Germany’s Work-Hour Overhaul: Flexibility Reserved for Unionised Workplaces as Electronic Tracking Becomes Mandatory

New German law mandates electronic timekeeping but offers flexible hours only via union deals, leaving half of workers stuck with rigid eight-hour days. Small firms exempted.

Workers at non-unionised companies in Germany could be locked out of the flexible hours that a planned reform is meant to deliver, critics warn, as the government prepares to impose mandatory electronic timekeeping on most employers.

The Federal Ministry of Labour’s draft bill, which aims to align with rulings from the Federal Labour Court and the European Court of Justice, would require companies to record start, end and duration of each employee’s daily work shift electronically on the same day it occurs. The standard daily maximum remains eight hours, extendable to ten only if compensatory time off is provided.

However, the real source of contention lies in how far flexibility can go. The draft allows collective bargaining partners to replace the daily eight-hour cap with a weekly limit – but only via a union contract. The weekly ceiling would be 48 hours averaged over twelve months.

New data from the Institute for Employment Research (IAB) highlights the impact: while 32.6 percent of all German businesses say they regularly need workdays longer than ten hours, that figure drops to just 9 percent when the analysis is restricted to unionised companies. The implication is that the vast majority of firms needing extended hours have no means to obtain them legally under the proposed model.

Small firms get a paper exemption

The electronic documentation requirement is not universal from day one. Businesses with no more than ten employees may keep records on paper permanently. For companies with up to 50 staff, and separately for those with up to 250, the government plans staggered transition periods before the electronic rule kicks in.

The German Hotel and Restaurant Association (DEHOGA) has warned that the reform will disproportionately burden small and medium-sized enterprises, particularly in hospitality. The sector is already under pressure: in September 2025 it recorded a 4.9 percent drop in revenue year-on-year, rising insolvency figures, and the higher statutory minimum wage of €13.90 that took effect in January 2026.

Only half the workforce covered by union deals

Roughly one in two German employees currently works under a collective bargaining agreement, according to official data. That means the new flexibility options – the very tools the government touts as modernisation – would be out of reach for the rest. Opponents argue this creates a two-tier system, where unionised staff gain leeway while others remain locked into the rigid daily eight-hour rule.

Berlin pushes parallel reform

The Berlin state government is moving ahead with its own changes. A draft amendment to the state’s Works Representation Act, published on 23 June, expands co-determination rights on flexible work arrangements and hours. It also strengthens electronic communication channels within staff councils.

Trade unions, meanwhile, are calling for stricter enforcement of existing documentation duties. The GEW (Education and Science Union) in Mecklenburg-Vorpommern has condemned the fact that academic researchers at universities routinely work far beyond their contracted hours despite current rules. A DGB university report found that researchers on nominal 20-hour weekly contracts log an average of 11.3 hours of overtime per week.

IAB proposes a middle ground

In a separate contribution to the debate, the IAB has floated an alternative it calls a “10-hour agreement”. Such an arrangement would be open to non-unionised businesses as well, but would be tied to a mandatory health monitoring programme. The goal, researchers say, is to align working-time design with actual operational needs without jeopardising employee health – a balance the current draft may not achieve for many workplaces.