Time Tracking: Breaks, Overtime, and Work Schedule Models
Here’s what it’s all about:
- What modern time-tracking software automates
- Why Break Rules and Time Accounts Are Important
- How Overtime and Premium Pay Are Calculated
- Which work schedule models can be implemented?
- What Companies Should Look for When Making a Selection
Modern time-tracking software verifies break requirements, calculates overtime based on stored target hours, and automatically manages time accounts. Important: A legally required break cannot be considered taken solely based on a flat-rate system deduction. In 2025, the Federal Labor Court (BAG) clarified that an automatic break deduction does not prove that the break was actually taken. Work schedules such as flex time, part-time work, or shift work can be managed in parallel, each with its own set of rules. Learn more about ZMI’s time tracking software.
✅ Time tracking as the foundation for automated processes
Today, digital time tracking does much more than simply record the start and end times of work. Modern systems evaluate recorded times based on defined work schedule models, maintain time accounts, identify discrepancies, and prepare data for HR and payroll.
Especially when it comes to breaks, overtime, and premium pay, the configuration determines how much manual effort is actually required. The software must be able to distinguish between company agreements, individual scheduled work hours, and legal limits, and apply them based on rules.
✒️ Break Policies in Time Tracking: What Does the Working Hours Act Require?
Section 4 of the Working Hours Act establishes the statutory minimum requirements for rest breaks. For work shifts lasting more than six hours but no more than nine hours, work must be interrupted by a rest break totaling at least 30 minutes. For work shifts lasting more than nine hours, a rest break of at least 45 minutes is required.
Breaks may be divided into periods of at least 15 minutes each. In addition, employees may not be required to work for more than six consecutive hours without a rest break.
Time-tracking software can store these rules in the system. For example, it can detect when a statutory break threshold is reached, flag missing breaks, or trigger a correction process.
❌ Why an automatic deduction for breaks alone is not enough
In many time-tracking systems, it is technically possible to automatically deduct break times from working hours once certain thresholds are reached. For example, if a certain duration of work is reached, the system can automatically deduct 30 minutes from the recorded attendance time.
However, such an automatic deduction does not automatically mean that the break was actually taken. In its ruling of February 12, 2025, Case No. 5 AZR 51/24, the Federal Labor Court clarified that an automatic break deduction does not imply that the employee actually interrupted their work. The system-generated deduction therefore does not replace proof that a break was granted and actually taken.
👉 For companies, this means that time-tracking software can automatically monitor and enforce break policies. However, it should not treat a break that was not actually taken as having been taken solely based on a predefined calculation rule.
🧐 Automatic deduction or actual break entry?
Advantage: minimal administrative effort and simple technical implementation
Please note: This alone does not constitute proof that a break was actually taken.
Advantage: The start and end of the break are clear
Please note: Employees must make a separate reservation.
Advantage: combines automation with actual documentation
Please note: A process is required for exceptions and missing entries
👉 In practice, therefore, a combination of clearly defined break rules, actual time tracking, and transparent correction options is recommended.
This is also relevant in connection with the general requirement to track working hours. According to the Federal Labor Court’s decision of September 13, 2022, Case No. 1 ABR 22/21, employers must implement a system that allows for the tracking of hours worked. The Federal Labor Court derives this obligation from Section 3(2)(1) of the Working Hours Act (ArbSchG). Learn more.
🧮 How does time tracking software automatically calculate overtime?
The automatic overtime calculation is based on a continuous comparison between the specified target time and the actual time recorded. For example, if a target time of eight hours is stored for a workday and the evaluated working time totals 8 hours and 45 minutes, the system can allocate the difference to a work time account.
A distinction must be made between a positive time balance and overtime subject to compensation. Whether additional working hours count as overtime and whether this gives rise to a claim for compensation or time off in lieu depends, among other things, on the employment contract, collective bargaining agreement, company agreement, and the company’s regulations regarding the scheduling or approval of overtime.
Time-tracking software therefore first records actual and recorded working hours. Legal and company policies then determine how these hours are processed further.
🤝 Time accounts replace manual calculations
Modern time-tracking systems can automatically update both positive and negative time balances. This provides HR, managers, and employees with an up-to-date overview of the status of each employee’s work time account.
For part-time employees, the calculation is based on the individually specified scheduled working hours. A workday consisting of six agreed-upon hours must therefore be calculated differently than the same period of attendance for a full-time employee.
👉 This eliminates a significant portion of the manual calculations involved in payroll accounting. The relevant scheduled hours, work schedules, and rules are stored in the system and are automatically taken into account with every entry.
🤔 How do you calculate night, Sunday, and holiday premiums?
