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By EasyHours | April 5, 2025
A guide to the consequences of failing to track working hours
Tags: time tracking, legal requirements, EU regulations, working hours, rest periods, time registration, legislation
How does it affect your business if you delay or overlook the requirement to track working hours? In this blog post, we examine the consequences—legal, financial, and practical—of failing to track working hours. Since July 1, 2024, all employers have been required to record employees' working hours, and violations of the working time law can result in anything from fines to compensation claims. We explain everything in a calm and informative manner without scare tactics, provide examples of possible scenarios, and show you a secure solution that eliminates risk and saves time.
On July 1, 2024, a new law on working time registration came into effect. This means that all employers must have an objective, reliable, and accessible system to record employees' daily working hours. The purpose of the law is to ensure compliance with occupational health and safety regulations, such as daily rest periods and the 48-hour workweek limit, as well as to create transparency around working hours. The requirement applies to almost all employees—only a few self-managing top employees can be exempted, and this must be stated in the contract. For most small and medium-sized enterprises (SMEs), this means that you need to implement some form of time tracking if you do not already have it. Read more about the specific legal requirements for working time registration.
The authorities monitor compliance with the rules. Lack of time registration itself does not have a tailored fine in the legislation, but it puts the company in a vulnerable position: Without registration, you have no documentation that you are following the rules. In practice, this can lead to unintentional violations of working time regulations – or you may not be able to prove your innocence if it is alleged. Below, we review the various consequences of ignoring or delaying the requirement for time registration.
If you do not comply with the legal requirement for working time registration, it can have legal consequences. The regulatory authorities are already focusing on the new requirement, and an employer who cannot document employees' working hours risks sanctions. Initially, the authorities may issue warnings or orders – for example, an order to implement a system within a deadline. If this is ignored, or direct violations of working time regulations (such as rest period rules or the 48-hour limit) are discovered, the authorities can impose fines. In the worst case, they can even require the company to cease operations temporarily until the issues are resolved.
According to occupational health and safety legislation, violations of rest period and working time rules can be punished with fines and, in extreme cases, imprisonment (up to 2 years) for more serious, intentional violations. It should be emphasized that prison sentences are extremely rare and only relevant in very serious cases – but it illustrates that lawmakers take the area seriously. Fines are a more immediate risk: they can vary depending on the extent of the violation and the size of the company. In cases of breaches of rest period rules, regulatory authorities operate with standard fines, where the base amount varies by jurisdiction. If multiple employees have been affected, or there are aggravating circumstances, the level of fines can escalate further – potentially running into very large amounts. In particularly serious cases with many repeated violations, the total fines could theoretically reach millions, although hopefully, very few SMEs will ever come close to that level.
Another legal consequence is liability for damages towards employees. The working environment and working time regulations entitle employees to compensation if the rules are violated. If an employee can demonstrate (or merely claims) to have worked beyond the legal limit, and you cannot disprove it due to lack of registration, the court may award the employee compensation. Typically, such compensations can be substantial per employee, depending on the severity of the violation. An example: In a specific case concerning the 48-hour rule, an employer had to pay significant compensation to an employee who had worked too many hours over a 4-month period. As an employer, you are obliged to ensure that each employee does not exceed these limits, so if it happens, it is the employer who is liable. Without a reliable time registration system, it may be impossible to document compliance with the rules – and legally, you stand on very weak ground.
When the law is not complied with, it also impacts the bottom line. Economic consequences of lacking time registration are closely linked to the legal ones: Fines from authorities and compensations/damages to employees must be paid by the company and can become a costly affair. Even smaller fines can be felt by a small business, and if multiple employees are affected, the amounts can spiral out of control. In addition to the fine itself, there are potential legal costs – time and money spent handling injunctions, lawsuits, or negotiations with unions. Resources that could have been better used in the business are instead tied up in firefighting.
