🤝 When must the works council be involved in the implementation of a time tracking system?
Many companies face the same question when it comes to works councils and time tracking: Is it enough to simply select and then implement time tracking software, or does the works council need to be involved as early as the planning phase?
Whenever an electronic time-tracking system is to be introduced or significantly modified, the works council’s rights of co-determination must be reviewed. This applies in particular when the software used is capable of collecting or analyzing information about employees’ behavior or performance.
In practice, this applies to most digital time-tracking systems. They not only record the start and end times of work shifts but also track, for example, breaks, overtime, absences, and shift schedules. Many solutions also offer comprehensive analysis and reporting features. About ZMI’s time tracking software.
The decisive factor here is not whether the employer intends to conduct surveillance. Rather, what matters is that the system objectively offers the possibility of obtaining such information. This potential for surveillance alone typically triggers the right to co-determination under § 87(1)(6) of the Works Constitution Act (BetrVG).
⚖️ The legal basis: Section 87(1)(6) of the BetrVG
The right to co-determination regarding the introduction of electronic time-recording systems is derived from Section 87(1)(6) of the Works Constitution Act. It states:
“In the absence of statutory or collective bargaining provisions, the works council shall have the right to participate in decision-making on the following matters: the introduction and use of technical equipment designed to monitor employees’ behavior or performance.”
This provision protects employees from the unilateral implementation of technical systems that allow conclusions to be drawn about their behavior or work performance.
👉 Digital time tracking often falls under this regulation. Working hours are stored electronically, changes are documented, and reports are generated automatically. This creates the potential for surveillance, regardless of whether the employer actually uses these capabilities.
☝️ Why electronic time tracking is subject to co-determination
Modern time tracking is no longer limited to simply recording when employees arrive and leave. These systems are often a central component of digital human resources management. Depending on the range of features, the following information—among other things—can be analyzed:
✅ Start and end of the daily work shift
✅ Compliance with required breaks
✅ Overtime and Time Accounts
✅ Absences
✅ Shift schedules
✅ Time adjustments
✅ Project hours, job hours, or cost center hours
Such data can provide insights into work processes and the behavior of individual employees. For this reason, electronic time-tracking systems are generally subject to employee participation.
💡 The assessment may differ if working hours are documented exclusively by hand and there are no technical means of analysis or verification. However, such situations now play only a minor role in day-to-day business operations and are not recommended from a compliance perspective, given the case law of the European Court of Justice (ECJ) and the Federal Labor Court (BAG), as well as the upcoming legal requirement for time tracking.
📄 What rights does the works council have when a time tracking system is implemented?
It is often assumed that the works council can demand the implementation of a time tracking system on its own. However, this assumption does not align with current case law. According to the ruling of the Federal Labor Court (BAG) dated September 13, 2022, the works council generally does not have the right to initiate the introduction of a time-tracking system (more on this). Employers are already required by law to track their employees’ working hours.
The right to co-determination therefore primarily concerns the specific structure of the system. For example, the employer and the works council must agree on
🔵 What data is collected,
🔵 which features are used,
🔵 which analyses are permitted,
🔵 Who is allowed to access what information,
🔵 how long work time data is stored and
🔵 What technical and organizational measures are in place to protect the data.
👉 If the two sides cannot reach an agreement, the conciliation board will decide on the provisions subject to co-determination.
🚨 An Overview of Recent Case Law
ECJ: Employers Must Track Work Hours
In its judgment of May 14, 2019 (C-55/18), the European Court of Justice ruled that Member States must require employers to establish an objective, reliable, and accessible system for recording working hours. The aim of this decision is to ensure the effective enforcement of working time regulations and to protect maximum working hours and rest periods.
BAG: Co-determination remains in place; there is no right to initiate referendums
In its decision of September 13, 2022 (1 ABR 22/21), the Federal Labor Court clarified that the works council does not have the right to initiate the introduction of a time-recording system. However, its right to co-determination under Section 87(1)(6) of the Works Constitution Act (BetrVG) remains unaffected. As soon as an electronic time-recording system is to be introduced or modified, the works council must be involved in its design.
🧐 What does this mean for businesses?
Selecting time tracking software is only one part of the project. Legal and organizational preparation is just as important. Companies should involve the works council in the planning process as early as possible and work together to define the goals of the time tracking system. Is the goal to comply with legal documentation requirements, simplify payroll processing, or increase transparency regarding working hours and overtime? A shared understanding makes it easier to draft the works council agreement later on.
Open communication with employees is just as important. Explaining in a clear and understandable way what data is collected, who has access to it, and how it is used builds trust and increases acceptance of the new system. This creates a seamless digital flow of information without duplicate data entry.
📜 What should a company policy on time tracking cover?
