By Neville Chamunorwa

Earlier this year, it became compulsory for all EU-based companies to track the time worked by their employees. This was due to a ruling made by the European Court of Justice (ECJ). The move is likely to have a significant impact on the many firms that do not monitor time and attendance in their workplaces.

The Law On Time Tracking

 The EU uses different instruments to make and shape laws. The most common are:

Regulations: these are directly binding on Member States (the countries that make up the European Union) and come into effect on a date specified by the EU.

Directives: these outline the effect or result each Member State has to achieve but leaves each country to pass its own domestic laws to bring this about.

Decisions: these are also binding but are more focused and only apply to the parties specified, which may be a particular firm, for example, or Member State.

The Working Time Directive required all Member States to pass laws that set limits on the number of hours employees can work per week. This is usually 48 hours on average measured over 17 weeks. There are, however, some exceptions to this. For example:

• Employees below the age of 18 cannot work more than 40 hours per week or 8 hours per day.

• Some types of jobs are exempt, such as the emergency services or places where 24-hour cover is required.

• Employees over the age of 18 can choose to opt-out of the 48-hour restriction.

This was intended to protect workers from being expected to work too many hours by their employers. With that being said, how does the mandatory time-tracking ruling actually fit into this?

In essence, it all stems from a case in Spain involving Federación de Servicios de Comisiones Obreras (CCOO) – a Spanish trade union – and Deutsche Bank. The CCOO took Deutsche Bank to court claiming that the company should have a system in place to track the time worked by its employees. The CCOO cited both Spanish domestic law and the Working Time Directive when making its case. Deutsche Bank argued against this, pointing to Spanish Supreme Court case law. This stated that companies must record the number of overtime hours worked but not regular hours.

The High Court in Spain were not convinced that the Supreme Court’s ruling complied with the obligations set out in the Working Time Directive. Therefore, the case was sent to the European Court of Justice (ECJ) for guidance. The ECJ listened to the arguments put forth and came down on the side of the CCOO. The logic for this is:

• The Working Time Directive states employees can work a maximum of 48 hours per week on average.

• There is an obligation upon companies to record the amount of overtime worked by their employees but not regular working hours.

• If a company does not record all the hours worked by an employee, it is impossible to verify how many regulars hours they have worked and how much overtime.

Therefore, the ECJ ruled that to be in compliance with EU worker rights, companies in each Member State must introduce time-tracking systems to record all hours worked by their employees.

What Mandatory Time-Tracking Means for EU Companies

While this ruling was a direct response to the case brought by the CCOO against Deutsche Bank, it applies to all EU-based firms. However, the ECJ did not give specifics about what sort of time-tracking system needs to be implemented or what this should look like. That means it is now down to each Member State to decide for itself the particulars of the system.

The time-tracking processes a company will need to put in place, then, will depend very much on which country the firm is based in. Sooner or later, though, every company will need to have some sort of system in place to record the hours worked by its employees. A lot of employers are understandably concerned about this and have questions. Some of the most common of these are:

• How will this apply to industries with changeable or unpredictable start and finish times?

• What about workers who are given deadlines and project objectives rather than specified hours?

• Will the obligation apply to freelance workers, consultants, and contractors?

• How can remote employees be properly monitored given that they’re not in a place with time monitoring facilities?

• How can time be tracked accurately for workers who are often based in different locations, for example, salespeople or onsite workers?

• Can this be done manually or will firms need electronic records?

• Is there a risk of breaching other laws when using time-tracking technology, for example, GDPR?

The reality is that the answer to most of these questions will only become clear once the different Member States begin to implement the ruling into domestic legislation. Until then, it is left to speculation. However, there are options out there for companies wishing to prepare for the upcoming change to the law on time-tracking.

Time-Tracking Solutions For EU Companies

Some Member States already have fairly comprehensive domestic laws on recording the number of hours worked by employees. For example, companies in both France and Hungary are already required to track all time worked. For firms based in countries already largely in compliance with the new ECJ ruling, little will change. Other countries have far less stringent laws in relation to time-tracking, however.

Germany, for example, currently only requires firms to record the amount of overtime worked. The new laws, then, will be a big change for companies in these countries and are already causing consternation. After the ECJ announced its ruling, the Confederation of German Employers’ Association (BDA) wasted no time in making its feelings clear. They protested that the modern-day working world was not suitable for workers clocking in and out each day. Remote workers have also been highlighted as an example of how this is not practically viable. How can you track the time of someone who isn’t physically there?

