Germany: “The effect of the information and consultation directive on Industrial Relations in the EU Member States five years after its transposition

  • Observatory: EurWORK
  • Topic:
  • Participation at work,
  • Labour and social regulation,
  • Industrial relations,
  • Published on: 18 January 2011



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The principal employee representation body in Germany is the works council (Betriebsrat) which applies to establishments which are organised under private law and have at least five employees. Its legal basis is the Works Constitution Act, which was last amended in 2001. The equivalent in the public sector is the staff council. Works and staff councils are widely accepted by both employers’ and trade union organisations. There are an estimated 97,000 works councils in Germany (2009) which have a range of information, consultation and codetermination rights.

Question 1: Trends in the incidence of undertaking- and/or establishment-level information and consultation bodies

(a) Using official statistics where possible, please provide annual data for the years 2005-2009 (inclusive) on the number and proportion (%) of undertakings and/or establishments which have an information and consultation (I&C) body or equivalent.(b) Where possible, please provide data to show trends in the uptake of I&C bodies by:

  1. size of undertakings/establishments in terms of employment levels (i.e. under 50 employees, 50-99 employees, 100-199 employees; 200-499 employees, 500 or more employees or other appropriate size bands used in national statistics)
  2. sector (broadly defined, i.e. industry/manufacturing, private services, public services).

(c) Please provide information on the extent of I&C arrangements in:

  1. smaller undertakings (those with fewer than 50 employees)
  2. public administration.

(d) What factors explain any increase/decrease in the incidence of I&C bodies (e.g. economic climate, legislative change, other)?

a-c) There never was an implementation of the Directive 2002/14/EC. Subsequent German governments shared the opinion that there was no need to transpose the Directive, since the German legislation on codetermination and in particular the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) from 1972 (with changes) went beyond the requirements of the Directive concerning information and consultation (see also DE0309201T).

The principal employee representation body in Germany is the works council (Betriebsrat) which applies to establishments which are organised under private law. Its legal basis is the BetrVG, which was last amended in 2001 (DE0107234F). The equivalent of the works council in the public sector is the staff council (Personalrat). 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.

The exact number of works or staff councils is not known as there is no official recording of those bodies. The Institute for Employment Research (Institut für Arbeitsmarktforschung, IAB) of the Federal Employment Agency (Bundesagentur für Arbeit, BA) regularly publishes data on the distribution of works councils. The data is based on the IAB establishment panel (IAB-Betriebspanel), which is a representative survey of 16,000 establishments. The survey includes establishments with more than five employees.

According to this data, in 2009 about 10% of establishments with five or more employees had a works council. This percentage has been more or less stable since 2005. It is estimated that there were some 97,000 works councils in 2009, covering some 11 million employees.

In 2009, the share of employees in establishments with five and more employees covered by a works council was 45% in western Germany and 38% in eastern Germany compared to 47% and 40% respectively in 2005.

The IAB data show that, as a rule, the existence of a works council is positively related to the size of the establishment. Whereas about 90% of establishments with 501 and more employees have a works council (89% in western Germany and 90% in eastern Germany) only 6% of establishments in western Germany in size band of 5 – 50 employees have such a body (7% in eastern Germany) – see table 1 below.

Table 1: Share of establishments with a works council and share of employees covered by size of establishment (in %).*
The table shows the share of establishments with a works council and the share of employees covered by size of establishment

Size band

5-50 employees

51-100 employees

101-199 employees

200-500 employees

501 and more employees

all

Western Germany
Establishments covered

6

37

64

79

89

10

Employees covered

10

38

65

80

92

45

Eastern Germany
Establishments covered

7

36

57

70

90

10

Employees covered

13

37

59

71

91

38

Note: *Based on establishments in the private sector with at least 5 employees.

Source: IAB, Betriebspanel, Ellguth and Kohaut 2010, table 5.

Question 2: Procedures for establishing I&C bodies

(a) What are the procedures for establishing I&C bodies in your country? For example, are I&C bodies mandatory (i.e. employers are obliged by law to establish them), or is their establishment dependent on employees/trade unions triggering statutory procedures? In the latter case, who can initiate the procedure? Is there a specified level of employee support required?(b) Please supply any available data on the extent to which I&C bodies have been:

  1. requested by employees
  2. requested by trade unions
  3. initiated unilaterally by employers.