A works agreement sets forth binding provisions on how a time-tracking system is to be used within the company. It provides legal certainty for employers and employees and specifies the works council’s rights to co-determination. The specific provisions required depend on the company and the system in use. However, there are certain points that should be included in every works agreement.
1️⃣ Purpose of Time Tracking
At the outset, it should be clearly defined why the time-tracking system is being implemented. Typical goals include complying with legal documentation requirements, calculating working hours, maintaining time accounts, and workforce planning.
Equally important is a clear limitation of purpose. The data collected may be used exclusively for the agreed-upon purposes. For example, if the system is not intended to be used for performance or behavioral monitoring, this should be explicitly stated in the works agreement.
2️⃣ What data is collected?
Employees should be able to understand what information the system stores. Therefore, it is recommended to list the processed data as specifically as possible. This includes, for example:
🔵 Start and end of the workday
🔵 Breaks
🔵 Overtime
🔵 Absences
🔵 Time Accounts
🔵 Shift Information
🔵 Project, order, or cost center entries (to the extent they are necessary for operational processes)
👉 Not every feature of a software program needs to be used. Often, it is sufficient to collect only the data that is actually needed for the intended purpose. This is also in line with the principle of data minimization under the GDPR.
3️⃣ Clearly Define Access Rights
A common point of contention is the question of who is allowed to view what information. The company policy should therefore include a clear framework for roles and access permissions. One possible model, for example, looks like this:
Access: Personal Work Schedules, Time Accounts, and Correction Requests
Access: Your Team’s Work Hours
Access: Master Data and Transaction Data for Human Resources Management and Payroll Processing
Access: Technical administration without the use of personal data analyses
👉 The more clearly permissions are defined, the lower the risk of misunderstandings or unauthorized access.
4️⃣ Define Permitted Analyses
Electronic time tracking enables a wide range of analyses. For this very reason, the company policy should specify exactly which reports may be generated and which may not. Among other things, it should stipulate that,
🤔 Which standard reports are permitted,
🤔 Who is allowed to view personal analytics,
🤔 Whether team or company evaluations are anonymized or aggregated
🤔 and whether performance comparisons or rankings are excluded.
This section is often one of the most important points of negotiation between the employer and the works council.
5️⃣ Data Protection and Data Security
Work time data is personal information and must be protected accordingly. The company agreement should therefore, among other things, stipulate that
📄 how the data is transferred,
📄 What technical and organizational safeguards are in place,
📄 how access is logged,
📄 how data backups are performed and
📄 How to recover data after a technical failure.
Depending on the nature of the processing, it may also be necessary to determine whether a data protection impact assessment is required.
6️⃣ Set retention periods
The retention period should also be clearly defined. In doing so, statutory retention requirements must be taken into account, as must the provisions of the GDPR. Once the specified periods have expired, personal data must be deleted or anonymized, unless there are legal grounds for further retention.
7️⃣ Employees' Rights
Employees should be able to verify at any time what working-time data is stored about them. The company policy should therefore specify, among other things,
💭 How employees can view their time records,
💭 how to request corrections,
💭 Who decides on amendments and
💭 How changes are documented.
👉 Clear procedures make day-to-day work easier and prevent unnecessary follow-up questions.
8️⃣ Information and Training
Implementing a new time tracking system doesn’t end with the installation of the software. Employees should be informed about it well in advance,
💡 Why the system is being introduced,
💡 which features are used,
💡 What rights you have
💡 and who to contact if they have any questions.
👉 Additional training helps reduce uncertainty and prevent mistakes during daily use.
✍️ Sample Structure of a Company Agreement
In practice, many companies follow a similar basic structure.
A company agreement on employee time tracking may, for example, include the following sections:
💡 The Purpose of Time Tracking
💡 Scope
💡 Data Collected
💡 Type of time tracking
💡 Roles and Permissions Framework
💡 Permitted Analyses
💡 Data Protection and Data Security
💡 Retention periods
💡 Employee Rights
💡 Training and Information
💡 Final Provisions
Depending on the company, additional policies may be implemented, such as those regarding mobile time tracking, shift work, or project time tracking.
👉 Employers’ associations, labor unions, and specialized publishers also provide sample company agreements. While these serve as a useful guide, they are no substitute for tailoring the agreement to your company’s specific practices and the time-tracking system you use.
🤝 Introducing Time Tracking Step by Step in Collaboration with the Works Council
Step 1: Notify the works council early on
Employee participation doesn’t begin with the selection of software. Inform the works council at the very start of the project and explain the goals you are pursuing with the implementation.
Step 2: Set Shared Goals
Employers and the works council should first agree on the requirements the new system is expected to meet. Compliance with legal requirements, reliable time tracking, and more efficient payroll processing are often the primary considerations.