The BDA was perhaps being a tad disingenuous with its comments, however. The technology to track the hours worked by workers of all types across all industries is already in wide use. This often comes in the shape of software and apps and these can be downloaded onto a variety of electronic devices. This means that workers can clock in on their PCs while they’re sitting at their desks, or on their laptops if they’re working from home, or on their smartphones or tablets if they’re onsite. Additionally, GPS is built into some systems to ensure that workers are clocking in where they’re supposed to be.

There are different types of time-tracking software available and a variety of methods for monitoring time worked. For example:

Clocking In and Out: employees clock in on the app when they start work and clock out when they finish.

Chronological: the worker logs the start and finishing times for work carried out on a certain task or project.

Duration: the worker records the amount of time spent on something but not the specific times between which it was carried out.

Location: this utilizes GPS technology to verify an employee is at their place of work.

Activity: some software monitors the time worked by recording keyboard strokes, mouse clicks, and screenshots of the employee’s desktop.

This means that whatever industry or field a company is in, there is likely already time-tracking software to meet its needs. For firms hiring employees that work unpredictable hours or in varying locations, this is invaluable. While it may seem like an inconvenience initially, implementing a time-tracking system could see firms reaping benefits they did not ever anticipate.

Benefits Of Using Time-Tracking Software

It is understandable that companies based in those Member States not yet requiring time-tracking will be daunted by the prospect of implementing it. When something is imposed rather than chosen, the natural reaction is to resist. However, many firms have already begun using time and attendance monitoring software for the benefits they bring aside from complying with ECJ’s ruling.

Some of the main benefits companies experience from utilizing time-tracking technology are provided below.

It allows accurate time recording

It enables firms to know exactly how many hours their employees are working and helps to eliminate stolen time which, in turn, can save money. It also gives the company insight into how time is being spent. This makes efficiency and productivity much more measurable.

Stops buddy punching

One employee getting another to clock in for them when they’re not physically present is, unfortunately, a common occurrence. Some software harnesses the use of facial recognition technology to stop this from happening.

Improves time estimates

Tracking the time for specific tasks or projects gives companies a better idea of how long completion is likely to take on future projects. Being able to give clients accurate time estimates for their work is a huge plus to many firms.

Improves time management

When employees know their time is being tracked, especially with software that takes screenshots of their on-screen activity, they are more likely to manage their time more efficiently.

Decreases micro-management

When an employer has access to information regarding how employees are spending their time, there is less of a need to micro-manage. Since workers are rarely happy being micro-managed, this makes for a more pleasant working environment all round. 

Increases productivity

Overall productivity tends to increase when time-tracking software is introduced. This is due to a combination of factors. Employees are aware that their time is being monitored and so waste less of it. Being aware of exactly how much time is being spent on specific projects and tasks can act as a motivating factor. In addition to this, it allows companies to tweak their strategies or match employees with the projects they do best.

Streamlines the payroll process

Payroll becomes a far simpler matter with time-tracking tools. Not only does it allow for more accurate pay, but integrating the software into your payroll system saves your payroll staff time as well.

Integrates with other tools

Firms can use time-tracking integrations to complement the existing software they use. Communication tools such as Slack and MS Teams are growing in popularity with companies in a wide range of industries. As a result, time-tracking functions are easily integrated into such software and work well with it.

Keeps firms compliant

One of the biggest benefits of implementing time-tracking software is that it will ensure firms are compliant with the ECJ ruling once it starts to be enforced. Even so, these tools are also generally compliant with other relevant legislation that might otherwise be breached, for example, GDPR laws.

The Future of Time-Tracking

It is only a matter of time before all companies across the EU are required to incorporate a time-tracking system to monitor the hours worked by their employees. While this may not be an issue for firms in countries with existing time-monitoring laws, those in countries without the more stringent regulations should start to prepare themselves.

There are various options available when it comes to time-tracking software and methods. Therefore, it would be wise for companies to start considering which of the wide selection of choices is most likely to suit their needs. Having a solid system in place before the ECJ ruling takes effect will put firms ahead of the game and also bring a plethora of other major benefits too.

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