CO-DETERMINATION 2019 CO-DETERMINATION 2019 Contents 33 Contents Co-determination at a glance 4 Co-determination at the level of establishment 5 Co-determination at board level 11 Works Constitution Act 17 Act on European works councils 72 Co-determination Act 88 Law on One-Third Employee Representation in the Supervisory Board 103 Act on the involvement of employees in a European company (SE Participation Act / SE- Beteiligungsgesetz–SEBG) 107 Citizens Information Phone Service 127 Publisher’s Information 128 4 Co-determination at a glance The co-determination laws guarantee that workers have a say in the terms and conditions of employment and in the economic planning and decision-making of the company. Worker participation Worker participation takes place at two levels: at the level of the establishment as the place where operational purposes are pursued (production, marketing, administration, services) and at the level of the company as the corporate entity with legal capacity pursuing economic or non-material objectives. The works council as an advocacy group Co-determination and participation at establishment level mean the involvement of the works council in all issues affecting employees at their workplace. These include, for instance, the introduction of short-time work, the determination of payment systems or piecework and bonus rates, the introduction of new technical equipment or work processes or the elaboration of social plans in cases of envisaged establishment closures or other changes in operations. The works council defends employees’ interests. Worker representation at the board level Rights of participation in business matters have their primary focus on economic planning and decision- making. Co-determination at board level takes place in the supervisory boards. Whereas co-determination at the establishment level applies to all German private law companies, the right of co-determination in board matters affects only large corporations. The two levels of co-determination complement each other. Co-determination at board level was confined to corporations because in partnerships at least some of the shareholders are personally liable and often part of the management. In addition, in corporations the supervisory board offers an adequate platform for worker participation. Co-determination at the level of establishment 5 Co-determination at the level of establishment How far do the rights of consultation of individual employees and their workplace representatives go, and how much of a share can they have in decision-making? What are the trade unions’ rights at the workplace? These questions are answered by the Works Constitution Act, which lays down how the workplace labour relations system in Germany should operate. The Act allows employees to participate in decisions made at their place of work. These participation rights cover practically all areas of activity at work, including social welfare, personnel and economic matters. So the Act establishes democratic conditions at the workplace, opening up greater opportunities to make working life more civilized. The works council represents all employees The size of the works council depends on the size of the workforce at a particular establishment: • If 5-20 employees are eligible to vote, the function is carried out by one person • If 21-50 are eligible to vote, the works council will have three members • If 51-100 are eligible to vote, the works council will have five members Larger establishments have correspondingly larger works councils. If there are a number of works councils within the same company, a central works council must also be established. A combine works council can be constituted if there are two or more central works councils in a group of companies. The same applies to youth and trainees’ delegations. If a company has more than 100 employees, an economic committee (Wirtschaftsausschuss) must also be formed. This committee has extensive rights of information and consultation on financial matters. The membership is nominated by the works council. Important: If a works council has three or more members, whichever gender is in the minority among the workforce must make up at least the same percentage of the works council as it does in the establishment as a whole. If the works council has nine or more members, it must also appoint a works committee (Betriebsausschuss) to manage its everyday business. In certain circumstances, delegates of the trade unions represented in the establishment may also take part in works council meetings. The works council and the employer should co-operate on a basis of trust, in the interests of the employees and the establishment. In so doing, they should also cooperate with the trade unions and relevant employers’ federations. 6 What establishments have a works council? If a private sector establishment has at least five employees over the age of 18, they are entitled to elect their own works council (Betriebsrat). However, at least three employees need to have spent at least six months working for the same establishment, or elsewhere in the same company or group (this is the requirement to be eligible for office). Employees under 18 years of age and trainees under 25 years of age can, if they wish, elect their own youth and trainees’ delegation. A central works council must be established if a company has several operating locations that each have their own works council; a combine works council if the company is part of a group of companies. Government offices (at the federal,Länder and municipal levels), and other public sector agencies and institutions do not have works councils. They are covered instead either by the Federal Personnel Representation Act or by similar acts in force in each of the Länder. Executive staff are not represented by the works council. If an establishment has at least ten senior managers, they are entitled by the Executive Committees Act to form an executive committee. A corporate executive committee can be formed for the company as a whole, and a combine executive committee if it belongs to a group of companies. The right to vote for the works council All employees aged 18 and over have the right to vote for the works council. However, employees are not eligible to stand for membership until they have spent at least six months working for the same establishment, or elsewhere in the same company or group. Temporary employees have the right to vote in works council elections in the user company from the first day of work, provided they are supposed to work there for more than three months. However, they are only eligible to stand for membership at their temporary work agency but not at the user company. Civil servants, public-sector employees and members of the armed forces are normally considered employees as defined in the Act when employed in an establishment belonging to a private-sector enterprise. The rule governing classification as executive staff under Section 5 (3) of the Act likewise applies to civil servants and members of the armed forces employed in a private-sector enterprise. This introduces general provision for civil servants and public-sector employees to stand for election and be elected onto works councils, supervisory boards and executive committees in private-sector enterprises. The works council election is a key element of industrial democracy, which is why works council elections are protected by law to ensure they are properly conducted. Thus, any attempts to obstruct or unlawfully influence the election are subject to criminal prosecution. A breach of election provisions can lead to the election being appealed before the labour courts. If the election is declared null and void, a new election must take place. Co-determination at the level of establishment 7 Tasks of the works council The main tasks of the works council include monitoring the employer’s adherence to all legal requirements, safety regulations, collective agreements and in-house agreements on the employees’ behalf. There are various social matters in which the works council’s agreement is needed before the employer can take the respective measure (known as its ‘right of co-determination‘). This applies to the following situations: • When questions arise relating to internal rules specific to the establishment, or to the conduct of employees • When issues of working hours at the establishment have to be dealt with, or when there are plans to introduce short-time or overtime working schemes • When the principles for allotting holiday time are announced, the holiday schedule is posted or (in cases where employee and employer cannot agree) individual employees have their holiday allotted • When determining the form to be taken by social welfare facilities operating solely at the one establishment, or within the company or group, and how those facilities should be run • When there is a proposal to introduce mechanisms to monitor the conduct and performance of employees • Within the scope of legislation, when measures are taken to combat occupational hazards (accident or illness), or when issues of health protection are involved • When company residential accommodation is to be allocated or vacated • When issues come up regarding the composition of pay at the workplace, when payment systems are devised, or piecework and bonus rates or similar performance-related payments are set • When determining principles for the practice of group working The works council also cooperates, and has a substantial amount of codetermination rights, on these matters: • Structuring of jobs, work processes and working environments • Personnel planning • Vocational training In view of the current importance of job security and training, works councils have been given greater participatory rights. For example, a works council can make proposals to the employer regarding flexible working hours, the promotion of part-time work and partial retirement, on in-house employee training, and on new forms of work organization and changes to processes and work flows.