Last month, the European Court of Justice (ECJ) said it was necessary to record employees' hours so that legal working time limits can be properly applied.
"In order to ensure the effectiveness of the rights provided for in the Working Time Directive and the Charter, the Member States must require employers to set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured," said the ECJ in a statement.
The ruling on the 14th May was announced after a case was brought to the ECJ by a Spanish trade union that asked for Deutsche Bank to be forced to set up a system to record working hours for its employees in Spain.
"The union considered that such a system would make it possible to verify compliance with the stipulated working times and the obligation, laid down in national law, to provide union representatives with information on overtime worked each month," said the ECJ.
Deutsche Bank was not recording its employees' working hours because it said that Spanish law only requires to keep a record of overtime hours worked by members of staff.
With this new legislation, it will be essential to implement an effective solution to monitor staff worklogs. Many businesses within Hospitality, Leisure and Retail already use biometric data to manage time and attendance.
According to research by recruitment company Reed, over 60% of workers are unpaid for the extra hours they put in each year. Although it is not a legal requirement in the UK for staff to be paid for any overtime worked, it may result in employees earning less than the National Minimum Wage if their salary is near the annual threshold, causing businesses to be fined.
Data provided by Reed
"In the absence of a system enabling the duration of time worked each day by each worker to be measured, it is not possible to determine, objectively and reliably, either the number of hours worked and when that work was done, or the number of hours of overtime worked, which makes it excessively difficult, if not impossible in practice, for workers to ensure that their rights are complied with", the ECJ noted in its statement.
Chairman of ShopWorks, Ian Hogg, said: This ruling will be no surprise to any employer who has been inspected by HMRC's NMW officers. They have been enforcing the National Minimum Wage, working time directive and break rules for a couple of years and are demanding hard evidence like biometric scans to prove that UK businesses comply.
"HMRC have employed NMW officers to regulate the National Minimum Wage and are demanding evidence to prove that UK businesses are remaining compliant. It is no surprise that employers who are not compliant are being issued with large fines. Supporting our customers with the right tools to meet their obligations is a key element of what we do at ShopWorks.
"It can be expected that every employer across the EU will need to tighten their workforce management in order to comply with the latest ruling from the ECJ."