposed solutions often forget that introducing such systems is only half the battle. After all, not all work is done in front of the computer.

Summary

First: keep calm. It is not yet clear how the German legislators will choose to implement the obligation to record working time. Federal Minister for Employment, Hubertus Heil has announced that he intends to find a new statutory rule and see the judgment implemented by the end of 2019. The German Coalition Government’s efforts to make working time models more flexible definitely constitute a challenge in this respect. In any case, the ECJ stressed that it is incumbent upon the Member States to adopt the specific terms, taking into account the special features of the activities involved and the size of certain companies. There is still hope that the prophesised setback will fail to materialise, and that the legislators will bear in mind precisely the situation faced by start-ups.

Dr Michaela Felisiak
(Lawyer, LL.M.)

Dr Erik Schmid
(Lawyer)