The reform of the Works Council Constitution Act in Germany and its effects on the co-determination rights of the works council

Author: | Published: 10 Oct 2001
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The amended co-determination rights of labour, issued by the German Federal Parliament (Bundestag) in the form of the Works Council Constitution Act (Betriebsverfassungsgesetz or BetrVG), introduce far-reaching changes in the works constitution. On the one hand the new regulations strengthen works councils, and increase the number of works councils members to be released, as well as raising the number of youth and trainee representatives. On the other hand, the regulations give a concrete definition of operations, revise the definition of an employee and regulate the fate of the works council in the event of split-up, closure or merger of an operation. Further, the voting process for works councils is newly regulated. The reform of the Works Council Constitution Act also expands the co-determination rights and hides additional costs for the employer.

This article describes the modifications that, for practical purposes, are of particular interest.

Section 1 BetrVG expressly states that in joint operations of several enterprises with, as a rule, at least five employees who have permanent voting rights, works councils may be elected. This corresponds with the (now consolidated) adjudication of the (German) Federal Labour Court. What is new is that section 1, subsection 2 BetrVG incorporates a statutory presumption when several enterprises form a joint operation. This statutory assumption applies if

  • the operational equipment as well as the employees of several enterprises are jointly deployed to carry out work for technical purposes; or
  • the consequence of the split-up of an enterprise is that one or several sectors of operations of one enterprise are allocated to another enterprise participating in the split-up without this event significantly changing the organization of the operation or enterprise concerned.

In addition, the employees of another employer are then entitled to elect a works council if they have been loaned to the operation for a certain period of time to perform work, and are deployed in the operation (enterprise) for more than three months.

Section 4 BetrVG contains a new regulation, according to which the employees of an operating division that has no separate works council may decide, with a majority of votes, to participate in the election of the works council of the main operation.

The definition of the term "employee", set out in section 5, subsection 1 BetrVG, is broadened to include employees engaged in tele-working and home-working. Furthermore, the distinction between white- and blue-collar employees no longer applies.

Section 9 BetrVG is revised to increase the number of members permitted on the works councils of enterprises that have more than 101 employees who are entitled to vote. For an overview, see Box 1, which compares the old and new regulations.

The cancellation of the distinction between white- and blue-collar employees also leads to a change in the regulation of the voting provisions of the works council. Furthermore, section 14a BetrVG introduces a simplified voting process for small enterprises. According to this, operations that have, as a rule, five to 50 employees with voting rights, may elect the works council in two steps. At the first election meeting, the electoral committee is appointed, at the second meeting the works council is voted in, in a secret and immediate election. This election meeting takes place one week after the first election meeting.

The newly inserted section 21a BetrVG regulates the transitional mandate of a works council in the event of a split-up in operations. Under this provision, the works council stays in office and continues to manage the business for the operational sectors allocated to it, insofar as it meets the preconditions of section 1, subsection 1 BetrVG and is not integrated into an enterprise.

The new section 21b BetrVG regulates the remaining mandate of the works council in the event of closure, split-up or merger of operations causing one operation to be extinguished. According to this regulation, the works council stays in office as long as this is required to represent the employees' participation and co-determination rights connected with the change in operations.

Furthermore, in section 38 BetrVG, the number of employees is reduced in enterprises in which members of the works council must be released. A comparison between the new and the old regulations in this regard appears in Box 1. Releases may also take the form of part releases. These may not, in total, exceed the number of releases listed in section 38, sentences 1 and 2 BetrVG. The voting process regulated in section 38, subsection 2 BetrVG concerning the works council members to be released is also simplified.

By cancelling the distinction between white- and blue-collar employees, the regulation covering the dispatch of works council members to the central works council contained in section 47 BetrVG was revised. According to this, each works council with up to three members must send one of its members to the central works council. Each works council with more than three members sends two of its members. Both sexes shall be given reasonable consideration in this process.

