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CO-DETERMINATION

GERMANY
MITBESTIMMUNG
CO-DETERMINATION

The concept of co-determination refers to two distinct levels and forms of employee participation: co-determination at establishment level by the works council (see next entry on co-determination rights of the works council ) and co-determination above establishment level, on the supervisory board of companies, which is the main subject of this entry. At this level, co-determination is regulated by three statutes for different sectors of the economy and sizes of company. The system which provides the most extensive form ("parity co-determination") co-determination is co-determination in the coal , iron and steel industry , governed by the 1951 Coal, Iron and Steel Industry Co-Determination Act (Montan-Mitbestimmungsgesetz). Companies in other industries with between 501 and 1,999 employees are covered by the corresponding provisions of the Works Constitution Act of 1952 (Betriebsverfassungsgesetz), under which employee representatives occupy only one third of seats on the supervisory board. Lastly, the 1976 Co-Determination Act (Mitbestimmungsgesetz) covers all standard forms of company normally employing more than 2,000 employees. This provides for equal numbers of representatives from the employee side and the company side on the supervisory board, which consists of 12, 16 or 20 members according to the size of the company. However, the procedure for electing the chairperson of the supervisory board stipulates that, if a second ballot is necessary, the chairperson is elected by the shareholders' representatives while the employee representatives may elect only the vice-chairperson. This is crucial since decisions by the supervisory board require a simple majority vote. In the event of a tie, the chairperson has two votes in the second ballot and hence can give the casting vote in favour of the shareholders' side. For all practical purposes, this means that the shareholders' side is always over-represented by one vote.

The employee representatives are elected either by direct election by the workforce if they so wish, or otherwise indirectly by a secondary body of delegates elected by the workforce. The shareholders' representatives are elected by the appropriate shareholders' meeting or company general meeting .

Historically, participation at company level dates back as far as the 1920 Works Councils Act (Betriebsrätegesetz). In terms of the history of ideas it covers a broad spectrum, ranging from catholic social theory via radical democratic to socialist perspectives. The Works Councils Act itself already provided a right for the works council to send a member to the supervisory board. Following the system established in the coal, iron and steel industry in 1951 and that introduced under the "works constitution" in 1952, the 1976 Co-Determination Act laid down a new form of participation at company level which was more extensive than the 1952 system, although the parity co-determination prevailing in the coal, iron and steel industry was still not achieved. In this respect the emphasis here again is more on acquiring additional information, without the ability to exert a real influence.

The 1976 Co-Determination Act was passed in the face of strong resistance from the employers' associations . A constitutional appeal against the Act was rejected by the Federal Constitutional Court in 1979.

As regards the form of co-determination to be applied in the European Company (Societas Europea, or SE), there are three variants available. The first is modelled closely on practice in the Federal Republic and the Netherlands, and the second corresponds to the French system. The third variant provides minimum conditions for co-determination; here, the form of co-determination can be agreed between management and employees as they choose, but employee representatives must be informed and consulted on the company's business situation at least every calendar quarter. As a general principle the nature of co-determination is, however, governed by the provisions on the matter in the Member State in which the SE is located.



Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.

Page last updated: 14 August, 2009