What can works councils achieve - what not?

18. July 2023
  • Labour Law

What improvements can a works council bring about in your company? On which issues does it have co-determination rights? And where should you not place false expectations on the works council because it has no co-determination rights?

By Rupay Dahm, specialist lawyer for labour law, Berlin

Democracy in the workplace increases productivity, motivation and pay equity

The works council is the democratically elected representative of the workforce. It represents the interests of the employees vis-à-vis the management. That this also serves the company can be seen from the fact that companies with works councils have often survived crises like the one in 2008 better and have had to file for insolvency less often than companies without works councils. Works councils increase productivity. Companies with works councils are more flexible and innovative because they invest more in continuing education (https://idw-online.de/de/news599576). Workers in companies with works councils and collective bargaining agreements are less likely to resign. Wages are higher in companies with works councils, works councils improve pay equity and reduce the wage gap between men and women - even though works councils have no right of co-determination over wage levels. Nevertheless, works councils exist in only about 11 per cent of companies in Germany.

What exactly is in the power of works councils?

The works council can raise any issue, have it discussed at the general meeting, or work out proposals and negotiate with management. If problems are addressed openly and solved quickly, this increases mutual trust and profitability in the company. There are no limits to the creativity of the works council: According to section 80 of the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG), the works council must apply to the employer for measures that serve the company and the workforce. However, it only has the right to enforce proposals against the will of management (via the conciliation board) within the framework of the co-determination provided for by law. In areas where there is no right of co-determination, the works council can build up pressure, for example through works meetings, to get the employer to give in and conclude a voluntary works agreement under section 88 of the Works Council Constitution Act (BetrVG).

These are the basic steps to establish a works council in your company.

Co-determination on shift plans (section 87 I no. 2 and no. 3 BetrVG)

Overtime to the point of collapse and burnout? Lack of planning certainty due to notification of shifts at short notice? Shifts changed at short notice? Lack of long-term planning? Too long or too short breaks? Too many weekend shifts? All these problems can be regulated by the works council. The works council has a comprehensive right of co-determination in all matters of duty scheduling, i.e. including flexitime rules, shift patterns etc. Each individual duty roster is only effective with the consent of the works council and cannot be changed without its consent. In a works agreement the works council can regulate notice periods as well as the times and distribution of shifts and what should happen if a red line of overtime is exceeded.

Co-determination on holiday planning (section 87 I no. 5 BetrVG)

By when do you have to apply for leave? Who has priority if too many employees want to take leave at the same time, e.g. during school holidays or at the end of the year: the boss's favourites? The employees with school-age children? Until when can the employer refuse a leave request and from when is it considered approved? The works council can regulate all these questions through a company agreement.

Works council to protect against unfair transfers, recruitment procedures or demandedbusiness trips (§§ 99 BetrVG)

In the case of personnel measures (e.g. recruitment, grouping, transfer) the works council must be informed and must give its prior consent according to section 99 of the Works Council Constitution Act (BetrVG). The works council's legal options are limited and not exactly constructive: the works council can only block and has no right of initiative. So it cannot enforce the appointment of more staff, but can only prevent recruitment for special reasons. Too low a wage is not a reason for refusal. However, the works council can object if an employee is classified too low. This applies not only in companies covered by collective agreements (Tarifverträge) but also to company pay scales.

Works council co-determination is particularly effective in the case of undesirable transfers. This can include business trips of a few days if they result in a significant change in working circumstances. In such cases the works council must agree. It is the works council's task to check whether the transfer or business trip will lead to a conflict with family obligations or whether the employee concerned will be favoured or disadvantaged compared to other employees. In the case of business trips, the works council can have a say in when a business trip is considered working time and when it is not.

Limited co-determination in questions of pay equity (§ 87 I no. 10 BetrVG)

The works council cannot regulate the exact amount of wages. This is reserved for collective agreements. However, the works council can regulate which groups in the enterprise earn more or less and the relationship between those groups, as long as it does not attempt to determine the amount of wages. It can also obtain information on the level of wages by inspecting the gross wage and salary lists, section 80(2) BetrVG. Finally, it can put the wage structure up for discussion in anonymised form at a works meeting, e.g. broken down by men and women.