Step 3: Jointly Assess Data Protection
Data protection issues should be discussed early on with the works council and—if there is one—the data protection officer. This particularly concerns access rights, retention periods, and the scope of data collection.
Step 4: Arrange a pilot run
A pilot project provides an opportunity to test the system under real-world conditions. Feedback from the company can be used to adjust processes before the time tracking system is rolled out company-wide.
Step 5: Adopt a workplace agreement
Once all outstanding issues have been resolved, the company agreement is finalized and signed by the employer and the works council. It then serves as the binding basis for the system’s implementation.
Step 6: Inform and train employees
Before the system goes live, all employees should be familiarized with the new time tracking system. In addition to explaining how to use the software, the contents of the company agreement should also be explained.
⚡️ Common Issues That Can Lead to Conflict and How to Resolve Them
"Time tracking is used solely for monitoring purposes."
This is a concern that companies often face. Open communication helps to alleviate reservations. Explain exactly what data is actually collected and what types of analysis are not permitted. Clearly defining the purpose of data collection in the company policy also helps build trust.
"What data is the software allowed to store?"
The principle of data minimization applies here. Only information that is necessary for the agreed-upon purposes should be collected. Features such as GPS tracking or biometric procedures require a separate legal review.
"Who is allowed to view personal data analyses?"
A tiered role- and permission-based system prevents personal data from being accessible to an unnecessarily large number of people. Who has access to what information should be clearly defined and documented.
"The software generates performance rankings."
Comparisons of individual employees are among the most sensitive functions of modern time-tracking systems. Companies should assess whether such analyses are necessary at all. If they are not, it is advisable to explicitly exclude their use in the company agreement.
"The employees were not adequately prepared."
Even the best software will be met with skepticism if employees don’t know why it’s being implemented or how it works. Regular updates, training, and transparent communication are therefore essential components of a successful implementation.
✅ Checklist for Employers
Before implementing an electronic time-tracking system, you should review the following points in particular:
1️⃣ Is there a works council?
2️⃣ Was the works council involved in a timely manner?
3️⃣ Were the rights of employee participation under Section 87(1)(6) of the Works Constitution Act (BetrVG) taken into account?
4️⃣ Is there an approved works council agreement in place?
5️⃣ Are the purpose, data protection, retention periods, and access rights clearly defined?
6️⃣ Has it been determined whether a data protection impact assessment is required?
7️⃣ Is the record of processing activities up to date?
8️⃣ Have roles and permissions been set up?
9️⃣ Have the employees been informed and trained?
🔟 Is there a plan to review the company agreement on a regular basis and amend it as needed?
🤓 Conclusion
The implementation of a digital time tracking system is not merely an IT project. It involves labor law, data protection, and organizational issues in equal measure. Companies with a works council should therefore include the right to co-determination in their planning from the very beginning.
A carefully drafted workplace agreement establishes a binding framework for the use of the system. It specifies what data is processed, who is authorized to access it, and what types of analyses are permitted. At the same time, it provides employees with clarity regarding how their work time data is used.
✅ By involving the works council early on, clearly defining responsibilities, and ensuring transparency throughout the implementation process, you can lay the groundwork for high acceptance and legally compliant operation of the time tracking system.
💡FAQ: Works Council and Time Tracking
Do I need a company agreement if there is no works council?
No, a works agreement requires an existing works council. If there is no works council, employers must nevertheless comply with labor law requirements and the provisions of the GDPR.
Can the works council prevent the implementation of a time tracking system?
The works council cannot arbitrarily block the implementation of a time-tracking system subject to co-determination. If there is a dispute over the system’s design, the conciliation board will decide upon request.
What happens if an employer fails to comply with the right to co-determination?
If co-determination rights are violated, the works council can enforce them through the labor courts. Depending on the specific case, injunctive relief or a resolution procedure may be considered.
What data may be stored as part of time tracking?
Only personal data that is necessary for the agreed-upon purposes may be collected. The company agreement should clearly describe what information is processed.
Is GPS tracking via a time tracking app permitted?
Location data is particularly sensitive under data protection law. Its processing requires an appropriate legal basis and a clearly defined purpose, such as fulfilling an obligation to provide evidence to the client regarding presence at a work site.
How often should a company agreement be reviewed?
The company agreement should be reviewed at the latest when changes are made to the time-tracking system or the legal framework. Regardless of this, it is recommended that the agreement be reviewed jointly on a regular basis, for example, every one to two years.
Can external consultants assist in drafting a company agreement?
Yes, many companies bring in external advice on labor law or data protection, as well as technical expertise, for the project. However, responsibility for the content of the works council agreement remains with the employer and the works council.