(c) Have the national government and/or the social partners in your country actively promoted the establishment of I&C bodies? If so, how have they done this?(d) What explains the absence of I&C bodies in some undertakings/establishments in which I&C bodies are supposedly mandatory or the statutory right to trigger their introduction applies?

a) The establishment of a works council is not mandatory. 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 initiative to establish a works council can be taken by employees and by a trade union which has a presence in the given establishment. The procedure is laid down in the Works Constitution Act.

b) There is no data available on the extent to which the initiative to establish a works council has been taken by employees or by a trade union. In many cases employees with an interest in establishing a works council will contact a trade union for support.

c) The establishment of works councils is not actively promoted by the government. Trade unions affiliated to the DGB are generally supportive of works councils. They actively promote the establishment of works councils on a case by case basis. An important criterion for promoting the establishment of a works council is usually the existence of a relevant union membership.

d) There are quantitative studies about the reasons why a great number of establishments (in particular smaller ones) have no works council. The smaller the establishment the smaller is of course the potential of employees interested in holding an office as works councillor. In an unknown number of cases employers oppose the establishment of a works council. In some cases this takes the form of open and declared opposition towards the establishment of a works council. In other cases this happens by way of indirect pressure on employees interested in establishing such a body. Trade unions constantly report cases where employees taking the initiative to establish such bodies are intimidated or harassed by employers. In retail some large companies, in particular discount chains in food and consumer electronics, are known for their opposition towards the establishment of works councils.

Question 3: Constitutional provisions

(a) Are the structure, rights and functioning of I&C bodies in your country determined by:

  1. statutory requirements that apply to all establishments/undertakings
  2. organisation-specific agreements/arrangements that may differ from the statutory provisions, providing the scope for organisations to vary the design of the I&C body and the processes of information provision and consultation
  3. a mixture of the two.

(b) To what extent can and do organisation-specific agreements/arrangements differ from national statutory requirements on I&C? What motivates the parties to introduce such agreements/arrangements? Please summarise any available data on the provisions of organisation-specific agreements/arrangements.(c) Are the terms of organisation-specific agreements/arrangements enforceable? What procedures – e.g. complaint to external administrative or judicial authorities (please specify which) – are available for this purpose?

a-c) The works council has a number of participation rights, consisting of rights to information, consultation and co-determination. These are laid down in the Works Constitution Act. 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 to 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. Under § 76 of the BetrVG, ‘[w]henever the need arises a conciliation committee shall be set up for the purpose of settling differences of opinion between the employer and the works council, central works council or combined works council. A standing conciliation committee may be established by works agreement.

Question 4: The main subjects for I&C

(a) What types of information are regularly provided by senior management to I&C bodies? Please give examples.(b) What issues are typically the subject of consultation between management and employee representatives? Please give examples.(c) What issues are typically raised by employee representatives themselves? Please give examples.(d) Since the onset of the recession, to what extent have I&C bodies been a vehicle for dialogue and consultation over management decisions concerning restructuring and recession-related developments? Please provide a general overview with evidence and examples.

a) There is no quantitative data available on the extent to which works councils are kept informed by management, and no data on the subjects involved.. The Works Constitution Act requires management to inform and/or consult the works council on personnel affairs, working time, health and safety, financial and other issues.

b and c) There is also no quantitative data on the issues works councils typically deal with. However, it can be assumed that the most important issues are those of employment, working time, health and safety and pay. However, the 2007 WSI works council survey (Betriebsrätebefragung) a representative survey commissioned by the Institute of Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans Böckler Stiftung, HBS) and covering establishments with 20 and more employees and having a works council, asked works councils which issues they were confronted with. Most frequently cited were issues of health and safety, employment, work pressure and working time. The survey also asked which issues were covered by formal works agreement s between works council and management – see table 2 below. On average 6.9 works agreements were in place.

