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Board-level Representation

Employee representatives have a right to seats on the supervisory board of larger companies – one-third in companies with 500 to 2,000 employees, half in companies with more than 2,000.

Employees in larger share-based companies (500 employees or more) also have representation on the supervisory board to which the day to day management of the company reports. This right applies both in a public limited company (AGs) and a limited company (GmbH), as well as in some other company forms. It does not apply in “ideological companies” – companies whose purposes are primarily political, religious, educational or artistic, or produce news or comment.

 

 

The supervisory board can normally appoint and dismiss the main management, and it reviews its performance. It gives advice, participates in setting the company’s strategy, and is provided with financial and other information. The supervisory board also draws up a list of operations where its approval is required before they are undertaken. However, the supervisory board should not take on the functions of the management board.

 

The proportion of worker representatives varies from one third, in companies with between 500 and 2,000 employees, to 50%, in companies with more than 2,000 workers. Even in these larger companies, the shareholders can win any contested votes on the supervisory board, as the chair represents the shareholders and can cast a second vote in the event that a vote is tied. The one exception is the larger coal or iron and steel companies, where there is a neutral member of the supervisory board, in addition to equal numbers of employee and shareholder representatives.1

In the coal and iron and steel industries, the employee representatives have additional rights in the appointment of the labour director, who cannot be appointed against the wishes of the employee representatives. The labour director is responsible for personnel and employment issues.

The employee representatives have the same rights and duties as other supervisory board members. Employee supervisory board members must not be discriminated against as a result of their membership of the board, and they must not be restricted in their work as supervisory board members. They are also entitled to reimbursement of their expenses and adequate training.

In companies with 500 to 2,000 employees, the employee representatives, who make up one-third of the total membership of the supervisory board, must be company employees. They should be elected by all employees in a secret ballot.

In larger companies, above 2,000 employees, some of the employee representatives, who make up half the total, are nominated directly by the union or unions with members in the company, and are usually union officials. Both the employees and the union officials are elected by the workforce, either directly or, in larger companies with more than 8,000 employees, indirectly through workforce delegates. In companies with more than 2,000 employees at least one of the employee representative places on the supervisory board must go to a senior management representative. In companies with between 2,000 and 10,000 employees, there are six employee representatives – four company employees and two external union members; in companies with 10,000 to 20,000, there are eight – six company employees and two external union members; and in companies with more than 20,000 there are 10 – seven employees and three external union members. Typically one of the external union representatives will be the vice-chair of the supervisory board.

A study for the Hans-Böckler-Foundation in 2009 found that there were 1,477 companies with between 500 and 2,000 employees and therefore subject to legislation requiring one third of board members to be employee representatives.2

At the end of 2013, figures from the Hans-Böckler-Foundation show that there were 640 companies in Germany with more than 2,000 employees, where employee representatives made up half the supervisory board (including 253 AGs and 343 GmbHs). This figure, which does not include 11 European Companies (SEs), is slightly lower than in 2010, when there were 670. Since 2002 there has been a gradual decline in the number of companies where half the supervisory board is composed of employee representatives.3

L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.