Forms, crediting, legal agreements: the employment law attorneys at the Dresden law firm white ip | Patent & Legal will answer your questions about working time accounts.
The attorneys at white ip | Patent & Legal have many years of experience in the field of working time recording and drafting employment contracts and can provide you with comprehensive and competent advice at any time on whether a working time account agreement makes sense for your company and which form of account agreement is most effective for your company.
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The standard phrase to explain what a working time account is is that it records in writing or electronically the actual work performed by the employee, including vacations, sickness, overtime and so on, and offsets it against the working time to be performed under the employment contract or collective agreement.
If an employee works more than agreed in the employment contract or collective agreement, he or she records “plus hours”; if he or she works less, he or she records “minus hours”.
After a contractually agreed period, usually on a monthly or annual basis, these two results are then offset and a corresponding equalization takes place.
Such contractual working time regulations are complicated because it must be clear when plus and minus hours accrue, how many plus and how many minus hours employees can accumulate and what should happen to the credit hours or minus hours when the employment relationship is terminated.
Working time accounts are essentially differentiated according to the agreed compensation framework. A basic distinction is made between short-term accounts and long-term accounts, which in turn are divided into various subcategories.
Short-term accounts
The term short-term accounts refers to working time accounts with a compensation period of less than one year.
Flexitime
As the “original form” of the working time account, flexitime is the most common form of account management. With a simple flexitime agreement, the employee is free to choose the start and end of the daily working hours within certain limits, for example 8 hours of work between 06:00 and 22:00. It is also possible to define a “core working time” within which hours must be worked, while the rest can be freely chosen, for example core working time between 10:00 – 14:00 while the remaining 4 hours can be worked within the framework of 06:00 – 22:00.
With qualified flexitime, the employee can decide not only the start and end of the daily working time, but also the duration. Only a weekly or monthly working time is specified, which the employee must achieve. If they do not achieve this, they will be credited with minus hours.
Annual working time account
With the annual working time account, the compensation period is the respective year, as the name suggests. Such an agreement leads to a high degree of flexibility for the distribution of working time. Ideally, the account shows an amount of +/- zero at or shortly before the end of the compensation period. However, with this account agreement there is a risk that a high number of plus or minus hours subject to compensation will accumulate.
Traffic light account
The so-called traffic light account does not represent a separate form of working time account, but merely extends the variants already explained. It is characterized by the introduction of a warning system. The employee’s hours balance is regularly checked and it is determined whether the account shows too many or too few hours.
A distinction is made between three different phases:
- Green phase (e.g. up to +/- 30 hours) – employees are solely responsible for their working hours.
- Yellow phase (e.g. up to +/- 40 hours) – requires the cooperation of employees and supervisors to return to the green phase.
- Red phase (e.g. up to +/- 60 hours) – supervisors ensure that employees’ working time balances are returned to the yellow and green areas.
Consistent monitoring and regulation of working time accounts can ensure that no time credits accumulate that can no longer be reduced by compensatory time off. This prevents the company from being financially overburdened by several high compensation payments, which are usually due at the same time. The hours when the yellow and red phases start vary from company to company depending on requirements.
Working time corridor
The regulation of the so-called working time corridor gives the employer the authority to determine the position and duration of daily working hours. Within the framework of such a regulation, the employer is authorized to determine the contractually agreed working hours within certain upper and lower limits depending on the workload, subject to prior notification. For example, the weekly working time can be freely chosen by the employer between 30 and 40 hours with a contractual average working time of 35 hours per week. The employer only has to ensure that the employee achieves the contractually agreed working hours in the chosen compensation period, as the employer is generally responsible for achieving the contractually agreed working hours within the scope of its authority to schedule and direct. Therefore, if the employer does not schedule an employee up to the amount of his contractually agreed working hours, no crediting of minus hours can be considered.
Long-term accounts
As the name suggests, long-term accounts are used for the long-term accumulation of working time credits. With the help of such accounts, it is possible to save working hours (plus hours) in a separate working time account.
Long-term working time accounts are almost exclusively managed as so-called lifetime working time accounts with the aim of being able to retire early. For this purpose, “surplus” working time is credited to the account and saved. This surplus working time results from the agreement of an additional quota of hours. For example, the employee regularly works a 42.5-hour week instead of a 40-hour week. However, it is also possible to contribute overtime, vacation not taken, one-off payments and other employer benefits. Since 2009, it is no longer permitted to contribute “hours” to a long-term account, so these must be converted into money. Due to this mandatory conversion, however, it can also be agreed that the working time account is to be used as a capital investment. According to Section 7d SGB IV, for example, an investment in shares or equity funds is permitted up to an amount of 20%.
In principle, other uses of a long-term account are also possible, such as use for a temporary retirement from working life; so-called “sabbatical”, but also in the case of an agreement on partial, parental or nursing leave with continued payment of full remuneration (until the account is used up).
The employee must be careful if the account is paid out to them on termination of the employment relationship. The amount of ALG-I is generally not reduced, as the calculation of the amount of unemployment benefit is based on the salary that would have been earned without the working time account agreement.
However, the payment is offset against payments of the citizen’s allowance. In order to prevent this consequence, the credit balance in the lifetime working time account can also be transferred to the German Federal Pension Insurance (DRV) instead of being paid out in the event of premature termination of the employment relationship.
Our Dresden lawyers at white ip | patent & legal can provide you with comprehensive and professional advice on these issues at any time. Together we will find an individual, suitable solution.
In the event of a dispute, the respective number of hours recorded in the working time account must be traceable. As a rule, the employer must therefore at least explain how and why the minus hours listed in the working time account arose (e.g. illness or vacation). Many working time accounts do not take this important question into account in the event of a dispute. There is often no reference whatsoever to the reason for the accrual. As in most cases no countersignature obligations are agreed, this leads to considerable problems for the employer or the employee in court proceedings, depending on whether the minus or plus hours on the working time account predominate.
Since 2002, as a result of a ruling by the Federal Labor Court, employment contract clauses have been subject to content review in the same way as general terms and conditions within the meaning of Sections 305 et seq. BGB (German Civil Code). This often leads to the invalidity of working time account regulations due to the balancing of interests in accordance with Section 307 (1) BGB.
As already mentioned, the contractual agreement of a working time account is quite complicated and must be adapted to the respective needs of the company. Nevertheless, it is surprisingly often the case that employment contracts contain pre-formulated standard clauses, which have presumably been taken directly from the internet and are in themselves only a model, which moreover do not (or cannot) take into account the specifics of the company. As a result, essential provisions are often missing in such cases, such as a provision regarding a credit note if the employee is entitled to continued payment of remuneration without working. There is also often no provision for the settlement and transfer of overtime and minus hours at the end of the compensation period. It is not uncommon for regulations on the management of the working time account to be missing altogether.
As a minimum requirement, an effective working time account agreement should contain answers to the following questions:
- What verification obligations does the employer have in relation to the account?
- Is there a possible right of inspection by the employee in order to meet the requirements of the transparency requirement?
- Is there an obligation to countersign?
- What is the maximum bandwidth of the working time account?
If your working time account regulation cannot answer one of these questions, there is much to suggest that the agreement is null and void. Due to the so-called prohibition of validity-preserving reduction, the agreement is generally not effective in all other respects, but void as a whole.
If you as an employer find that the provision in your employment contracts does not meet the requirements described, we recommend that you consult a lawyer immediately in order to draw up an effective provision. The law firm white ip | Patent & Legal in Dresden has many years of experience in the drafting of working time account agreements and employment contracts. In order to choose the best possible arrangement for your companywe pay particular attention to close coordination with the employer.
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