German Employers Face €35 Million Penalties as Mandatory Digital Time-Tracking Takes Effect in August
Published on 06/22/2026 at 18:09 | Redaktion boerse-global.de
Starting in August, electronic recording of working hours will become compulsory on the same calendar day, a move aimed at curbing manipulation — and companies that fail to comply risk fines of up to €35 million under the EU’s AI Act.
The new obligations stem from a draft bill published by Germany’s Federal Ministry of Labour in June. Alongside the digital recording requirement, the proposal would allow collective bargaining partners to agree on a maximum weekly working time instead of the current daily cap. Strict 11-hour rest periods could also be waived under specific conditions.
The regulatory push coincides with fresh data on workplace dishonesty. A recent study by Consumerfieldwork, surveying 1,000 employees, found that around 13 percent do not record their hours truthfully. Even more striking: three-quarters of respondents admitted to handling private matters during paid work time.
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Labour courts have already set hard precedents. The Cologne Regional Labour Court upheld the dismissal without notice of a supervisor who spent his official hours in cafés or on personal errands. The employee not only lost his job but was ordered to repay €21,000 in detective costs. Similarly, the Hamburg State Social Court ruled that job centres can reclaim up to €2,600 in basic income benefits (Bürgergeld) if a recipient’s financial hardship results from unexcused absences.
Trust-based working time offers no shield. Performing just 20 hours instead of an agreed 40 hours per week counts as a serious breach of duty, courts have confirmed.
AI Systems and Worker Surveillance
The EU AI Act’s compliance deadlines kick in on 2 August, targeting high-risk AI systems — including tools like “Workplace Check-in,” which logs employee presence via WLAN or IP data. In Germany, works councils retain the right to co-determine the use of such surveillance technology. Violations of the AI Act can trigger fines as high as €35 million.
Transport and travel time are also under the spotlight. The European Court of Justice ruled in October 2025 that employer-organised group journeys between a base and changing work sites count as working time — provided the employer sets the route and vehicle and the employee cannot use the time freely.
This directly affects effective hourly wages. With Germany’s minimum wage rising to €13.90 on 1 January 2026 and further to €14.60 in 2027, companies must ensure that travel time does not push pay below the legal floor. Principal contractors also face liability for subcontractors’ violations, with fines up to €500,000.
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Urgency Even During Holidays
Employers who suspect time fraud must act quickly. The Federal Labour Court ruled in December 2025 that a suspect may need to be heard even while on leave. If the employer lets weeks pass without attempting contact, the two-week deadline for an extraordinary dismissal can expire, rendering the termination invalid.
Major sporting events — like a football World Cup — create additional risk. There is no automatic right to time off for matches. Employees who stream games during work hours without permission or fail to pause their time tracking face potential fraud charges. Experts advise companies to set clear policies on flexitime or compensation to avoid legal disputes and potential dismissals.
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