From the legal point of view, term which may be used either in the narrow or in the broad sense. In the narrow sense, it refers only to those special consultation rights which confer on the workforce (or the works council) a full right of co-decision-making. Such an extensive right exists only exceptionally, in relation to the introduction of disciplinary procedures, general questionnaires covering facts which go beyond basic data for staff records, monitoring systems which intrude on human dignity and payment by results systems. The employer may take these measures only if the works council has given its consent by concluding a works agreement to that effect (mandatory works agreement). In the broader sense, co-determination is understood as generally encompassing all consultation and co-determination rights (Mitwirkungs- und Mitbestimmungsrechte) possessed by the workforce. This applies in particular to consultation and co-determination in social, staff and economic matters and to the representation of employees' rights on the supervisory board (Aufsichtsrat) of every joint-stock company (see works agreement, works constitution).
The system of co-determination provided for by the Labour Constitution Act (Arbeitsverfassungsgesetz), as described in detail in the earlier entry in this Glossary on the works constitution, is well developed and enables the workforce to exert effective influence on company decisions which have direct (or at least indirect) implications for employment conditions. Any further development of the system seems unlikely for the time being, however. There may perhaps be more flexible rules on the organization of the workforce with regard to the complex corporate structures emerging in sectors such as the railways and postal and telecommunications services, and this is bound to have its effects on the pattern of co-determination. But the latter will not be the subject of any major changes.
Co-determination at establishment level is a cornerstone of the entire system of social partnership. Its importance lies in the fact that it safeguards the system “from below” against spontaneous conflicts. Co-operation within the social partnership system at sectoral and national level depends on the assurance that its agreements can also be put into practice at establishment level. Co-determination contributes to this in two respects. First, it ensures co-operation between management and the representation of employees' interests at establishment level. Most employers (especially in large industrial companies) fully appreciate the works council's function of guaranteeing industrial peace and co-operation. Second, co-determination ensures the co-operation between works council and union which is a precondition of their collaboration in the system of social partnership. This is based mainly on the obligation on the works council to co-operate with management, which is in accordance with the principles of social partnership, and on the complementary division of functions between works council and union, which gives precedence to the union on two fronts: in the organization of industrial disputes, owing to the peace obligation imposed on the works council, and in the collective regulation of pay, since rates of pay are excluded from the permitted scope of works agreements. Despite the practice of concluding informal works agreements on pay, the latter do not enjoy the special legal protection provided for formal works agreements and collective agreements and therefore pose no threat to the union's competence in regard to pay. They do, however, perform a “pressure release” function in allowing limited scope for the collective adjustment of pay to conditions in a particular establishment. Because of the incorporation of works councils into the trade union structure, co-determination also contributes indirectly to the continued existence of the union as an organization, since in their activities within the establishment (e.g. in recruiting members) the unions are backed by the works council's privileged position as the statutory form of interest representation.