The formation of a central works council for a group of companies has also been changed. The formation of such a works council now requires the consent of the central works council of the group of companies in which a total of more than 50% of the employees of the group of companies are employed. Under the old regulation, the level was 75% of employees. In addition, pursuant to the revision in section 55 BetrVG, the central works council must send two of its members to the central works council of the group of companies, even if it only represents white- or blue-collar employees.

Section 62 BetrVG increases the number of representatives for youths and trainees in enterprises. According to this, under section 60, subsection 1, the representation of youths and trainees in enterprises with, as a rule:

  • 5 to 20 employees, will be one member;
  • 21 to 50 employees, will be three members;
  • 51 to 150 employees, will be five members;
  • 151 to 300 employees, will be seven members;
  • 301 to 500 employees, will be nine members;
  • 501 to 700 employees, will be 11 members;
  • 701 to 1000 employees, will be 13 members; and
  • more than 1000 employees, will be 15 members.

In addition, sections 73 (a) and (b) BetrVG introduce the representation of youths and trainees in a group of companies.

The responsibilities of the works council contained in section 80 BetrVG is extended as follows:

  • the promotion of compatibility between family and occupation;
  • the application of measures to fight racism and hostility to foreigners in the enterprise;
  • the promotion and safeguarding of employment in the enterprise; and
  • the promotion of measures for employment protection and environmental protection in the enterprise.

The participation and co-determination rights of employees are supplemented by section 86a BetrVG by a proposal right for employees. According to this, each employee has the right to propose topics to the works council for consultation. If the proposal is supported by 5% of the enterprise's employees, the works council must put the proposal on the agenda of a works council meeting within two months.

The co-determination catalogue of the works council contained in section 88 BetrVG is extended by No 13. According to this, the works council must co-determine principles concerning the execution of group work; "group work" as defined in this provision prevails if, under the structure of the operational works process, a group of employees carries out a collective task assigned to it mainly under its own responsibility.

The new regulation of the BetrVG provides that voluntary works agreements may, pursuant to section 88 BetrVG, also be regulated (decided) with respect to measures for works environmental protection and measures for the integration of foreign employees, as well as for fighting racism and hostility to foreigners.

In section 97 BetrVG, a new co-determination right of the works council is introduced by inserting a second subsection. According to this, the works council has a co-determination right when introducing measures of in-plant (industrial), professional training if the employer has plans for technical plants, work processes and work flows, or workplaces that will cause the activities of the employees concerned to change, and lead to a situation in which their professional know-how and abilities are no longer sufficient for them to fulfil their tasks. If no agreement is reached, the conciliation committee makes a binding decision. The award of the conciliation committee substitutes the agreement between the employer and the works council.

The co-determination right of the works council with respect to individual personnel measures is broadened by the fact that in section 99, subsection 1, sentence 1, the word "operations" is replaced by the word "enterprises". According to this, the works council must now be informed with respect to enterprises that have, as a rule, more than 20 employees with voting rights prior to each employment, classification, reclassification and transfer.

The regulation in section 103 BetrVG is also new. The works council must now give its consent in the event of a transfer of members of the works council and other specially protected persons.

Just as in section 99 BetrVG, the word "operations" is replaced by the word "enterprises" in section 111 BetrVG.

Further, should changes in an enterprise's business operations require a Reconciliation of Interests and a Social Plan to be concluded (section 111, subsection 1 BetrVG), the works council in enterprises with more than 300 employees may call in an adviser for support.

The new regulations came into force on August 1 2001. Box 1 reflects the most important changes.

Box 1: Key changes introduced by the Works Council Constitution Act
Regulation relating to:

Old regulation

New regulation

In which operations does the establishment of a works council come into consideration?

In operations with – as a rule – five employees entitled to vote (upon completion of the 18th life-year), of whom three are eligible (entitled to vote and six months in the operation).

After some lengthy discussions and ambiguity, the required number of five employees entitled to vote remains in force.

Definition of operation.

The adjudication defined the operation up to now as an organizational unit within which the entrepreneur alone or together with his/her employees continuously pursues labour-related purposes by means of factual and immaterial means ("uniform performance apparatus").

In future, an operation is already assumed if work means and employees are actually uniformly deployed.

Who has the right to vote?