Surcharges can also be calculated automatically based on defined time windows and rules. This applies, for example, to:
✅ Shift work
✅ Overtime Pay
✅ Night work
✅ Working on Sundays
✅ Working on Holidays
✅ Hardship Allowances
✅ Additional allowances agreed upon in the collective bargaining agreement
✅ Additional company-provided benefits
In doing so, the system must take into account the regulations in effect at the company. There is no general legal entitlement to Sunday or holiday pay premiums.
In contrast, § 6(5) of the Working Hours Act (ArbZG) provides for a special provision regarding night work. Unless there are compensatory provisions in a collective bargaining agreement, night work must be compensated by an appropriate number of paid days off or an appropriate premium added to the gross wages.
👉 Time-tracking software should therefore not assume any flat-rate surcharges. Rather, it must be able to reflect the actual collective bargaining agreements, employment contracts, or company policies that apply.
⚖️ Time off in lieu or payment for overtime
Overtime does not necessarily have to be paid. Depending on the terms of the employment contract or company policy, time off in lieu may also be provided.
Time tracking software can support both options. Time credits can first be accumulated in a work time account and later offset against time off. Alternatively, specified hours or premium pay can be transferred to payroll as data relevant to payroll processing.
👉 For HR and payroll accounting, a clear distinction between different time types is particularly important. The system should be able to identify which time entries are simply recorded as flex time credits, which are considered approved overtime, and which are relevant for payroll processing.
🔍 Transparency for Employees Through Employee Self-Service
Automation not only reduces the workload in HR and payroll. It also provides transparency for employees. Through an employee self-service portal, for example, employees can view their current time balance, recorded work hours, and any outstanding corrections.
This makes it possible to identify discrepancies earlier. Employees don’t have to wait until the end of the month or until payroll processing to discover that a transaction is missing or that a balance doesn’t add up.
👉 This continuous insight is especially important when it comes to flexible work schedules. The more responsibility employees take for managing their own work hours, the more important it becomes to have transparent access to their own time data. Learn more.
🤝 What work schedule models does modern time-tracking software support?
Many companies have more than one work schedule model. Administration, production, sales, and service may each require different rules.
Modern time-tracking software should therefore be able to support various work schedules simultaneously.
Brief description: Flexible scheduling of working hours within defined parameters and, where applicable, core hours
Typical areas of use: Office , administration
Brief description: Employees organize their work schedules largely on their own; the requirement to track working hours generally remains in effect
Typical areas of application: knowledge work , executives
Brief description: Work in defined early, late, night, or rotating shifts
Typical areas of application: Manufacturing , logistics, healthcare
Brief description: Individually reduced target hours within a defined flex-time framework
Typical area of application: Individual work-time arrangements
Brief description: Mandatory on-site work period combined with flexible work hours before and after
Typical applications: Offices and hybrid work models
👉 Trust-based working hours and time tracking are not necessarily mutually exclusive. Trust-based working hours primarily involve the employee taking personal responsibility for organizing their work schedule.
The requirement to track time, on the other hand, pertains to documenting the actual hours worked. Therefore, even under a trust-based work schedule, digital time tracking may be necessary.
🖥️ How does time-tracking software automatically accommodate different work schedules?
The primary benefit of automation comes from configurable rules. Companies define once which rules apply to specific employees, departments, or work schedules. The system then applies these rules to the recorded times.
For example, administrative staff may work under a flex-time system, while production staff work on a shift schedule. Part-time employees may also be assigned individual daily or weekly work hours.
Typical rules within a work schedule model include:
🔵 Daily scheduled working hours
🔵 Weekly target working hours
🔵 Flexible Work Hours
🔵 Core working hours
🔵 Recess Rules
🔵 Shift Hours
🔵 Time Accounts
🔵 Balance Limits
🔵 Nighttime Hours
🔵 Bidding Rules
🔵 Compensatory time off
🔵 Approval Processes
🔵 Correction Processes
This means that not every single transaction has to be manually classified.
🔍 Review of maximum working hours and rest periods
In addition to company policies on working hours, statutory limits can also be monitored.
Section 3 of the Working Hours Act (ArbZG) generally provides for a workday of eight hours. This may be extended to up to ten hours, provided that the average of eight hours per workday is not exceeded over a period of six calendar months or 24 weeks.
Section 5 of the Working Hours Act (ArbZG) generally requires an uninterrupted rest period of at least eleven hours following the end of the daily work shift. For certain industries, the law provides for exceptions.
👉 Time-tracking software can check for such limits and highlight any deviations. For example, the system can alert users if the rest period between two work shifts is too short or if a defined work time limit has been exceeded.
⚠️ The software does not replace a legal assessment of an individual case. However, it helps identify suspicious time patterns early on.
