Works councils provide representation for employees at the workplace and they have substantial powers – extending to an effective right of veto on some issues. Although not formally union bodies, union members normally play a key role within them.
There is a clear legal basis in Germany for the workplace representation of employees in all but the very smallest companies. Under the Works Constitution Act, first passed in 1952 and subsequently amended, most recently in 2001, a works council can be set up in all private sector workplaces with at least five employees. (There is a system of staff councils in the public sector which have a broadly similar structure.)
In practice large workplaces are much more likely to have works councils than small ones. Figures from the government-backed research body the IAB show that, in 2011, only 10% of all eligible workplaces had a works council in West Germany (9% in the East), but they covered 44% of all employees in the West and 36% in the East. In workplaces with more than 500 employees, 88% had works councils in West Germany and 92% in East Germany.1 (These figures are for works councils in the private sector. The proportions are slightly higher if staff councils in the public sector are also included.)
Works councils are not directly trade union bodies. But the unions have a major influence on their operation. An analysis of the works council election results in 2010, on behalf of the Hans-Böckler-Foundation, found that 77.3% of the members elected were members of DGB unions.2 This is slightly lower than in the elections four years earlier, when the figure was 78.0%, continuing a downward trend that has been present since the 1980s. However, despite this works councils remain an area of trade union dominance. (This is also the case for public sector staff councils, although here there are DBB members as well as those from the DGB.) Other links between unions and works councils are that works councils have the right to invite trade unions to attend the meetings, provided a quarter of the members are in favour, and works council members often go on union-organised training courses.
The law in Germany does not provide a separate statutory structure for union workplace representatives. However, some unions make provision for them. Their rights and duties are normally fixed by the unions, although in some industries their position is also regulated by collective agreements. In an ideal situation they exist alongside the works council. In practice there is often no separate specific trade union structure and the members of the works council will take over their tasks.
Numbers and structure
A works council can be set up once there are five employees in a workplace, with the size increasing with the number of employees (see table).
Number of works council members
From 1,500 to 5,000 employees the number in the works council increases by two for every 500 employees or part thereof; from 5,000 to 7,000 by two for every additional 1,000. Workplaces with 7,000 to 9,000 have 35 members of the works council, and above 9,000 workplaces have two additional works council members for each additional 3,000 employees. The changes in 2001 increased the size of the works council at almost all levels.
All employees are covered by the works councils with the exception of senior management for whom separate representation is provided. In Germany works councils are purely employee bodies. There are no members representing the employer. Manual and non-manual employees should normally be represented in proportion to their numbers in the workforce.
There is also a requirement, which was newly introduced in 2001, that the sex which is in a minority in the workforce, must be represented in proportion to its presence in the workforce on all works councils with more than one member. The aim of this change was to increase the number of women in works councils. Research on the 2006 works council elections shows that it is having some effect, with the proportion of women increasing slightly on the previous elections – up from 25.4% to 25.9%.
The works council chair, elected by the whole works council from amongst its members, plays a key role. His or her legal functions include calling the meetings and setting the agenda. The law also requires that in works councils with nine or more members - above 200 employees - a separate works committee should be elected from the works council to deal with day to day business. If the works council wishes it can set up other sub committees.
In companies with more than 100 permanent employees, the law requires the setting up of another body, the economic committee. This committee is consulted about economic and financial issues. But it is chosen by the works council, and in certain circumstances the works council can decide to do without an economic committee and directly take over its functions.
There is also separate representation for young people and the disabled, who are able to take part in works council discussions of concern to these groups.
In addition to the works council structure, there is separate provision for the representation of senior management. Provided there are 10 senior managers, either in the plant or in the company, they can choose to elect a body to represent them. This can have between one and seven members, depending on the number of senior managers involved.
Health and safety committees should be set up in all workplaces with more than 50 employees and in some with between 20 and 50 employees. Members of the works council take part in the meetings of the safety committee.
Tasks and rights
Works councils exist to ensure that some of the key decisions at the workplace are not taken by the employer alone but involve representatives of the workforce. However, the works council cannot consider just the interest of the employees. Its legal basis is to work together with the employer "in a spirit of mutual trust....for the good of the employees and the establishment". At the same time the law recognises that there will inevitably be conflicts between the interests of the employer and the workforce, and also makes it clear that trade unions have a separate duty to protect the interests of their members.
The law provides the works council with two main types of rights: participation rights where the works council must be informed and consulted about specific issues and can also make proposals to the employer; and so-called co-determination rights, where decisions cannot be taken against the wishes of the works council.
In some areas where the works council has co-determination rights the wishes of the works council can be set aside by a decision of the labour court. In other areas the works council must positively agree to management proposals and a labour court decision cannot replace this positive agreement. Instead the issue must, in almost all cases, go to an arbitration committee (Einigungsstelle) which is composed of representatives of both employer and works council with a neutral chair. In areas where positive agreement is required, the works council can also make its own proposals which must be considered in the same way as proposals coming from the employer.
