Time Tracking Software: A Comparison for Small and Medium-Sized Businesses [2026]
Time tracking software compared: a 10-point checklist, the BAG ruling explained, GDPR requirements, and why time tracking and scheduling belong together.
Since the 2022 BAG decision, one thing is clear: employers in Germany are in principle obligated to record their employees' working hours systematically. But which time tracking software is right for a small or medium-sized business? What does it need to do, what may it cost – and what should you watch out for when choosing one?
This article gives you a 10-point checklist for the selection, compares tracking methods for different workplaces, and shows why the combination of time tracking and scheduling can be particularly worthwhile for SMEs.
Why time tracking software is relevant for employers in 2026
The 2022 BAG ruling and its consequences for SMEs
In September 2022, the Federal Labour Court (BAG) ruled that employers in Germany are in principle obligated to introduce a system with which working hours can be recorded. According to the BAG, this obligation already arises from the existing Occupational Health and Safety Act – no new law is needed for it.
For SMEs, this means: the question is no longer whether, but how working hours are recorded. Read more on the legal background in our article on the time tracking obligation 2026.
What can happen if companies don't track digitally?
Anyone without verifiable time tracking risks several disadvantages under the current legal situation: in disputes over overtime or wage claims, the burden of proof can shift to the employer's disadvantage. Official audits by customs authorities or social insurance providers can uncover deficiencies. And the competent supervisory authorities can issue orders under the German Working Hours Act (ArbZG).
Important
The consequences mentioned here are based on current case law and the existing German Working Hours Act (ArbZG). The exact legislative framework for the tracking obligation is still pending. When in doubt, a lawyer specializing in employment law should be consulted.
10-point checklist: what good time tracking software should be able to do
Not every piece of software suits every business. These 10 criteria help with the selection – sorted by relevance for SMEs with shift operations:
Tracking via app, browser, and terminal
Flexibility for different workplaces: field staff need an app, the office a browser, production a terminal. Ideally, the software supports all three methods.
Automatic break calculation
Following ArbZG principles: 30 minutes from 6 hours, 45 minutes from 9 hours. The software should give notices when breaks are missing or too short.
Working-time account with target/actual comparison
Plus and minus balances per employee, calculated automatically. Monthly and yearly overviews for evaluation.
ArbZG notices (rest periods, maximum working time)
Notices about possible conflicts with rest periods (generally 11h) and maximum working time (max. 10h/day). No substitute for a legal review, but a practical aid.
GDPR – EU hosting, DPA, data minimization
Personnel data belongs in the EU. Look for EU hosting, a DPA, encryption, role-based access control, and deletion deadlines.
Export for payroll
Recorded hours, bonuses, and absences exportable as CSV – compatible with common payroll systems.
Absence management (vacation, sick leave)
Vacation requests, sick notes, and special leave in the same system as time tracking. No separate tool needed.
Link to scheduling
The decisive difference: target hours from the schedule, actual hours from the tracking – automatic reconciliation. Most pure time tracking tools don't offer this.
Mobile offline capability
For construction sites, warehouses, or areas without Wi-Fi: the app should also work offline and sync the data as soon as a connection is available.
Verifiable documentation
Change history, approval status, and audit trail. Important for official audits and labour court proceedings.
Shiftdesk supports all 10 points.
Try it free for 14 days – no credit card required.
Time tracking for different workplaces: which method fits?
| Workplace | Recommended method | Benefits | Typical costs |
|---|---|---|---|
| Office & home office | Browser time clock | No download, usable at the PC | Included in software |
| Field service & trades | Mobile app (iOS/Android) | Flexible, GPS, offline-capable | Included in software |
| Production & warehouse | Tablet terminal at the entrance | Fixed location, simple | + Hardware (~EUR 200) |
| Shift operations | App + schedule link | Target/actual automatic | Included in software |
For shift operations, the link to the schedule is especially valuable. Read more on our page about the online shift planner.
Time tracking and scheduling: why SMEs need both in one system
Most time tracking tools only know actual hours: when did the employee clock in? What they don't know: what was actually planned? The target hours are missing – and with them the automatic reconciliation. The result: duplicate data entry, manual target/actual comparisons in Excel, and transfer errors during payroll.
