In establishments with a works council and at least 20 workers with voting rights, the employer has to comprehensively inform the works council of any planned alterations that may entail substantial disadvantages for the workers and consult the works council members on the planned alterations.

The consultations should address whether the planned alterations have to take place, when they shall be implemented and how negative impacts for affected workers can be avoided. These consultations typically discuss the number of dismissals/redundancies, options of avoiding job cuts via short-time working or company-based job transfer agencies and alternative forms of work organisation and production. Works councils in establishments with more than 300 workers may hire professional consultants for support.

If management and the works council can reconcile their interests in connection with the planned alterations, they lay down their interests in an agreed, binding interest agreement. 

In case the planned dismissals cannot be avoided, the management and the works council go on negotiating a social compensation plan proving financial compensation for the affected workers. Any agreements have to be made in written form.

In case an agreement cannot be reached both parties may refer to the chair of the Federal Employment Agency for mediation. The mediator, however, is not allowed to take decision.