Works Council Constitution Law

The German Works Council Constitution Act was enacted in order to allow for co-determination for companies’ employees in so far as their company’s decisions and resolutions are concerned. It is for this purpose that a works council must be elected from amongst the company’s employees to act as their representative body. The latter is to represent the employees’ interests in relation to the company’s management whereas the Works Council Constitution Act is not relevant for executive staff. Their representation in relation to the employer is covered by the German Spokespersons Committee Act. In order to ensure the proper working of the co-determination principle in a company the Works Council Constitution Act provides for and  specifies works councils’ rights regarding information, counselling, protest, refusal of consent and co-determination. These rights are adapted to safeguard the works council’s co-determination within the company.

The basis of this law is the stipulation that every company which normally has at least five employees has or must have a works council. The works council’s term of office is usually four years. In line with the provisions of the Works Council Constitution Act a new election for all the members of works councils must uniformly be held some time between March and May, the next time being in 2014 in those cases where any one company has not yet established a works council the company’s employees may themselves found a works council by initiating election proceedings for the same. As and when they decide to do so they are not bound to the statutory election term.

In order to allow them to exercise their function in a works council each of the members of the works council has the right to be released from his or her normal job by the employer. In addition these works council members enjoy a special protection against their being dismissed. Notice of termination of employment of any one member of the works council is only possible if either the entire body of the works council consents to such termination or if consent thereto is given by a judicial order or ruling.  When a trade union is represented inside a company it may give advice to the works council and support the latter in implementing or enforcing their functions which they have under the Works Council Constitution Act.

The works council is to represent the interests of the company’s staff as a whole in relation to the employer. The writing of an ad hortatory letter to an individual employee is, therefore, not subject to co-determination by the works council.

It is with a view to safeguarding its full rights of co-determination that the works council is entitled to get full and comprehensive information from the employer. The underlying idea is that the works council is to have the same level of information and knowledge as the employer has. When it comes to issues of broader economic significance for the company such as, for instance, company division, merger or shutdown of plants or establishments or of parts of the same, the organization of in-company activities or the introduction of novel technologies the employer will, as a matter of principle, take decisions by itself and alone. The works council does, however, have the right to demand that any of these measures be discussed with them and that the employer will consider the council’s argumentation when drawing its conclusions and before a final decision will be taken, as the law provides that the works council shall have its say in such decision-making processes.

In cases where an employer considers the employment of a new staff member or the transfer or relocation, grading or regrouping of an employee who is already employed by it, the employer shall first of all hear the works council in order to get its opinion which it has with reference to this intended personnel management measure. If the works council refuses its consent the employer must not implement this intended measure unless and until such refused consent will have been superseded by way of judicial proceedings. If the employer wishes to give notice of dismissal of an employee the employer will first have to hear the works council and inform the latter of the reasons for such a dismissal. If and when the works council will contradict such a dismissal the employer may then nevertheless give notice of termination of the respective employment. In certain circumstances the employee concerned may, however, in such a case enforce his or her continued employment until a potential pertinent litigation with the employer will have been finalized. The Works Council Constitution Act thus provides for and ensures a broader range of protection for every individual employee In case of his or her dismissal.

Moreover the works council also has a right of co-determination when it comes to issues such as working time, the ordering of overtime or short-time work, the implementation of regulations serving for the prevention of accidents, the establishment  and organization of  social facilities such as canteens, job tickets or transport pools, or payment of premium awards or bonuses. In these respects the works council may, on the grounds of its own initiative rights, submit and enforce suggestions of its own to the employer. The works council may demand that the employer attend negotiations up to the point where an agreement will eventually have been reached. In certain circumstances it will be required to establish a conciliation board for that purpose. The works council will exercise its rights of co-determination by concluding works or operating agreements or settlement arrangements with the employer.

Another right which is incumbent upon the works council is its right to participate in consultations and deliberations when it comes to questions and issues of economic significance for the company.

Changes concerning the company’s business operations such as, e.g. shutdown of a facility, reduction of personnel in considerable numbers, Changes of operating locations or the introduction of new production methods may only be implemented by the employer after the employer will previously have consulted the works council with regard to such an issue. The employer must make attempts to come to an agreement with the works council concerning the implementation of the intended measures by arriving at an agreement on the reconciliation of interests. If it is to be expected that this will entail financial disbenefits for the company’s employees, it will be required to come to terms on a social compensation plan between employer and works council. Otherwise the employees may take the case to a Court to so enforce such a compensation for disbenefits by the employer.

Our certified labour law expert lawyers will counsel and advise you in all fields and on all the aspects of works council constitution law. Our services range from issues such as the attitude and the conduct which an employer shows during the period of constitution of a works council, to problems in the employer’s daily relations with the works council and to negotiations concerning works agreements or company reorganizations.


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