Thematic feature - works councils and other workplace employee representation and participation structures

This article examines the German situation, as of September 2003, with regard to works councils and similar workplace employee representation and participation structures. It looks at the regulatory framework, statistical data, evidence on practice and the views of the social partners.

The issue of works councils and similar workplace employee representation and participation structures is topical at present, with the EU Member States required to implement the recent Directive (2002/14/EC) establishing a general framework for informing and consulting employees in the European Community (EU0204207F) by March 2005 (though countries which currently have no 'general, permanent and statutory' system of information and consultation or employee representation may phase in the Directive's application to smaller firms up until 2008). The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides employees with the following rights to information and consultation:

• information on the recent and probable development of the undertaking's or the establishment's activities and economic situation;

• information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and

• information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.

While the Directive does not stipulate that information and consultation must be provided through any particular channel or structure, it defines such information and consultation as taking place between the employer and the employee representatives provided for by national laws and/or practices. It is these representatives, who in most EU Member States sit on standing 'works council'-type structures (and in many countries already enjoy all or most of the information and consultation rights laid down in the Directive) that are the focus of this article. The existence of workplace employee representation and participation structures, based on law or widespread collective agreements, is seen in some quarters as a distinctive and important feature of the (mainland) European industrial relations model. Indeed, the idea has been raised of using the coverage of such worker involvement arrangements as an indicator of 'quality' in industrial relations (as suggested, for example, by the European Commission’s June 2001 Communication on Employment and social policies: a framework for investing in quality).

In this context, in September 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to provide information about the current situation with regard to national (rather than European level) works councils and similar bodies - the regulatory framework, statistical data (or estimates where not available), evidence on practice and the views of the social partners. The German responses are set out below (along with the questions asked).

Regulation

What is the legislative framework in your country concerning works councils and/or other workplace employee representation and participation structures? Please include here: definition; workforce-size threshold for establishment; composition/election; subjects for information, consultation and co-determination; conditions under which information, consultation and co-determination should take place (ie timing, methods, contents, level of representation, type of response by employees, form of interaction etc); meetings; confidentiality; protection of employees’ representatives. If there is no legislation on this issue in your country, please refer to widespread systems of works councils etc based on collective agreements.

The principal employee representation body in Germany is the works council (Beteriebsrat) which applies to establishments which are organised under private law. Its legal basis is the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) which was last amended in 2001 (DE0107234F).

The scope of the BetrVG covers only those employees within an establishment defined in section 5 - executive staff are thus excluded and have the right neither to vote in works council elections nor to stand for election. The establishment of a works council is not mandatory. Either employees or a trade union represented in the establishment (ie having one member in the establishment concerned) can take the initiative to set up a works council. The works council election procedure is laid down in the BetrVG and was streamlined in 2001 to remove certain bureaucratic obligations as far as small establishments are concerned (DE0305202F).

The requirement for setting up a works council is that the establishment in question should regularly employ at least five employees who are eligible to vote. The council's term of office is four years. The size of the council depends on the number of employees in the establishment who are eligible to vote. Provided that it has several members, the council elects two of them as its chair and deputy chair. Council members enjoy protection against dismissal.The gender which is in the minority within the workforce must be represented by at least a corresponding share of works council members. This provision was introduced in 2001 to establish a minimum quota for female representatives.

The works council has a number of participation rights, consisting of rights to information, consultation and co-determination. The area of co-determination encompasses, among others points: matters connected with works rules; working time in the establishment; the method of payment used for remuneration; the introduction and use of technical devices for monitoring employees' conduct and performance; and health and safety issues. The works council furthermore has the right be informed about and involved in all relevant aspects of environmental protection in the establishment and the right to negotiate works agreements on this subject. As a general principle, the right of co-determination is exercised through a works agreement or semi-formal works agreement in the case of collective measures, and through a decision by the works council in the case of matters relating to individual employees. Statutes and collective agreements, however, take precedence over the exercise of the works council's rights. It has no right to collective bargaining and no right to call industrial action.

In companies where there are several works councils, a company works council (Gesamtbetriebsrat) can be formed. In a group of companies, a group works council (Konzernbetriebsrat) may be formed in addition to this, if the company works councils of the member companies so decide.

The employer bears the costs of the council's activities and works council members are released from work to fulfil their duties. A certain number of members of works councils are entitled to be fully released from work. Their number depends on the size of the establishment. The threshold for a works council to be entitled to a full-time member is 200 employees.

In establishments that normally employ five or more employees under 18 years of age or under 25 years of age and receiving vocational training, a separate representative body for young workers and trainees (Jugend- und Ausbildungsvertretung) must be elected.