All employees who have completed their 18th life-year. Also loaned employees who are deployed in the operation for more than three months.

How does the appointment of an electoral committee take place?

By the works council, a works meeting or the labour court upon application of three employees entitled to vote.

In future, an existing group or general works council may appoint an electoral committee, if no works council exists in the operation of an enterprise or a corporation.

How does voting take place in small enterprises (five to 50 employees)?

As in other operations (election meeting, formation of an election committee which prepares the voting – proposal lists, etc – and carries it out).

Two-stage voting procedure: At a first election meeting an electoral committee is elected. One week later, the works council is elected at a second election meeting (secretly and directly). In operations with 51–100 employees, the  electoral committee and the employer may unite this two-stage voting procedure.

How is the works council composed?

With equal representation according to employee groups

The gender with a minority in the operation must, in future, be represented in the works council at least according to its proportion in the workforce/staff.

From how many employees upwards may a works committee be formed?

From 301 employees upwards.

From 201 employees upwards.

How large is a works council?

5-20 employees with voting rights=1
21-50 employees with voting rights=3
51-150 employees with voting rights=5
151-300 employees with voting rights=7
301-600 employees with voting rights=9
601-1000 employees with voting rights=11
1001-2000 employees with voting rights=15
2001-3000 employees with voting rights=19
3001-4000

employees with voting rights=23

4001-5000 employees with voting rights=27
5001-7000 employees with voting rights=29
7001-9000 employees with voting rights=31
5-20

employees with voting rights=1

5-20 employees with voting rights=1
21-50 employees with voting rights=3
51-100 employees with voting rights=5
101-200 employees with voting rights=7
201-400 employees with voting rights=9
401-700

employees with voting rights=11

701-1000 employees with voting rights=13
1001-1500 employees with voting rights=15
1501-2000

employees with voting rights=17

and so on in steps of five hundred.

Can the works council transfer tasks to other committees?

Prerequisite is a works committee (s.a.)

Only in operations with more than 100 employees may committees be formed.

Can the works council transfer tasks to work groups?

Not provided for.

Only in operations with more than 100 employees may tasks be transferred to other work groups according to a skeleton agreement to be reached (executed) with the employer.

When do members of the works council have a right to compensation?

The individual members of the works council were only entitled to compensation if their works council activity fell into the personal work time of the majority of works council members.

An entitlement to compensation also exists when the works council activity, because of the different work times, cannot be carried out in the personal work time of the individual.

From what size of operation upwards must members of the works council be released from their work duties?

From 300 employees onward.

From 200 employees onward.

Number of the works council members to be released

300-600 employees = 1
601-1000 employees = 2
1001-2000 employees = 3
2001-3000 employees = 4
and so on in steps of 1000 employees


200-500 employees = 1
501-900 employees = 2
1001-1500 employees = 3
1501-2000 employees = 4
and so on in steps of 1000 employees


Are part releases provided for as well?

No Yes

Can group and general works councils be formed?

Yes. Voluntarily.

Voluntarily.

Has the works council the right to require the drawing up of selection criteria for new hires?

In operations with more than 1000 employees.

In operations with more than 500 employees.

Has the works council a co-determination right in individual personnel measures?

In operations with more than 20 employees.

In enterprises with more than 20 employees.

Have new co-determination rights been added?

The works council has been given the right to take the initiative for the safeguarding and promotion of employment; a co-determination right relating to training measures (further education) in the event that the measures arranged by the employer threaten to reduce the qualification of the employees for their tasks; a co-determination right when carrying out group work as well as comprehensive participation rights in matters of environmental protection and racism.

Does special protection against dismissal arise in connection with the Works Council Constitution Act?

Yes, for members of the works council and members of the electoral committee.

Now for up to three employees as well, who may call the election of a works council or apply for the appointment of an electoral committee.

Do members of the works council enjoy special protection against a transfer?

No.

Yes, if this would result in the loss of the mandate or eligibility.




Heuking Kühn Lüer Wojtek
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Düsseldorf
D-40474, Germany
www.heuking.de
Tel: +49 211 600 5500
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