Working time fraud: What you should know about the legal situation

Manipulated timesheets, excessive private use of the internet at work – working time fraud is not a trivial offense, but represents a serious breach of duty that can permanently shatter the relationship of trust between employer and employee and cause considerable economic damage to companies.

It is therefore essential for companies to know the legal framework, recognize the various forms of fraud and take effective preventive measures.

This article provides an easy-to-understand, concrete overview of what working time fraud is, what examples there are, what legal steps are possible and how modern time recording systems can promote a culture of transparency and fairness.

Definition: What counts as working time fraud?

Working time fraud is a common problem for companies. Seventy percent of the companies surveyed stated in in a survey stated that they had already had problems with working time fraud.

In order to understand what constitutes working time fraud, it is necessary to look at the basis of the employment relationship. By signing an employment contract, employees undertake to provide their labor for the agreed and remunerated time.

This mutual obligation is set out in § 611a of the German Civil Code (German Civil Code). The core of working time fraud lies in the intentional breach of this obligation.

Intent as a decisive characteristic

The decisive difference between a simple breach of working time and working time fraud is therefore the intent. If an employee is stuck in a traffic jam through no fault of her own and arrives late, this is a violation, but not fraud.

The same applies to a quick trip to the coffee machine or a quick chat with colleagues. Such interactions are part of everyday working life.

Working time fraud begins when employees deliberately and systematically pretend to be working when they are not. In other words, they allow themselves to be paid for a period in which they do not perform any contractually owed work. They do this with the intention of gaining an unlawful advantage, be it more time off or higher pay.

Different variants: Specific examples of working time fraud

The examples of working time fraud are numerous and sometimes creative. They range from subtle manipulations to blatant falsifications. It is important for employers to know and be able to identify the various forms.

Manipulation of time recording

This is the most classic form of fraud. It includes:

• Incorrect clocking in and out: Employees clock in or out at times that do not correspond to reality, for example only after arriving home.
• Buddy punching: A phenomenon in which colleagues punch for each other to cover up a late start or early departure.
• Overtime falsification: Fictitious overtime is written down in order to receive additional remuneration or time off in lieu.
• Incorrect information in field service: travel times are artificially extended or appointments are incorrectly dated in order to increase the recorded working time.

Break fraud and unauthorized absence

Breaks are required by law and are good for your health, but are often misused in various ways.

• Undocumented breaks: Smoking breaks in particular are often not stamped out and add up to a considerable loss of time over weeks and months.
• Extended lunch breaks: The regular break time is significantly exceeded without documentation or compensation.
• Leaving the workplace unannounced: Employees leave the company premises for private errands such as shopping or visits to the hairdresser without clocking out.

Private activities during working hours

The boundary between work and private life is not always clear, but excessive private activities are a clear violation.

• Private communication and internet use: constant messaging, long private phone calls, excessive social media surfing or online shopping.
• Sleeping at work: A particularly serious breach of trust that can occur especially during night shifts.

Special features in the home office

The working from home offers many freedoms and advantages for employers and employees, but also new gateways for working time fraud. The lack of direct supervision makes it more difficult for employers to notice or prove violations.

• Faking presence: The computer is left switched on to simulate activity while private tasks such as housework are carried out.
• Generally unproductive work: Despite formal attendance and availability, no significant work output is achieved.

Consequences under employment law: What are the consequences of working time fraud?

If working time fraud is discovered, employers should react. The instruments under employment law are staggered and depend on the severity and frequency of the offense. Many years of service does not protect against consequences.

The warning as the first step

For minor or first-time violations, a written warning is the method of choice. It has a warning function and must contain three elements: a precise description of the misconduct, a reference to the breached contractual obligation and the threat of more serious consequences, such as termination, in the event of a repeat offense.

It gives the person concerned the chance to correct their behavior.

Termination for conduct-related reasons

If the warning remains ineffective or if the violation is significant, an ordinary, behavior-related termination due to working time fraud is possible. The employment relationship then ends subject to the statutory or contractual notice period. The justification must be valid, as it can be contested before the labor court.

