Germany’s Major Push for Digital Time Logs Targets 53.6% Unpaid Overtime Share

New German law requires electronic work-time recording for all employers, targeting €6.27B in unpaid overtime. Gradual rollout for small firms, trust-based hours preserved.

A staggering 638 million hours of unpaid overtime were worked in Germany last year – roughly 53.6 percent of all extra hours – equivalent to nearly 486,700 full-time jobs. That lost labour carried an estimated economic cost of €6.27 billion. The figures, drawn from 2024 data, illustrate the scale of the problem that a new government proposal on working-time recording aims to fix.

The reform, a draft bill from the Federal Ministry of Labour and Social Affairs (BMAS), would require all employers to track the start, end and duration of employees’ daily shifts using an electronic system. It is a direct response to a 2019 European Court of Justice (EuGH) ruling and a 2022 Federal Labour Court (BAG) decision, both of which demanded an objective, reliable and accessible method of time documentation. A coalition committee had let an earlier deadline pass in early July 2026, but the ministry has now firmed up plans for introduction this autumn.

Gradual rollout spares the smallest firms

The electronic logging duty applies to every employer, but the government has staggered the compliance deadlines to ease the burden, particularly on smaller businesses:

• One year for all companies.
• Two years for firms with fewer than 250 employees.
• Five years for micro-enterprises with fewer than 50 staff.

Companies with up to ten employees are completely exempt from the electronic format. Additionally, collective-bargaining agreements can still provide for paper-based or other non-digital recording.

Trust-based working hours – preserved but not free of red tape

The popular model of Vertrauensarbeitszeit (trust-based hours) remains in place, but employers operating it must still meet the new documentation obligations. The Confederation of German Employers’ Associations (BDA) has sharply criticised the draft, arguing it misses the mark on necessary reforms and contradicts the coalition agreement.

The issue has drawn attention even beyond the private sector. In May 2025, the BMAS stated that there were no legal objections to introducing time recording for teachers, a sign that the debate is widening.

Broader labour shake-up alongside the time-recording rules

The working-time overhaul is part of a larger legislative package. A coalition decision on 2 July 2026 mandates a doctor’s certificate from the first day of illness, doing away with the current practice of phone-based sick notes. While employers could already demand a certificate from day one, it will now become the legal default. Medical associations have warned that the change will significantly increase paperwork and strain surgeries.

Other planned adjustments:

• Fixed-term contracts: The permissible duration of a contract without objective grounds rises from 24 to 48 months, with up to six renewals. The regulation will expire at the end of 2030.
• Minimum wage: Raised to €13.90 in January 2026 and again to €14.60 in January 2027.
• Mini-jobs: The earnings threshold increases to €633.
• Dismissal protection: High earners with an annual income above roughly €180,000 would face relaxed rules.

Separately, a health-care reform was adopted on 10 July 2026, introducing higher out-of-pocket costs for medication and a contribution increase for family-insured partners. The federal government also announced tax relief worth €10 billion annually for low and middle incomes.