Mandatory Time Tracking in 2026: What SMBs Must Do

From 2026, time tracking is mandatory for all employers in Germany. Find out what has changed and how to become compliant in minutes.

7 Min. Lesezeit

Wichtige Erkenntnisse

  • Since 1 January 2026, systematic time tracking is a legal requirement for all employers in Germany — no grey area remaining.
  • Who is affected: essentially all employers regardless of company size — including businesses with fewer than 10 employees.
  • Three paths to compliance: a protected spreadsheet, a time clock/terminal, or dedicated software (the recommended option).
  • Legally compliant time tracking must document start, end, and duration of daily working hours — retain records for at least 2 years.
  • Acting now saves fines and avoids evidentiary problems in employment disputes.

Mandatory Time Tracking in 2026: What Small Businesses Must Do Right Now

Since 1 January 2026, there is no longer any grey area: every employer in Germany is legally required to systematically record the working hours of their employees. Anyone who has been handling this with a piece of paper on the desk or a shared Excel document is now at risk of significant fines. This guide explains what has specifically changed, who is affected by the obligation, and how you can quickly and cost-effectively achieve compliance as a small or medium-sized business.

What Actually Changed in 2026

The story of mandatory time tracking in 2026 didn't start this year. It has three clear milestones:

2019 — The ECJ Ruling: The European Court of Justice ruled in the case CCOO v Deutsche Bank that all EU member states must require employers to measure daily working hours objectively and reliably. This ruling was the starting gun — but it did not yet apply directly to every German employer.

2022 — The Federal Labour Court Ruling: Germany's Federal Labour Court (Bundesarbeitsgericht, BAG) established in a landmark ruling that employers are already obliged under existing German law to introduce a system for recording working hours. The ruling triggered an intense political debate, but did not yet create a uniform statutory basis.

2026 — The German Working Hours Act (Arbeitszeitgesetz) in Its New Form: With the amendment to the German Working Hours Act (Arbeitszeitgesetz, ArbZG), which came into force on 1 January 2026, the obligation has now been clearly codified. Employers must electronically record the start, end, and duration of their employees' daily working hours — and retain these records for at least two years. Enforcement is the responsibility of the occupational health and safety authorities of the individual German states; violations can be penalised with fines of up to €30,000 per individual case.

Who Is Affected — and Who Isn't?

Short answer: practically everyone. The new mandatory time tracking obligation for 2026 applies in principle to all employers, regardless of industry or company size. However, there are graduated transitional periods:

  • Companies with more than 250 employees: Fully obliged to electronic recording immediately from January 2026.
  • Companies with 50–249 employees: Transitional period until July 2026.
  • Companies with 10–49 employees: Transitional period until January 2027.
  • Businesses with fewer than 10 employees: Transitional period until January 2028, but the basic obligation applies here too.

Important: even if your transitional period is still running, employment law experts unanimously recommend acting now. In the event of an audit or legal dispute — for example, an overtime claim — the burden of proof lies with the employer. If proper records are missing, you will generally lose in court.

The only temporary exception to the electronic requirement applies to micro-businesses with fewer than 10 employees, who may keep paper-based records until January 2028 — provided these are made immediately after the end of each working day.

What Counts as Legally Compliant

The law stipulates that recording must be done electronically. However, there is no requirement to use a specific system or provider. The following requirements must be met:

  1. Recording of start, end, and duration of daily working hours — including breaks.
  2. Immediate recording, meaning on the same working day.
  3. Retention for at least two years, accessible to the relevant authorities.
  4. Tamper-proofing: The data must not be alterable after the fact without a logged record.
  5. Employee access: Employees must be able to view their own records.

What no longer suffices: a shared Excel sheet that can be edited after the fact generally does not meet the tamper-proofing requirements. Handwritten lists are excluded altogether for companies with 10 or more employees.

The 3 Most Affordable Paths to Compliance

Option 1: Protected Spreadsheet

Technically possible, but risky. A password-protected, write-protected spreadsheet can serve as an interim solution, but is vulnerable to allegations of manipulation. Defensible in the short term for businesses with fewer than 10 employees; barely recommendable for anyone else.

Cost: Virtually zero — if you ignore the time spent on manual entry.
Risk: High. Difficult to prove in a dispute that no retroactive changes were made.

Option 2: Time Clock or Terminal

Classic time clocks and time recording terminals are reliable and tamper-proof. Often the best choice for production facilities or retail businesses with fixed locations.

Cost: Hardware from around €200 per terminal, plus ongoing maintenance.
Risk: Low. Not a solution for mobile teams or remote workers.

Option 3: Dedicated Software (Recommended)

A specialised time tracking app is now the practical standard — particularly for SMBs with mixed teams of office, home office, and field workers. Modern solutions meet all legal requirements: complete logging, tamper-proof storage, export functionality for authorities, and employee access to their own records.

Cost: From around €2–5 per user per month — for a team of 20, that's €40–100 monthly.
Risk: Minimal, if the provider stores data in compliance with GDPR within the EU.

TodayOff falls into this category. The app is set up in minutes, runs on iOS and Android, stores all data on EU servers, and is fully GDPR-compliant. Particularly attractive for small teams: the entry price starts from €1.49 per user (Time Tracking module; Absence Management: €1.79; Complete Bundle: up to €2.99) per month — with no annual contract.

If you also want to manage leave and absences digitally, read our article on managing leave with Excel and modern alternatives — because both can be solved in one step with the right software.

What You Should Concretely Do Right Now

Mandatory time tracking in 2026 might sound bureaucratic — but it doesn't have to be. With the right software, you can complete the transition in an afternoon:

  1. Take stock: How many employees do you have? From when does your transitional period apply?
  2. Clarify requirements: Do you have field workers or remote employees? Then a mobile app is essential.
  3. Choose a provider: Look for EU data storage, tamper-proofing, and a transparent export path.
  4. Plan the rollout: Brief your team in good time — and choose a tool that's intuitive enough that everyone will actually use it.
  5. Retire the old system: Once all employees are active in the new system, freeze the old spreadsheets and archive them for the statutory retention period.

Frequently Asked Questions About Mandatory Time Tracking in 2026

Do managers also have to record their hours? In principle, yes. Exceptions apply only to senior executives within the meaning of § 5 Para. 3 of the German Works Constitution Act (BetrVG) — meaning individuals with genuine staffing authority and significant independent decision-making scope.

What about trust-based working hours? Trust-based working hours as a concept remain permissible — but even here, actual working hours must be recorded. The model therefore changes in practice: it is now about when work is done, not whether it is recorded.

Can employees enter their own hours? Yes — self-recording by employees is explicitly permitted. What matters is that the system does not allow unlogged editing after the fact, and that the employer bears responsibility for the accuracy of the data.

What happens in the event of a violation? The occupational health and safety authorities can initially issue a warning. For repeated or serious violations, fines of up to €30,000 may be imposed. In employment law disputes, employers without proper records bear the burden of proof for overtime worked — which can become very costly.

Conclusion

Mandatory time tracking in 2026 is no longer optional — it is the law. But the effort required for implementation is manageable if you choose the right software. Small and medium-sized businesses benefit doubly: they protect themselves legally and simultaneously gain a genuine overview of hours actually worked, overtime, and leave.

The most important step is to start now — not just before your transitional period expires.

Get compliant now: Start your free TodayOff trial and record working hours in line with GDPR from day one. → https://app.todayoff.de