Co-determination on special payments, bonuses, etc. (§ 87 I no. 11 BetrVG)

If the employer wants to distribute voluntary annual bonuses or similar payments over and above the regular pay, the works council has a say in the distribution, but not in the total amount. The employer cannot simply pay a voluntary "extra" to their favourite employees. If they do so without the works council's consent, the works council can demand a redistribution afterwards.

Co-determination on health protection (section 87 I no. 7 BetrVG)

Works councils can have a wide-ranging say in health protection issues, starting with the design of risk assessments, BEM discussions or all kinds of company health protection measures, ergonomics, etc. The works council can also have a say in the design of group work (section 87 I no. 7 Works Council Constitution Act).

Organisation of group work (section 87 I no. 13 BetrVG)

When introducing group work, such as Scrum, Holocracy or other agile methods, the works council has a wide-ranging right of co-determination, especially to prevent negative effects such as stress, burnout and overload. It can demand control mechanisms, contact persons, regular evaluations, e.g. of overtime and countermeasures and regulate these in a company agreement.

Listening to the workforce (section 85 of the Works Council Constitution Act)

Employees can call in a works council member they trust for unpleasant staff discussions. The works council enjoys special protection against dismissal and other discrimination, so it can protect individual colleagues. For example, it can take up complaints from its colleagues on any subject and pass them on to the management, section 85 BetrVG.

Organising exchange among colleagues - the works meeting

Before the November Revolution in 1918 and during the Nazi era, workers' meetings were forbidden. According to the Works Constitution Act (Betriebsverfassungsgesetz), the works council now has the right to hold up to 6 works meetings a year during working hours, section 43 (1) BetrVG. These can be used to inform about current problems and discuss them (with or without management), e.g. about the economic situation, excessive workload, the mood in the workforce, mobbing, work techniques, customer satisfaction or the product, innovations, agile work organisation in teams, company environmental protection or socio-political issues such as rent prices.

Severance compensation in case of closure, outsourcing, redundancies or operational changes (§ 112 BetrVG)

Although the works council has little say in decisions such as whether a part of a business is to be closed, moved to another building or whether colleagues are to be made redundant, it can negotiate compensation for disadvantages in a social plan. This includes severance pay but also the assumption of relocation costs if employees have to "move behind" the company.

Little say in individual dismissals

The works council must be consulted before any dismissal, otherwise the dismissal is invalid (section 102 I BetrVG). However, beyond this the works council has little influence on the dismissal. It can only object to a dismissal for very narrowly defined reasons. This does not render the dismissal invalid, but the employee is then entitled to continued payment of wages for the duration of a dismissal process - even beyond the notice period (section 102 (5) BetrVG).

No say in economic decisions (§ 90 and § 111 BetrVG)

As early as the 1920s the trade unions demanded co-determination of the works council in economic matters - without success. The works council has no right of co-determination in all economic decisions (investments, product development, production processes, market strategy, etc.) and above all in decisions concerning the existence of the company: plant closures, relocations, staff reductions, outsourcing, replacement of permanent staff by temporary workers or third-party companies - all these measures can be carried out by the employer without co-determination of the works council. The works council must be informed "in good time" and can negotiate a reconciliation of interests and a social plan. This can cushion negative effects. However, company closures etc. can only be prevented through trade union action and massive pressure involving large sections of the workforce and the public.

Public relations and talks

Even though works councils do not have the right of co-determination on issues concerning the product, production methods, sales strategy, product development, closure of parts of the company, etc., they can ensure that all employees in the company are informed and can express their opinions in newsletters, works meetings or through other channels. Works councils can organise open discussions and look for creative solutions together in times of crisis.

In the age-old quest for fun in the workplace, some offices have embraced Nerf guns. Find out whether works councils have a right to negotiate rules for Nerf Gun battles here.

You need advice or training as a works council? The management is not willing to cooperate with you the way they should? You need help negotiating a good company agreement (Betriebsvereinbarung)? We’re happy to help! Just call us or send us a message.

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