The works constitution forms the basis for the institution of employee representation bodies within establishments , and their rights and obligations. Together with the co-determination enshrined in the company constitution , it is the core of the system of institutionalized representation of interests . It is governed by the Works Constitution Act (Betriebsverfassungsgesetz) of 1972 (which is sometimes also referred to in English as the Labour/Management Relations Act). The principal active organ of the works constitution is the works council . Regulations on collective employee representation bodies are also laid down in the relevant statutes for disabled persons or on representative bodies for executive staff . The works constitution also contains individual rights relating to consultation and grievances which the employee can assert even in establishments where there is no works council. Otherwise, the various participation rights of the works council provided for in the works constitution are vested in the council alone.

The works constitution applies to all establishments located in the Federal Republic which are organized under private law. In the public service , these matters are governed by provisions on staff representation . Participation rights as provided for in the works constitution are not applicable to Church institutions and Religious Communities (Works Constitution Act § 118), which have their own ecclesiastical staff representation bodies. In the category of establishment known as a "Tendenzbetrieb" the co-determination rights of the works council are restricted; special regulations also apply to garrisons maintained by the Allied Forces.

In terms of personnel, the scope of the works constitution covers only those within an establishment who are employees within the meaning of the Act (& 5); executive staff , for example, are excluded. The Act requires the works council and the employer to work together on a basis of co-operation in good faith and with due regard to rules contained in statutes and collective agreements . This does not, however, place the works council in a position of direct subordination to the trade unions as representative bodies. Rather, within individual establishments the unions perform a supportive and monitoring role. Union officials possess a right of access to establishments in which they have union members. With the exception of provisions on penalties and administrative fines, all disputes on matters concerning the works constitution fall within the jurisdiction of the Labour Courts , which decide them according to the "Beschluss" procedure . Under the Act (&& 40 f.), all costs connected with the works constitution are borne by the employer.

The historical precursors of an institutionalized system of employee representation were the workers' committees instituted in the mining industry from 1905, the manual and white-collar workers' committees instituted in all establishments with more than 50 employees from 1916, and the legal guarantee of employee representation provided by the Works Councils Act (Betriebsrätegesetz) of 1920. Forms of employee representation as provided for in the works constitution have existed since the Works Constitution Act of 1952. The Act of 1972 then broadened the scope of the works council's co-determination rights and completely re-codified the works constitution. This Act can therefore be viewed as an industrial equivalent of the democratization of the state. The Federal Parliament's Standing Committee on Co-Determination (Mitbestimmungskommission) has also expressed the opinion that, with due regard to the protection of human dignity and the right of individuals to develop their personality freely as enshrined in the Basic Law, the subordination of the employee to other people's managerial and organizational authority is acceptable only if the guarantees of freedom afforded by the Constitution are reflected in the opportunity to have a voice in the shaping of the work process. The Act of 1972 consequently contains minimum participation rights which can in principle be extended.

In a number of companies which operate branch establishments or subsidiaries in various EC Member States, special "works councils" have been set up for the purpose of voicing the interests of employees in all their establishments throughout the Community. These bodies do not, however, have institutional backing comparable to that of the German-style works council, nor corresponding rights.

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.