The precise rights of the works council vary from area to area. The rights are strongest in the social area, organisation of hours, holidays, methods of payment and so on, and weakest in the area of economic issues.
On economic issues the works council should be informed about the economic situation - with quarterly reports in larger workplaces, and be consulted about changes in the plant which could lead to disadvantages for the workforce, including the introduction of new techniques and procedures and in particular new technology. In workplaces with more than 100 employees, many of these rights are exercised by the economic committee, made up partially or wholly of works council members, to which the employer should report once a month.
In addition, since June 2008 there are new rights to information, where outside investors have built up a stake in the company with the aim of possibly taking it over. In such cases, the employer is required to inform the economic committee or, where there is none, the works council itself of activities of the other company and the possible impact of the takeover on employees.
On employment issues, the employer is required to inform the works council of overall staffing needs and discuss these with it. It also has a general right to be consulted on training. The works council can ask the employer to advertise all jobs internally, but cannot prevent external advertisement or external appointments. On individual personnel issues, appointments, grading and re-grading, transfers and dismissals, the employer must inform the works council before acting. However, the works council can only prevent the action taking place in specific circumstances, such as where the proposal clashes with existing agreements or practices. The works council can also make proposals to the employer on issues, such as providing equal opportunities for men and women and combating racism at work.
The works council has positive co-determination rights over a range of social issues including: disciplinary rules; starting and finishing times and breaks; any temporary shortening or lengthening of working time - such as overtime or short time working; holiday arrangements; the principles used for the payment of wages and salaries - for example, should they be based on bonus or time work; the setting of bonuses and targets; the time, date and method of payment; the introduction of cameras or other devices to measure work or check the behaviour of employees; the arrangements for the operation of works institutions like canteens or sports grounds; the operation of the works suggestions scheme and the introduction of group work. On some of these issues the works council will typically reach written agreements with the employer.
The environment is an area where the works council was given new rights in 2001. The employer should involve the works council in environmental issues leading in some cases to a written agreement.
The works council must also agree the type of personal data held on individual employees and it can influence the methods used to select candidates. It also has a positive right of co-determination on the training at workplace level. This includes the practical experience of trainees, the selection of trainees and the introduction of workplace examinations. The works councils also can veto the appointment of trainers if it thinks they are unsuitable and it can suggest further training to safeguard jobs.
Positive co-determination in economic issues is, in general, limited only to the development of a so-called social plan, where changes in the workplace including total closure produce major disadvantages for the workforce. The social plan, which must be agreed by both sides, should cover issues such as the level of redundancy payments, earnings protection in the case of job changes, and payments for additional travelling expenses.
By law, works councils should normally not be involved in collective bargaining on issues, such as pay or working time, which are dealt with by the unions. However, recently works councils have started to have a greater role in these issues, as agreements include “opening clauses”, which allow the works council and local management to agree variations to the deal reached by the union and the employers’ association at industry level (see section on collective bargaining).
The trade union representatives in the workplace are there to promote the interests of the union as well as representing union members.
Election and term of office
Nominations to the works council are made either by groups of individual employees - in most cases 5% of those eligible to vote - or from any trade union with at least one member in the workplace. The elections take place every four years.
Trade union representatives, where they exist separately, are chosen in line with individual union rules or guidelines, normally by election at the workplace.
Protection against dismissal
Works council members can only be dismissed for extraordinary reasons - such as gross misconduct - and only if the works council or the labour court agrees.
Time-off and other resources
Works council members must be given time off at their normal level of earnings to carry out their duties - such as attending meetings or giving advice. In work places with less than 200 employees, the details of this are not laid down by law. But in larger workplaces the law sets out the number of works council members who should be freed from their normal work and the number was increased in 2001. The current figures are: one in workplaces with 200 to 500 employees; two where there are 501 to 900; three for 901 – 1,500; four for 1,501-2,000 and then one for each extra thousand employees up to 10,000 with one for each 2,000 after that. In practice, not all works councils make full use of their time-off rights.
In addition, all works council members have the right to take part in training courses that are closely connected with their activities on the works council, and they have at least three weeks for more general training/education in the course of their period of office. These more general training courses should be jointly agreed by the unions and employers’ organisations.
The employer must bear the costs of the works councils. This includes providing rooms, stationery, photocopying, typewriters as well as office staff. It also includes, for example, paying for telephone conversations with the trade union, translating works council reports into languages other than German if there are large numbers of non-German speaking employees and in certain circumstances payment of outside experts brought in by the works council. In very large companies the works council or the works council for the whole group may have paid professional staff.
Representation at group level
As well as works councils at workplace level, the law also requires the setting up of a central works council at company level (GBR) if a company covers several workplaces. This brings together representatives of the individual plant works councils.
It is also possible to set up a works council at group level, covering all the companies in a group (KBR). However, this can only happen if works councils covering 50% of the total group workforce want to set one up. Group works councils remain relatively rare.
L. Fulton (2013) 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.