Termination without notice as ultima ratio (Section 626 BGB)

In the case of particularly serious working time fraud, the relationship of trust is often so permanently destroyed that continued employment until the end of the notice period is unreasonable. In such cases, extraordinary termination without notice is possible.

The following requirements must be met:

• An “important reason” exists (e.g. deliberate manipulation of time recording).
• The fraud is clearly demonstrable.
• Notice of termination must be given within two weeks of the employing company becoming aware of the fraud.

Is working time fraud a criminal offense? A look at the penal code.

The question of whether working time fraud can constitute a criminal offense can be clearly answered in the affirmative, provided certain conditions are met. The possible consequences then go beyond employment law.

Working time fraud as criminally relevant fraud

If employees intentionally make false statements in order to obtain a financial advantage (salary for work not performed) and the company suffers economic damage as a result, the offense of fraud according to § 263 StGB may be fulfilled.

While minor violations are usually only punished under employment law, systematic or extensive fraud can lead to criminal charges, fines or even a prison sentence.

Forgery of documents when stamping

The Federal Labor Court has in judgments clarified that the deliberate misuse of an electronic time recording system can be considered a forgery of a document. In this case, the digital record has the character of a document whose content is deliberately falsified. This explains the possible classification of working time fraud as a criminal offense.

The role of the employing company: obligation to provide evidence and prevention

Despite the clear legal situation, the biggest hurdle for employers often lies in providing evidence. The burden of proof lies entirely with the company. It is not enough to have a vague suspicion; solid evidence must be presented to justify a dismissal.

Catching employees in the act is difficult. What is a person actually doing at their home office workplace? Video surveillance is generally inadmissible for obvious and data protection reasons. Witness statements from colleagues are often unreliable.

Without an objective data collection system, verification can become a Sisyphean task.

Prevention instead of reaction: creating a culture of transparency

The most effective way to combat working time fraud is prevention. Instead of relying on penalties for violations, companies should create a working environment from the outset in which fraud becomes unattractive and unnecessary.

• Clear rules: Communicate unambiguously which rules apply to working hours, breaks and private activities. What is allowed and what is not? The clearer your guidelines are, the less room there is for misunderstandings.
• Open communication: training courses or information materials create awareness of the seriousness of the issue. At the same time, an open corporate culture in which questions can be asked reduces uncertainty.
• Modern digital time recording: it is one of the most important and simplest levers. Automated, forgery-proof systems create an objective data basis that makes manipulation more difficult and creates transparency for both sides.

Establishing a fair and transparent work culture with Teamhero

In view of the obligation to provide evidence and the BAG ruling of 2022 the introduction of a digital solution is not only a strategically smart decision, but also legally necessary.

Teamhero is a comprehensive personnel management software that offers precise and tamper-proof time recording as an integral component. In contrast to manual timesheets or simple Excel spreadsheets, working times are recorded in real time. The software is specially designed to meet the needs of personnel-intensive companies.

• Prevention of manipulation: The above-mentioned “buddy punching” is practically impossible, as the recording is often device- or person-related.
• Transparency for both sides: Employees can view their hours worked, overtime and break balances at any time. This creates trust and prevents misunderstandings. Employers receive a reliable database for payroll accounting and can detect irregularities at an early stage.
• Efficiency and fairness: The automatic recording of working and break times ensures that every minute worked is recorded correctly. Overtime is not lost and payroll accounting is always correct. The system can be configured so that statutory break regulations are automatically taken into account.

With Teamhero, you can transform the chore of time recording into a valuable and time-saving tool for promoting a fair, transparent and productive working culture.

Conclusion: Proactive action protects against loss of trust and damage

The possible legal consequences for working time fraud are severe and can include termination without notice and criminal prosecution. However, the biggest challenge for employers is often providing complete proof.

The best solution therefore lies in prevention. Clear rules and open communication are a necessary basis, but only a modern, digital time recording system such as Teamhero creates the necessary transparency and security.

It not only protects the company from economic damage, but also guarantees fair treatment of all employees. By acting proactively and relying on objective data collection, you lay the foundation for a working environment based on trust and integrity.