Table 2: Issues most frequently covered by works agreements (share of establishments with a works agreement, in %)*
Table 2 shows the ten issues most frequently covered by works agreements (share of establishments with a works agreement, in %)
Working time accounts

58.4

Overtime

46.6

Benefits

44.1

Health and safety

37.5

Pay

35

Further training

34.9

Company suggestion plan

34

Wage classification

29.8

Extension of working-time

28

Note: Based on establishments with 20 and more employees and a works council, survey conducted in the fourth quarter of 2007

Source: 2007 WSI works council survey, WSI

Question 5: The nature and extent of the I&C process

(a) How often do I&C bodies typically meet with management? Is it common practice for special meetings of the I&C body to be called to consider urgent or important matters? If so, on what issues?(b) How does consultation take place? For example, is information on proposed changes provided by management so that employee representatives can prepare a considered view? Do managers provide a reasoned response to employee representatives’ opinions? Examples of good and poor practice would be helpful.(c) Is information usually provided on a confidential basis to the I&C body before management decisions are taken and announced? Are there examples of I&C not taking place due to confidentiality considerations?(d) Please outline what guarantees and protections employee representatives usually have, e.g. time off work, training, material and financial resources, facilities, protection against dismissal/ discrimination, access to workers.(e) Can employee representatives seek external advice on how to handle difficult topics for consultation (e.g. from trade unions, external consultants)? In the case of the latter, who pays?

a) No recent quantitative data exists on the frequency of meetings with management. Data of the 2005 WSI works council survey revealed that at that time works councils met on average twice a month without management and 0.8 times per month with management.

As a number of issues involve consultation and co-determination rights it can be assumed that it is common that works council representatives and management meet on important matters in particular those involving employment issues.

b and c) No data is available. The Works Constitution Act states that the employer shall supply comprehensive information to the works council in good time to enable it to discharge its duties. Given the huge number of almost 100,000 works councils it can be assumed that a wide range of practices exist which range from detailed and timely information to poor and untimely information. As for confidentiality § 79 BetrVG states that ‘Members and substitute members of the works council shall be bound to refrain from divulging or making use of trade or business secrets that have come to their knowledge as a result of their membership on the works council and which the employer has expressly stated to be confidential.’

d) Members of works councils are, under the BetrVG, protected from dismissal. The exceptional dismissal of a member of the works council is only possible with the consent of the works council. All wages and costs of works councils have to be borne by the company. This includes the costs of training courses for works council members.

Section 37 BetrVG states: ‘The members of the works council shall be released from their work duties without loss of pay to the extent necessary for the proper performance of their functions, having regard to the size and nature of the establishment.’ The BetrVG defines the minimum number of members of works councils that shall be fully released from work. The number depends on the size of the establishment. The facilities are usually negotiated with the company concerned but under § 40 BetrVG ‘[t]he employer shall provide to the necessary extent the premises, material facilities, means of information and communication and office staff required […].’

e) Works councils can seek external advice and call for external consultants. Section 80 (3) of the BetrVG reads: ‘In discharging its duties the works council may, after making a more detailed agreement with the employer, call on the advice of experts in as far as the proper discharge of its duties so requires.’ Again the costs have to be borne by the employer.

Question 6: Practical outcomes of consultation

(a) What evidence is there, if any, of the consultation process resulting in the modification of management decisions and/or the process or timetable for their implementation? Please give an overview of the impact of consultation with examples.(b) How many complaints per year concerning the operation of I&C procedures (e.g. employers not consulting in circumstances where consultation is obligatory) have been lodged with administrative or judicial authorities since 2005? Who were the claimants and what were the key issues? What proportion of these applications were upheld? What sanctions were imposed?

a) Given the large number of works councils and the many tasks they have, it is likely that there are management decisions with are modified. In very many cases there will be a modification of management’s timetables. However, there is no quantitative evidence on this. The existence of codetermination rights and the widespread existence of works agreements (see question 5 above) indicates that there are many areas in which management cannot unilaterally implement its decisions but has to compromise.

b) There is no recent data available on the number of complaints. In a survey carried out by the Cologne Institute for Economic Research (Institut der deutschen Wirtschaft Köln, IW) it was reported in 1999 that only 0.1% of all disputes between works councils and management which were related to codetermination rights came before a conciliation committee and 0.3% before a labour court (Niedenhoff 1999).

