Spanish Law on the recording of working time

Interview with our Spanish colleague Carmen Torres

The German Federal Labour Court ruled in its decision of 13 September 2022 that employers are obliged to introduce and use a system to record working hours. Following the decision, the German legislator announced that it would quickly present a bill. So far, this has not happened and uncertainty remains as to what the legal requirements for a proper recording of working time will be and which effects an accurate recording of working time will have in practice. It is therefore worth taking a look at Spain, where the main employment law (Spanish Statute Act) was amended with effect as of May 2019 in order to introduce a new obligation for employers to record on a daily basis the start and end of their employees’ working schedule.
Carmen Torres from our Madrid office reports on her experiences with the new law passed in Spain in the following interview with Alexander Greth from our Düsseldorf office:

Hi Carmen,
thank you for taking the time for this interview. After the Federal Labour Court in Germany ruled that employers are obliged to record the working time of employees, employers are nervous and wonder how time recording must be done and what impact a thorough time recording will have on their business. The decision of the Federal Labour Court suggests that electronic time recording should be the rule and manual time recording may only be considered as an exception. What is the situation in Spain?

Carmen: Exactly the same situation arose in Spain almost four years ago when, after a few judicial resolutions pointing towards the need/convenience to record effective working time daily in order to enable working time compliance monitoring, our legislator amended our main employment law in order to effectively introduce this obligation. At first, all companies were very alarmed as it seems a complex matter to comply with both the recording itself and, in some sectors, the effective compliance with working time regulations – as, to be honest, in many sectors this had been systematically ignored. After almost four years, the situation seems to have calmed down a bit; however, there are still companies which are not compliant, and labour inspection seems to be placing more focus on this. Very recently, the “big four” have been subject to a labour inspection in this regard, which has received attention from the public media.

Alexander: May employees correct the recorded working time manually, e.g. if they forgot to activate an electronic time recording in the morning or to stop it in the evening?

Carmen: There are plenty of different ways to record the working schedule. Some small companies will just issue a word document and have employees state the date, start hour, exit hour and signature manually. Others have more sophisticated electronic means and software solutions which may require an act by the employee (stating the time or ticking a box) or which will just record the time automatically (e.g. upon starting the computer). As a general rule, employees may change the information within the same day. Technically, the system (whatever it is) should not enable changes to be made on the following days (as the purpose of the system is to provide a solid record/evidence, preventing manipulation by any party). However, my impression is that, in practice, many systems do allow for some changes to be introduced at a later stage.

Alexander: What exactly has to be recorded? Only the start and end of the working time or also the exact duration of breaks?

Carmen: Spanish law forces employers to record the start and end time of each employee’s effective working schedule on a daily basis. Spanish law does not make any references to breaks. Some companies will record all the breaks (with the aim of reducing the risk of a court or labour inspection gaining the understanding that the effective working time exceeds the regularly agreed one). Others will not record any breaks, in many cases, with a similar aim but a different approach: i.e. as they are aware that their employees tend to work longer hours than the officially agreed ones, they will have a more general record and argue that all the excess is due to “breaks” or similar, rather than having all breaks recorded and still evidencing that they are exceeding the agreed working hours).

Alexander: Is it sufficient that the employer provides for a system that allows employees to record their working time, or must the system be used by employees?

Carmen: Spanish law provides that companies shall “guarantee the registration of the daily working schedule”. Some companies have systems in place which, with the purpose of reducing employees’ red tape, automatically register the start and end of the working schedule taking into consideration the officially agreed working hours & timetable, but allow for employees to manually correct this information. These companies argue that they are compliant as the employees are “entitled” to change the information if inaccurate; however, there are considerable risks that our courts and labour inspection will not deem this fully compliant.

Alexander: Is the employer obliged to check compliance with the Working Time Act on the basis of the recorded working hours?

Carmen: Technically yes, and overtime should be adequately identified in the pay slips and compensated (with paid rest time or additional salary). In addition, employers are obliged to allow access to the records to the employees, the employees’ representatives at work and labour authorities. However, not all companies are fully compliant with this, being subject to potential fines which, in some cases, they believe to be less damaging than actually changing their model in order to make it fully compliant with the system.