A system that combines scheduling and time tracking solves this problem: the target hours come from the schedule, the actual hours from the tracking. The reconciliation happens automatically. Overtime, minus hours, and deviations become visible instantly.
That is exactly the approach of Shiftdesk. For general scheduling, there's our page on creating schedules online. For the time tracking solution, the page on time tracking for employees.
GDPR requirements for time tracking software
Personnel data – and working hours are part of it – are subject to data protection. Anyone introducing time tracking software should watch out for these points:
EU hosting and DPA
Data should be hosted in the EU. A data processing agreement (DPA) under Art. 28 GDPR is generally required when processing personnel data.
Data minimization
Only record the data needed for time tracking: start, end, duration, breaks. GPS tracking only with explicit consent and only where operationally necessary.
Access control
Role-based permissions: employees see only their own data, team leads their team, HR the overall view. No blanket access for everyone.
Deletion deadlines
Working-time data must generally be retained for at least 2 years under the ArbZG. After that, it should be deletable. The software should support deletion deadlines.
Introducing time tracking software: the first 7 days
Introducing digital time tracking doesn't have to be complicated. This roadmap shows how you can go live within a week:
Set up and configure the system
Define the tracking method (app, browser, terminal), set up working-time models, and configure break rules.
Create and invite employees
Enter master data, record contract type and weekly hours, and send out login credentials.
Run a pilot with a small team
Have 3-5 employees test the system for a week. Collect feedback and clarify common questions.
Make adjustments
Based on the feedback: adjust break rules, review working-time account settings, and define the approval workflow.
Roll out to all employees
A short briefing (15 minutes is plenty), provide an FAQ sheet, and name a point of contact.
First monthly evaluation
Check the target/actual comparison, review hour balances, and test the export for payroll.
Optimization and fine-tuning
After the first month: what works well, what doesn't? Adjust settings and create templates.
Frequently asked questions about time tracking software
Is time tracking mandatory in 2026?
In 2022, the Federal Labour Court (BAG) ruled that employers are in principle obligated to record working hours systematically. The exact legislative framework is still pending. The need to act, however, already exists.
What does time tracking software cost for SMEs?
Costs vary depending on the provider and feature set. Typical prices range between EUR 2 and EUR 10 per employee per month plus a base fee. Shiftdesk starts at EUR 25/month plus VAT (6 employees included).
Which time tracking method is right for small businesses?
For small teams, an app-based solution is often enough. Employees clock in via smartphone, and the data is evaluated centrally. For office teams, a browser-based time clock is practical.
Is time tracking via Excel still permitted?
In principle, the law does not prescribe a specific method. However, according to case law, the tracking must be objective, reliable, and accessible. Excel can meet that in individual cases, but it is error-prone and hard to follow during official audits.
What must time tracking software offer for GDPR?
EU hosting, a DPA (data processing agreement), data minimization, role-based access control, and deletion deadlines. GPS tracking only with explicit consent.
Can I use time tracking and scheduling in one system?
Yes. Systems like Shiftdesk combine scheduling and time tracking so that target hours from the schedule are automatically reconciled with the actual hours recorded. This saves duplicate data entry and reduces errors.
Conclusion
Choosing the right time tracking software depends on your business: how large is the team, where do the employees work, do you need a link to the schedule? The 10-point checklist gives you clear guidance. And the GDPR requirements ensure you stay on the safe side.
If you're looking for a solution that combines time tracking and scheduling in one system, try Shiftdesk free for 14 days – no credit card required.
This article is for general information and does not constitute legal advice. The description is based on the German Working Hours Act (ArbZG), the Occupational Health and Safety Act (ArbSchG), and the GDPR in their current versions (as of 2026). Collective bargaining agreements may provide for special arrangements that differ. The description refers to German law. Different regulations apply to Austria and Switzerland. Shiftdesk assumes no liability for the accuracy, completeness, or timeliness of the content presented. For an individual assessment, consult a lawyer specializing in employment law.
The Shiftdesk team writes about scheduling, time tracking and labor law in the DACH region — practical and easy to follow.
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