Question 7: Relationship between I&C bodies and other forms of employee voice

(a) Can, and if so do, trade unions play a part in the establishment of I&C bodies and in their operation? Do external trade union officers often sit on I&C bodies? How common is it for I&C bodies to include both union and non-union employee representatives?(b) Is there any overlap between the remit of I&C bodies and trade union-based collective bargaining? If so, how are such issues resolved?(c) Is the consultation required by the collective redundancies/transfer of undertakings Directives carried out via I&C bodies, trade unions or other employee representatives?(d) Is the use of direct forms of employee involvement by management through such things as team briefings seen as complementary to or in competition with the I&C body?

a) Trade unions have legal rights in the process of establishing a works council – see question 2 above - but there is no quantitative data available. External trade union representatives cannot sit on works councils as only employees are eligible.

b) The characteristic feature of German industrial relations is the 'dual system of interest representation' based on trade unions and employers who are solely responsible for collective bargaining, and works councils as the main workplace employee representation bodies. Works councils cannot conclude collective agreements. However, many collective agreements contain so-called opening clauses which define on which issues works councils and management can negotiate deviations from the collective agreement.

c) Mass dismissals and the transfer of undertakings are issues the works council has to deal with. In addition it may be that the trade union negotiates a collective agreement to deal with the consequences of mass dismissals or relocations.

d) Team briefings or other forms of direct employee involvement by management may become an issue for negotiations between works councils and management, although management remains free to address employees directly. Whether this is regarded by the works council as means of management to interfere in the works council’s work will depend on the circumstances.

Question 8: Views of the social partners

(a) What are the attitudes of the main employer and trade union organisations in your country towards (i) the value or necessity of I&C bodies and (ii) the operation of I&C bodies in practice, especially in a recession? (b) Have the social partners, jointly or separately, conducted any review of the operation of the national regulatory framework governing I&C? What is their assessment of its effectiveness? Is there any pressure from the social partners for reform?

a and b) The value and necessity of the works councils is neither questioned by unions nor employers’ associations. In general the practice of works councils is appreciated by the main employers and trade union organisations. The two most important umbrella organisations, the Confederation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA) and the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) differ in their views on how the Works Constitution Act could be reformed.

In January 2010 the BDA issued a policy statement in which it made several proposals for reform. Generally the BDA calls for more flexibility in legal provisions, criticising the Works Constitution Act as being too bureaucratic. In principle the BDA wants company level agreements to take precedence over collectively agreed provisions. It also advocates that works councils should only be established if a third of employees take part in the necessary elections. BDA is also in favour of a speeding up of the codetermination process, in particular as far as the work of the conciliation committees is concerned. The BDA further proposes the introduction of electronic voting machines for works council elections.

In September 2009 the DGB issued a policy paper on the future of the Works Constitution. The DGB demands that the election of works councils in small and medium-sized enterprises should be facilitated by extending the simplified election procedure to all establishments with up to a hundred employees (currently the threshold stands at fifty employees). Temporary agency workers, employees with fixed term contracts or contract workers should be put on a par with other employees with regard to the Works Constitution. The DGB demands enhanced codetermination rights in the context of relocation and restructuring and advocates that the establishment of group works council s should be made mandatory even in cases where the company or group headquarter is located outside Germany.

Commentary by national correspondents

In a survey of 500 companies which was commissioned in 2005 by Hans-Böckler-Stiftung 82% of managing directors declared that given the choice they would want to keep the works council. Only 3.6% wanted to get rid of it. Trade unions regard works councils as indispensable and have long accommodated these representative bodies although they are legally not trade union structures. Codetermination at workplace level is an established practice in Germany. It has to be noted, however, that there is large zone, in particular of small establishments, where no works councils exist. The fact that only a minority of employees is covered by a works council points to deficits in the current legal situation concerning the establishment of these bodies.

References:

  • Ellguth. P., Kohaut, S. 2010: Tarifbindung und betriebliche Interessenvertretung: Aktuelle Ergebnisse aus dem IAB-Betriebspanel 2009, in WSI-Mitteilungen, 63 (4), pp.204-209.
  • Niedenhoff, H. 1999: Die Praxis der betrieblichen Mitbestimmung: Zusammenarbeit von Betriebsrat und Arbeitgeber, Kosten des Betriebsverfassungsgesetzes, Betriebsrats- und Sprecherausschusswahlen, Cologne: Deutscher Instituts-Verlag

Heiner Dribbusch, Institute of Economic and Social Research, WSI

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