If there is no digital time tracking system in place or if employees manipulate their actual working hours in other ways, this can be considered working time fraud under employment law. What exactly this means, what consequences under employment law may result, and when termination without notice is even possible—we answer these and other important questions.
Work Time Fraud: Cheating on Work Hours
Working hours fraud occurs when you, as an employee, are paid for work hours you did not actually work, for example:
- You surf the Internet during work hours and visit websites that have nothing to do with your job.
- You shop online during work hours or pass the time playing computer games.
- You ask a coworker to clock you in an hour before your shift starts, even though you don’t show up at your workplace until an hour later.
- You claim to be working from home. In reality, you’re doing everything at home except your actual work.
- You don’t clock out during your breaks or record breaks as work time.
- You work in the field and claim travel time for periods when you’ve long since been home.
The examples listed are typical cases of working-time fraud. However, there are also situations where it is not immediately clear whether or not they constitute fraud.
For example, if you chat with coworkers several times during a workday, you’re not working—you’re wasting valuable work time.
However, this does not constitute working-time fraud because the intent required for fraud is lacking. In this respect, it is part of everyday work life and falls within the scope of normal practice. Smoking breaks at the workplace are a frequent point of contention.
In this case, it is advisable to establish clear agreements and, for example, require smokers to clock out during their smoking breaks.
Criteria for Termination Due to Working-Hour Fraud
As an employee, you may wonder what legal consequences you could face if you commit working-time fraud.
Legally speaking, you have breached your obligations under the employment contract and abused your employer’s trust. Therefore, the employer has the option to issue a termination for cause or an extraordinary termination without notice.
For a termination based on working-hour fraud to have a chance of success, it must meet certain requirements:
- A prerequisite for termination due to working-hour fraud is that you, as an employee, have cheated on your working hours to a significant extent. A few minutes may be enough for a written warning, but not for termination. There is no uniform case law regarding termination due to working-hour fraud. Instead, each court decides based on the circumstances of the individual case.
- Another requirement is that the employer has suffered damage as a result of the employee’s conduct. The decisive factor is the extent of the damage resulting from payment for work not performed. If the compensation fraudulently obtained through non-performance is minimal, a written warning may be the only appropriate action. Only when the damage is substantial can the employer terminate the employment relationship with or without cause.
- In order to claim damages and prove working time fraud, the employer must demonstrate the fraud, including the fraudulent intent.
Example of a justified termination:
In a ruling dated June 9, 2011—Case No. 2 AZR 381/10 —the Federal Labor Court (BAG) declared a termination without notice due to working time fraud to be lawful.
The decision was based on the following facts:
An administrative employee of the Medical Service of the Health Insurance Funds (MDK) worked under a flex-time schedule and clocked in while still in the parking lot. In total, this amounted to 135 minutes that she recorded as working time, during which she had not actually worked.
In its reasoning, the BAG confirmed the existence of “good cause” as required under Section 626 of the German Civil Code (BGB). The employee had violated her contractual obligation to accurately record her working hours using the digital time-tracking system.
This constituted a serious breach of trust toward the employer, who had suffered financial loss due to work that was not performed but was paid for.
Employer’s Burden of Proof
In principle, the employer must prove the working-hour fraud. In fact, many terminations fail because the employer is unable to provide this proof. A fundamental prerequisite is that working hours must be clearly defined, which applies equally to the start and end of the workday.
Proof is established if working hours are specified in the employment contract or in a company agreement and working hours are recorded digitally. Proof is also established if the employer catches the employee in the act. However, the employer must be prepared for be prepared for excuses ranging from “the time-tracking device wasn’t working” to “I forgot.” As a result, working-hour fraud is a ground for termination that employers overestimate, since the burden of proof usually cannot be met.
If an employer has reasonable suspicion but lacks the necessary evidence, they may issue a termination based on suspicion. As specialists in employment law, we recommend that our clients issue a written warning to an employee whenever there is an interest in continuing their employment. This gives otherwise good and reliable employees the chance to adjust their behavior accordingly.
Do you have questions about time-sheet fraud or other employment law issues? We will review the facts of your case with you and discuss the possibilities for an out-of-court settlement or a resolution in court.