The equivalent of the works council in the public sector is the staff council (Personalrat). A staff council must be formed in every public sector establishment with at least five employees, including career public servants (Beamte), white-collar workers and manual workers. Its legal basis is the Federal Staff Representation Act (Bundespersonalvertretungsgesetz) and the staff representation laws of the individual states (Länder). The staff council's participation rights are structured along similar lines to those under the works constitution in the private sector, with information and consultation rights mainly in personnel matters, and co-determination rights in the context of social matters.

Statistics

Please provide the most recent available statistics (in absence of statistics please provide estimates referring to sources) on the following (referring to other workplace employee representation and participation structures where works councils are not present and to widespread collective agreements on the issue where there is no legislation):

• the total number of employees and undertakings/establishments in your country;

According to the Federal Employment Service (Bundesanstalt für Arbeit, BA) there were around 27 million employees (within the scope of national insurance) in 2002 ,of whom 12 million were women. In 2002, there were about 2 million establishments in Germany.

• the total number of undertakings/establishments covered by the works councils legislation in your country and their total employment (data should be as much as possible disaggregated by gender, company size and sector);

• the total number of undertakings/establishments in your country which have established works councils and their total employment (data should be as much as possible disaggregated by gender, company size and sector).

Please provide any other national data indicating the number/diffusion of works councils.

There are no official figures available on how many establishments are covered by the works councils legislation. Furthermore, as the existence or non-existence of a works council need not be reported to any official agency there are no official statistics available on their number. To estimate the extent to which the works council legislation has been implemented in practice, it is necessary to turn to sources such as survey data collected by the BA's Institute for Employment Research (Institut für Arbeits- und Berufsforschung, IAB) and the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI), and data collected by trade unions ('Quantitative Reichweite der betrieblichen Mitbestimmung', Peter Ellguth, in WSI-Mitteilungen, Vol. 56, No. 3, 2003).

According to IAB survey data there were about 113,000 establishments in Germany with a works council in 2002. According to the same source, 11% of all establishments in the private sector with at least five employees (ie those potentially covered by the legislation) had a works council in 2002, compared with 10% in 1998. This small percentage is due to the high number of small establishments, which rarely have works councils. Of all establishments with 501 and more employees, however, 95% have a works council.

Works councils covered 48% of all German employees in 2002 (in western Germany they covered 50% of all employees, in eastern Germany only 40%) - the same overall coverage as in 1998. Again, when it comes to the larger establishments coverage increases considerably.

The overall picture differs in the various economic sectors. In 2002, 90% of employees were covered by works councils in mining and the water supply sector, while in banking and insurance the coverage was 83%. Works council coverage was also very high in the consumer goods (74%) and capital goods sectors (71%). Only minorities of employees, however, were covered in commerce (35%), the various other service sectors (between 33% and 38%) and construction (23%), where works councils are found only in a small number of establishments.

In the public sector about 74% of all establishments have a staff council. These cover 93% of all employees in the public sector.

According to the results of the third WSI works and staff council survey ('Industrial relations in Germany - an empirical survey', WSI-Mitteilungen, Special issue 2003) the overall percentage of women among works and staff council members has increased over the years and reached 30.6% in 2002 (DE0306201F). The great majority of the chairs of works councils are men, with only 18.9% of all works councils chaired by a woman. Women are found comparatively more frequently as works council chairs in companies where they make up a high percentage of the workforce - eg in retailing, banking and insurance, and the other service sectors - but even in establishments with a predominantly female workforce the majority of works council chairs are male.

The WSI survey found that around 79% of all members of works councils and 57% of members of staff councils were members of one of the trade unions affiliated to the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB).

Practice

If there are any other statistical sources or recent research on the current practice of works councils or other workplace representation/participation bodies, please give details of the results paying attention to the issues covered by Question 1 (Regulation). Please provide as much quantitative data as possible - eg how many meetings and how often, chair, agenda, composition (eg how many representatives of management, if any, workers, proportion of women members, proportion of women as head of works councils etc) and identify factors of success. Please indicate how the works councils (or works council-type bodies) institution has evolved over the years.

Works councils meet as often as they consider it appropriate for their work. According to WSI's third works and staff council survey, about 40% of all works councils meet more than three times a month. On average, works councils meet 2.4 times a month in the absence of the employer and hold 0.9 meetings per month together with the employer. The meetings are usually chaired by the works council chair or deputy chair.

The agendas are as different as the problems works councils face in their daily work. The 2002 WSI survey asked members of works councils to identify the problems they confronted in their daily work - see the table below. The topic 'personnel cutbacks' was ranked only second, but it was a problem that concerned more than half of all companies - and the figure for west Germany alone was even higher at 60%. The topic that headed the rankings - phased part-time retirement - which ranked only fifth in the second WSI survey of works councils in 1999/2000, is often linked to workforce reductions and should be seen in the context of a number of collective agreements concluded in recent years which provide various schemes for phased part-time retirement.