Lack of working time registration can also indirectly lead to financial losses. If you do not have control over the hours, you risk errors in payroll – for example, underpaying for overtime (which can lead to claims for back pay later) or overpaying because no one has an overview. Both are costly in the long run. Additionally, the absence of a good system can make it harder to optimize workflows and utilize employees' time effectively. Without data on working hours, management loses an important basis for planning resources optimally, which can impact productivity.
Finally, one should not underestimate the soft economic consequences such as loss of reputation. If a company repeatedly violates working time regulations or becomes known for not taking care of employees' work environment, it can damage the brand and make it harder to attract both customers and talent. In industries with high union coverage, lack of registration can also lead to more disputes with unions, often resulting in costly settlements or lawsuits. All in all, a "cost-saving exercise" by postponing time registration can turn out to be very expensive when considering all the associated costs.
Besides the long arm of the law and the economy, there are a number of practical consequences of not implementing time registration. First and foremost, you are left without documentation of employees' working hours. It may sound abstract, but think of situations where documentation is crucial: for example, if an employee is injured at work. In a work injury case, it can be important to show when and how long the person has worked, both for insurance purposes and to determine whether work environment rules (such as rest periods) were followed leading up to the accident. Without any records, you are poorly positioned to prove that you have not pushed the employee beyond reasonable limits. Inadequate documentation can thus worsen the outcome of the case for the company or delay case processing.
Another practical problem is that without a system, you risk internal disagreements and uncertainty. Employees may be unsure about how to record their time – or whether they are even getting the correct pay for overtime. It can create frustration and distrust if there are no clear guidelines. Small misunderstandings about working hours can grow large without a common reference point. For example, an employee may believe they have worked more than agreed, while management may not be aware of it – without registration, such a situation can easily end in conflict or dissatisfaction, which could have been avoided.
Moreover, the lack of time tracking can present operational challenges in daily life. Planning staffing, vacations, overtime, etc., becomes more difficult without a unified system. You waste time on manual tasks because you have no automatic way to collect data. It can be tempting to continue "as we usually do" and think it will be fine – but often you end up spending more time fiddling with timesheets, Excel sheets, or after-the-fact adjustments than it would take to get a smart system up and running. In other words: Without a time tracking system, you risk both chaos and wasted time in administration, which is a practical hindrance to an efficient workday.
Let's look at some concrete scenarios that illustrate the consequences of not complying with working time regulations and the requirement for registration:
Fines and orders from authorities: Imagine the regulatory authorities pay a visit. You don't have a system, and it is discovered that several employees are working without having their time recorded. The authority can, for example, issue an order to immediately implement time tracking and simultaneously issue a fine for violating working time regulations. The level of the fine depends on the circumstances and jurisdiction, but even a minor first-time offense can be costly. If you comply quickly, you might get away with just an order and guidance – but it is still a stressful and disruptive experience that could easily have been avoided.
Compensation claims from employees (48-hour rule): An employee has been busy and claims after a few months that he has often worked more than 48 hours a week on average. Because there is no systematic registration with you, you cannot present precise timesheets. The employee contacts his union, which helps to raise a claim for compensation for violating the 48-hour rule. In such a dispute, the court will typically take the employee's word for it if the company lacks documentation. It may end up that you have to pay substantial compensation to the employee for the period you cannot document. At the same time, you are instructed to establish a system so it does not happen again. Regardless, such compensation is a significant amount – and the money could probably have financed a time tracking system many times over.
Poor case in work injury: On an unfortunate day, a workplace accident occurs at your workshop, where an employee is seriously injured late in the afternoon. The regulatory authorities and the insurance company investigate the case. They request documentation of the injured person's working hours leading up to the accident, including to see if the 11-hour rest rule was observed the previous day. Since you have not kept time records, you cannot provide documentation. It later turns out that the employee had worked late on the evening shift the day before and came in early again—possibly in violation of the rest time rules. The lack of data makes it difficult to refute, and it may lead to a stricter assessment of your responsibility. In the worst case, the insurance company may reduce compensation or the authorities may impose an additional fine for violating rest time rules, on top of the already sad situation. If you had proper records, you could have either prevented the violation—or documented that you actually complied with the rules.
