6. April 2020

Labour law requirements

In contrast to occupational pension schemes, employees are not entitled to the introduction of working time accounts. Thus the employer is completely free in his decision whether he would like to use time value accounts as personnel and enterprise-internal control model.

In the case of the introduction of time accounts in companies, the corresponding legal justification act – i.e. the respective labour law basis – for the participation of the respective employees in a time account system is usually carried out in one of the following three ways:

1. individual contractual agreement,
2. works agreement or
3. collective agreement.

Individual contractual agreement

The individual contractual agreement is generally to be found in companies in which there is no works council.

The contents of an individual contractual agreement are all the regulatory modules that are to be regulated between the respective employer and employee within the framework of a working time flexibilisation measure through the introduction of working time accounts.

Every individual contractual agreement becomes part of the respective employee employment contract and should be historicised by all contracting parties for reasons of proof. The same applies to any supplement or amendment to an individual contractual agreement.

Works agreement

In the case of companies that are co-determined via a works council, the introduction of working time accounts via a works agreement is an option.

A works agreement concerns employees who fall within the personal scope of the Works Constitution Act (§ 5 BetrVG). Like the collective agreement and the provisions under
the Speakers’ Committee Act, the works agreement is one of the collective-law regulatory acts.

The contracting parties to a works agreement are the employer and the works council (possibly the general or group works council) as the collective body of the employees of the company it represents. The works agreement has a direct and mandatory effect (§ 77 para. 4 sentence 1 BetrVG), i.e., similar to a law, it has a normative effect on the individual employment contracts without becoming their individual legal component (BAG of 11.06.1975 – 5 AZR 217/74 -, NJW 1976, 78).

In addition, it must be mentioned that a declaration of waiver of remuneration must also be concluded between the employer and the employees participating in the time value account system within the framework of a time value account regulation on the basis of a works agreement. This means, for example, that the amount of the waiver of remuneration and the type of remuneration to be converted (overtime, holiday entitlements, etc.) must be determined individually.

Collective agreement

Regulations on the introduction of working time account systems or lifetime working time accounts can also be based on a collective agreement, which also falls within the scope of collective labour law. If the collective agreement contains an opening clause, it is possible for the respective companies to establish regulations for the introduction of working time accounts independently on the basis of an individual or company agreement.

Supplementary information under labour law

When introducing working time accounts, companies are required to observe additional provisions. These include, for example, limiting the conversion of holiday entitlements into value credit components in order to comply with the requirements for the actual exercise of minimum leave in accordance with the “Minimum Leave Act for Employees”.