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What is hours billing?
Hours billing is the systematic recording of an employee's working hours. It sets down when an employee started work, when they finished and how long a break they took. The resulting hours form the basis for the monthly payroll.
Hours billing serves two functions at the same time: it is used to calculate pay and it supplies data for business planning. Anyone who wants to keep staff costs under control needs reliable time data. But anyone who wants to pay employees fairly also needs accurate records.
Legal obligation: what applies since the Federal Labour Court ruling
The obligation to record working time is clearly regulated in Germany. Back in 2019 the European Court of Justice decided that all employers in the EU must fully document their employees' working hours. The Federal Labour Court (Bundesarbeitsgericht) confirmed this obligation as binding for Germany too in September 2022.
The start and the end of daily working time, as well as the breaks in between, have to be recorded. Simply recording overtime is no longer enough.
On top of that come the specific requirements of the German Working Hours Act (Arbeitszeitgesetz, ArbZG):
- Maximum daily working time: 8 hours, in exceptional cases up to 10 hours – provided the additional time is balanced out within 6 months
- Break requirement: from 6 hours of working time at least 30 minutes, from 9 hours at least 45 minutes
- Rest periods: at least 11 hours between two working days
These requirements have to be visible in the hours billing, otherwise there is no proof that they were met.
How hours are calculated correctly
The calculation itself is straightforward: daily working time is the difference between the start and the end of work, minus break times. These daily figures are added up across the month and multiplied by the agreed hourly wage.
An example: an employee works five days with different working hours each day and reaches a total of 38 hours. At an hourly wage of €15 that gives a gross wage of €570 for the week. In the monthly statement all weeks are added together and, where applicable, overtime, absences or special payments are included.
For payroll programs it is also often necessary to convert minutes into decimal values: 30 minutes correspond to 0.5 hours, 45 minutes correspond to 0.75 hours. Digital systems handle this conversion automatically.
Public holidays, vacation and sickness in the statement
Absences also belong in the hours billing. Statutory public holidays count as paid holidays: the employee receives their pay without having to work. Digital time tracking systems can recognise these days automatically and take them into account in the hours account.
Vacation and sickness reduce the target hours for the relevant period and feed into the overall calculation for the month. If you are based in a federal state with a particular public holiday, you have to set this individually for employees in different federal states. Modern time tracking solutions can handle this automatically too.
If an employee works despite a public holiday, special pay rules apply. Holiday premiums have to be documented and billed correctly.
Special rules for mini-jobs
For mini-jobbers and employees in industries covered by the German Act to Combat Illicit Employment (Schwarzarbeitsbekämpfungsgesetz), a special recording obligation applies under Section 17 of the German Minimum Wage Act (Mindestlohngesetz, MiLoG). Employers have to document the hours worked and keep the records for at least two years.
The reason is the earnings cap: mini-jobbers may not earn more than a certain amount per year. Since January 2026 the statutory minimum wage has been €13.90 per hour. That determines the maximum number of hours a statutory mini-jobber may work per month. Without precise hours records this is hard to keep track of, and it becomes a problem in an audit.
Employees who earn exactly the minimum wage also need to keep an eye on their hours: anyone who permanently works more hours than their hourly wage covers falls below the minimum wage in arithmetic terms. That is unlawful.
Hours billing for projects and jobs
One variant of hours billing that is particularly relevant in service companies, agencies and the skilled trades is project time tracking. Here working hours are not only recorded as an employee's total working time, but assigned directly to particular projects, jobs or customers.
That makes it possible to see at the end of a project how much time was actually spent. On that basis an invoice can be drawn up afterwards, or the budget can be reviewed. Employees book their hours twice: to their personal working time account and to the respective project.
For invoicing customers, such proof is often required by contract. Anyone who bills by the hour needs complete documentation of the services provided.
Timesheet, Excel or digital software?
There are various ways of putting this into practice. The classic paper timesheet is still in use in some small businesses. Employees write down the start, the end and the break by hand every day, sign at the end of the month and hand the sheet in. That works, but it is error-prone and laborious to evaluate.
Excel templates offer more structure and allow simple calculations. With formulas in place, decimal hours can be calculated automatically, monthly totals summarised and deviations from the target spotted. For smaller teams with little turnover that can be enough.
Beyond a certain size, a digital time tracking solution is advisable. Employees clock in and out via app, browser or terminal, and breaks are recorded or deducted automatically. The system shows the planned vs. actual comparison in real time. Overtime, vacation and public holidays feed into the calculation automatically. The data can be exported and transferred straight into payroll programs.
For businesses that want to handle working time documentation in a legally compliant way with minimal effort, a digital solution is the standard today.
Time tracking with clockin
Hours billing without the manual effort
With clockin your employees record their working hours digitally – and you get all the data neatly prepared for the monthly payroll.
- Working hours, breaks & absences recorded automatically
- Planned vs. actual comparison and overtime at a glance
- DATEV integration for preparatory accounting
What customers say
Conclusion
Hours billing is far more than an administrative duty. It protects employers from legal risks, ensures that employees are paid correctly and provides the data basis for sound staffing decisions. Anyone who uses a digital solution for it saves time, avoids mistakes and is on the safe side in an audit.
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