Administrative chaos and wasted time: In a busy small business without time tracking, you try to keep track of working hours through trust and homemade solutions. Over time, different employees have different agreements: some send hours by email, others write them down on paper. When a senior employee goes on vacation, you discover that no one has recorded the extra hours she put in before the vacation. You have to spend an entire day reconstructing her schedule by digging through old calendars and project notes. Meanwhile, another employee is dissatisfied because he believes he has not received correct overtime pay for the last month. All this leads to stress and extra work for management. It is an example of how the lack of a system saves time in the short term but costs time and headaches later. A digital system would have provided a common overview and eliminated these uncertainties.
These scenarios illustrate that the consequences can impact legally, economically, and practically. Fortunately, there is much that can be done to avoid ending up in such situations. The key is to start with time tracking in a smart way – preferably before it becomes urgent.
The positive aspect is that the solution to the above challenges is straightforward: Establish reliable time tracking and a clear policy around it. If you are unsure how to approach it, help is available. Here are some resources and tips to get off to a good start:
Get to know the rules: Start by reading up on the most important aspects of the legal requirement. We have collected the most common questions and answers in our FAQ on working time registration—here you will find information about who is covered, what needs to be recorded, and how to store data, etc. Also see our guide to mandatory time tracking for a complete overview. The better you understand the rules, the more confidently you can navigate them.
Getting Started Guide: Implementing time tracking doesn't have to be difficult. Read our guide How to Get Started with Time Tracking, which explains step by step how to implement a system at your workplace. The guide covers everything from choosing a solution, involving employees, to how to create a simple time tracking policy for the company. With a plan in hand, you can avoid surprises.
Choose the right system: There are many ways to track time – from simple spreadsheets to advanced digital systems. The choice depends on your needs. In the blog post How to Choose the Right Time Tracking System, we go through the advantages and disadvantages of different solutions. Consider factors such as user-friendliness, the possibility of integration with payroll systems, mobile apps for employees, etc. A good system should make it easy for everyone to track time continuously, so it doesn't become a burden in daily life.
Involve employees: Remember to inform and educate your employees when you roll out time tracking. Make it clear that the purpose is not control for control's sake, but that it is a legal requirement and a protection of their rights (which it indeed is). Feel free to have a dialogue about how time tracking can provide everyone with a better overview of working hours and ensure, for example, correct overtime payment. When employees understand the purpose and feel heard, implementation goes more smoothly.
By using the above resources and advice, you can relatively quickly get a handle on time tracking. Many companies are already on board – and the sooner you join, the more you prevent the risk of the unfortunate consequences we described earlier.
Finally, it is worth mentioning that you do not have to handle this task alone. EasyHours was created specifically to help companies like yours safely through this transition. EasyHours.com.pt offers a user-friendly time tracking app that automatically meets all legal requirements. With EasyHours, employees can easily record their working hours via computer or smartphone, and as an employer, you get a complete overview. The system even sends alerts if someone is about to exceed rest period or 48-hour rules, so you can intervene in time and stay on the right side of the law—without stress and without having to monitor manually.
By choosing a solution like EasyHours, you eliminate the risk of fines and legal issues. You also save time on administration: no more manual entries in Excel or forgotten slips. Everything is recorded automatically and securely stored in the cloud for the required 5 years, ready for documentation if it ever becomes necessary. At the same time, you gain valuable data that you can use to optimize operations and ensure that employees' time is used correctly. It provides peace of mind for both management and employees.
Call-to-action: Are you ready to make time tracking easy and worry-free? Let EasyHours guide you on your way. Visit EasyHours.com.pt to learn more and get a free trial. You are also welcome to contact us for a non-binding conversation – we are ready to advise and ensure that you successfully comply with the new time tracking law. With EasyHours as your partner, you can confidently focus on what you do best, knowing that working hours are recorded correctly and that you comply with the law to the letter. Make it easy for yourself – and get started with EasyHours today!