✅ Why rule-based time tracking results in fewer errors than Excel
Excel can generally calculate working hours. However, as the number of employees increases, along with varying scheduled hours and multiple work schedules, the maintenance effort increases significantly.
Formulas must be adjusted, overtime periods reviewed, and individual agreements taken into account. Changes to a company agreement or a work schedule may require additional manual adjustments.
A centralized time tracking system, on the other hand, operates based on predefined rules. Changes can be systematically applied starting at a specific point in time. This reduces, in particular, the risk of:
🔵 Incorrectly entered target times
🔵 Overlooked time deviations
🔵 Incorrectly calculated surcharges
🔵 Inconsistent calculation methods
🔵 forgotten corrections
🔵 manual entry errors
🔵 Inconsistent time accounts
This creates a more consistent database for HR, managers, and payroll accounting .
🚨 What should companies look for in time-tracking software?
✅ Break rules configurable in accordance with § 4 of the ArbZG: The system should be able to detect missing or insufficiently long breaks without treating a break that was not actually taken as having been taken simply because of an automatic deduction.
✅ Ability to map multiple work schedule models simultaneously: Flexible hours, shift work, part-time work, and other models should be manageable at the same time.
✅ Automatic overtime calculation: Planned and actual times should be automatically calculated based on defined rules.
✅ Configurable premium rules: Premiums for night shifts, weekends, holidays, shift work, and overtime should be configurable in accordance with applicable regulations.
✅ Verifiable working time limits: It should be possible to monitor maximum working hours and rest periods through appropriate regulations.
✅ Transparent time accounts: Employees should be able to track their current time balance.
✅ Ability to track time off in lieu and cash payments: Support should be provided for different company policies.
✅ Historical rule changes must be transparent: A change in the working time model must not result in past periods being unintentionally assessed according to the new rules.
✅ Integration with payroll: Rated working hours and premium pay should be able to be transferred without having to be manually entered again.
✅ Correction and approval processes are in place: It should be possible to track and address missing entries, rule violations, and exceptions.
🤓 Conclusion: Modern time tracking automates rules, not the actual breaks taken
Modern time-tracking software primarily reduces manual effort in situations where working hours must be tracked regularly according to defined rules. Target hours, time accounts, overtime, work schedule models, and premium pay can be processed largely automatically. Different employee groups can be managed in parallel according to different work schedule models.
However, when it comes to breaks, current BAG case law highlights an important limitation of automation. A break that is automatically deducted by the system is not automatically considered an actual break taken. An appropriate time tracking system therefore combines configurable break rules with transparent tracking, notifications, and correction processes.
👉 This creates a reliable database for HR and payroll. Employees receive transparent time accounts, and companies can manage different work schedule models within a single system.
💡 FAQ: Breaks, Overtime, and Work Schedule Models in Time Tracking
Does time-tracking software automatically deduct break time, even if employees don't take a break?
Technically, time-tracking systems can evaluate break times based on rules or deduct them automatically. However, such a deduction does not prove that a break was actually taken. In its ruling of February 12, 2025, Case No. 5 AZR 51/24, the Federal Labor Court (BAG) clarified that an automatic deduction for breaks does not prove that the break was actually taken. Companies should therefore establish a transparent process for recording breaks and handling exceptions.
How is overtime calculated for part-time employees?
The actual hours worked are compared to the individually agreed-upon scheduled working hours. Whether this results in overtime subject to compensation depends on the provisions of the employment contract, collective bargaining agreements, or company policies. A positive time balance therefore does not automatically entitle an employee to overtime pay.
Can multiple work schedule models be used at the same time within the same company?
Yes, modern time-tracking software can assign different work schedules to different employees or employee groups. For example, the administrative department might use a flex-time schedule, while the production department might follow a shift schedule.
What happens when the work schedule is changed for individual employees?
The new work-time model should take effect as of a specified date. Historical periods should remain traceable according to the rules in effect at the time. This prevents a later change from unintentionally reevaluating previous work hours.
Are night and holiday surcharges calculated automatically?
Time-tracking software can automatically calculate premium pay based on defined rules. However, the specific amount and eligibility are determined by the applicable laws, collective bargaining agreements, employment contracts, or company policies. There is no general legal entitlement to premium pay for work on Sundays or holidays.
Is a trust-based work schedule compatible with the requirement to track work hours?
Yes. Trust-based working hours and time tracking are not inherently mutually exclusive. Employees can continue to decide on their own how to organize their work hours. However, the actual number of hours worked each day must still be tracked using an appropriate system.
Jonathan Martin
Jonathan Martin is a managing partner at ZMI GmbH. For many years, he has been working in the fields of time tracking, HR software, access control, and the digitization of HR processes. In his articles, he provides practical insights into current developments, legal requirements, and digital solutions for businesses.
