Time and Attendance

Time Tracking and the Law (EU, USA and UK)

The ultimate guide to the different time tracking rules in the US, UK and EU...
Sean QuinnPosted on Monday, July 31st 2023

Tracking employees' working time, and their compensation for that time, is a key issue for businesses, with each country enacting their own laws and standards which protect employee welfare. Ensuring compliance with each region's legislation is crucial, in order to avoid legal action and potential fines.

US Time Tracking Laws (Fair Labour Standards Act)

The Fair Labour Standards Act (FSLA) dictates many of the labour laws in the United States, including those surrounding the minimum wage, working time, overtime pay and record keeping.

However, it does not mandate other employee benefits such as rest breaks, paid holidays or discharge notices for employees, which are basic rights in many other countries.

The rules set out by the FSLA don't apply to all employees in the same way; for example there are exceptions and different rules for employees in State or Federal employment, the US Postal Service, and businesses with an annual turnover of less than $500k who aren't engaged in interstate commerce.

Rules on working time in the US

According to the FSLA, non-exempt employees in the US must receive overtime pay at no less than one and a half times their usual rate of pay, for any hours they work over 40 hours per week. There is no legal limit on the number of hours an employee may be required to work during a daily or weekly period - the legislation only stipulates that this overtime is paid at time and a half.

In general, the FSLA sets a minimum level of employee protections, which states can enhance with their own legislation. For example, many states mandate paid 20 minute rest breaks or an enhanced minimum wage.

Tracking time in the US

When it comes to timekeeping, the law requires employers to keep detailed records. This includes the time and day the workweek begins, hours worked each week and per day, their hourly rate and any overtime earnings for the period.

Employers are free to choose their timekeeping method, so may opt for old fashioned manual timesheets, a punch card time clock or a more modern cloud based system. So long as the records are complete and accurate, the method of timekeeping does not matter.

If employees work a fixed schedule, it is sufficient for employers just to keep a record of their schedule and indicate whether this was followed, as well as noting any variations on an 'exception basis'.

Penalties for failure to comply with FSLA

If employers repeatedly and willfully violate sections 206 or 207 (which pertain to overtime pay and minimum wage) they can be fined $2,374. Therefore, keeping an accurate record of hours worked in order to calculate an employee's correct wage is of paramount importance to avoid penalties.

EU Time Tracking Laws (Working Time Directive)

The EU sets many directives, which member states should enact into their own laws as a minimum - the Working Time Directive (WTD) of 2003 dictates the rights employees have to a fair working arrangement, and lays out the rules on working time.

Rules on working time in the EU

The WTD states that employees in member states must benefit from a limit on their maximum hours each week (48 hours, including overtime), daily and weekly rest breaks, as well as paid periods of annual leave.

Where states enforce a maximum of 48 working hours per week, they can allow employees to opt out - but this must be at the employees free will, requests to opt out must be documented, and the option to opt back in must always be available to the employee. Employees who do opt out of the agreement must not receive preferential treatment over those who refuse.

There are also allowances for member states to diverge from these rules when it comes to specific categories of employees - for example, some rules may not apply to emergency service workers or the Armed Forces.

Tracking time in the EU

In a landmark case against Deutsche Bank, the European Court of Justice ruled that in order to ensure employers are following the rules on working time, a record of each employee's working hours each day must be kept.

It is left up to the member states to decide how to implement this ruling. Many make different considerations depending on the sector, or the type of employment. The time of time tracking method enacted is also up to the businesses discretion, so long as it provides an accurate record of employees' hours worked.

Some member states provide examples of good time tracking protocols, in an attempt to standardise the information collected - for example, the OWT1 form in Ireland.

Penalties for failure to comply with Working Time Directives

The penalties businesses face for failing to abide by the rules and keep track of their employees hours, will depend on the member state.

In Ireland, employers who fail to keep a record of their employees working hours can face a fine of €1,900. Employers must take full responsibility for employee working hours being recorded - so even if employees have been asked to fill in timesheets themselves, it's the employer who will ultimately face a penalty if these aren't completed.

In Germany, fines are even more severe, with penalties of up to €15,000 for those who fail to follow the rules. Certain infringements, including failing to provide the minimum rest breaks, are criminal offences which can even lead to imprisonment. In many cases, directors can be held personally responsible for their business' failure to protect employees' working time.

UK (England, Scotland, Wales and Northern Ireland) Rules on Tracking Time

The rules on working time in all regions of the United Kingdom are dictated by the Working Time Regulations, which came into force in 1998.

Rules on working time in the UK

Generally, the laws that protect employees' working time are broadly similar to those in place in the EU.

Employees must not work more than 48 hours per week (averaged over 17 weeks in most cases) unless they have expressly opted out. Workers are also entitled to a 20 minute rest break after 6 hours work, 11 hours of rest between working days, and 5.6 weeks of annual leave per year.

Tracking time in the UK

UK law does not specifically dictate that employers should use timesheets to record employee time, but they must keep a record which proves employees were paid above the minimum wage on average, do not exceed maximum working hours and received the rest breaks they are entitled to.

In order to prove that they are complying with these requirements, businesses must adopt some form of time tracking, whether that comes in the form of physical timesheets and rotas, or a digital alternative.

Penalties for failing to comply with UK Working Time Regulations

If employees have evidence that their employer has failed to keep up their responsibilities and protect their working time, this can be the basis for an employment tribunal, which can result in employers paying damages and compensation.

If the Health and Safety Executive are made aware of breaches to the Working Time Regulations, they will generally give a notice for improvement with a time limit. If the business in question fails to comply within that time limit, they're then considered to have commited a criminal offence.

This means directors could face up to two years of imprisonment, and potentially unlimited fines, depending on how severe their breaches have been.

The bottom line

No matter which region your business operates in, it's good practice to keep a thorough record of your employees' contracted hours, schedule and the actual hours they work, including statutory rest breaks and leave.

Even in countries where time tracking isn't mandated by law, keeping good records helps to prove your business is abiding by other labour laws, and can be useful if disputes do arise.

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