Alexander: The German Working Time Act is rather strict. For example, the maximum daily working time is limited to ten hours, and there must be an uninterrupted rest period of eleven hours between two working days in line with the EU Working Time Directive. The Working Time Act applies to all employees, with the exception of the very small group of executive employees. It thus also covers very well-paid employees, for example in investment banks, law firms and consultancy firms, where long working hours – and to some extent non-compliance with the Working Time Act – are part of the business model. This has not caused huge concerns and has not resulted in investigations and complaints of authorities, especially as violations of the Working Time Act have not been documented. What is the situation in Spain?

Carmen: What you tell us resonates quite well with the Spanish case. Spanish regulations on working time are quite strict. In Spain, the “opt out” system as is applicable in the UK and other countries does not exist. Therefore, nearly all employees regardless of their seniority and salary, and with the only exception of top executives which are very few in number, are expected to abide by Spanish maximum annual working time regulations, which depend on the sector but, that as a general rule, would not be above 1,800 annual effective hours of work. In addition, under Spanish law, overtime is capped at a maximum of 80 hours per year (unless the overtime is compensated with equivalent paid time off within the four months following its occurrence) and must be identified in the pay slips. AMIF & FI companies (amongst others) have been struggling with this as their work model is based on employees with high salaries and extensive working schedules. Over these past years, we have been assisting many companies in this regard, and helping them to find the best solutions to their cases considering their different particularities.

Alexander: Do companies take the restrictions of the Spanish Working Time Act more seriously due to the new legal regulations? Do employees work less?

Carmen: There is much more focus on this topic and, as a general rule, there is more compliance. However, there is still much room for improvement and there are, of course, companies/sectors where this has not really changed their working patterns in practice.

Alexander: Has the approach of Spanish authorities changed? Are they investigating more thoroughly whether companies comply with the Spanish Working Time Act?

Carmen: When the law was implemented, there was a lot of publicity surrounding it, and many companies were terrified at the contingencies that this would lead to their businesses. So far, there has been an increase in individual claims from employees (usually upon termination of employment, not while the employment relationship was in force) and in labour inspections, but not as much as we had initially feared (these inspections had initially focused more on sectors with low salaries vs. AMIF & FI, for example). Records reveal that there have been more than 9,000 fines in this regard by the end of 2022, with a total fine amount over EUR 15 million (so it is clearly a relevant topic). In addition, quite recently, there has been a relevant labour inspection of the big four (KPMG, EY, Deloitte & PWC) in this regard, which has received some publicity. This might be the start of a new campaign with a different target, i.e. well-paid employees of consultancy firms and in the AMIF & FI sector.

Alexander: In Germany, there are concerns that a proper working time recording will have a negative impact on trust-based working time systems and mobile working. Trust-based working time in the sense that the employer waives any control of working time will certainly no longer be admissible. Do you see any other restrictions, e.g. in relation to mobile working?

Carmen: This was also a concern in Spain, and an argument of many employers to refuse introducing this type of working time recordings. However, I would say that this is not necessarily contrary or an obstacle to flexible working patterns or mobile working.

Alexander: Finally, a question regarding overtime: Do employees increasingly claim compensation for overtime after it has been well documented?

Carmen: Yes. Under Spanish law, claimants bear the burden of proving the merits of their claims. In the past, it was a complex matter to evidence overtime due to a lack of records, and this prevented many claims. Now, we are noticing an increase in individual claims in this regard, essentially upon termination of employment, not while they are still employees. However, we should highlight that there are still sectors in which, probably due to their being “small” and all relevant players knowing each other, employees are still not making a lot of claims in this regard (e.g. asset management entities).

Alexander: Last but not least: Is there anything else you would like to tell German clients?

Carmen: It is key to analyse the situation carefully and adapt measures that are in line with the particularities of each company and which, while allowing to keep business as usual as much as possible, reduce the risks and potential contingencies in this regard.

Alexander: Thank you very much for the interview!