German Works Council Strengthening Act 2021

Update: German Federal Cabinet decides on Works Council Modernisation Act

On 31 March 2021, the German Federal Cabinet decided on the draft of the Works Council Strengthening Act (Betriebsrätestärkungsgesetz), whose draft referendum from December 2020 we already reported on in detail (see below). Even though the law has now been passed under a new name called the Works Council Modernisation Act (Betriebsrätemodernisierungsgesetz), no comprehensive changes have been made compared to the draft referendum.

The Works Council Modernisation Act now particularly provides for the following measures:

• Facilitating the establishment and election of works councils (also for youth apprentice representation (Jugendauszubildendenvertretung)),

• Simplification of digital works council work (new in Sec. 30 to 34 of the Works Council Constitution Act (BetrVG)),

• Extending co-determination in mobile work & home office (new in Sec. 87 (1) no. 14 BetrVG),

• Strengthening the rights of the works council in relation to further training (new in Sec. 96 (1) BetrVG), and

• Involving the works council in decisions with regard to the use of artificial intelligence (AI).

The Works Council Modernisation Act still has to be passed by the German Bundestag and Bundesrat. We will keep you updated on any changes in this regard.

With regard to the details, we refer to our following insight on the draft referendum of the law from December 2020.

Works Council Strengthening Act (Betriebsrätestärkungsgesetz) 2021: German Labour Minister Heil plans to strengthen the institution of works councils.

Shortly before the end of 2020 the (German) Federal Ministry of Labour and Social Affairs published a draft law providing for special dismissal protection for employees initiating works council elections, facilitating of elections of works councils and works council resolutions via video and telephone conferences and expanding works council co-determination rights on mobile working. The vote of the German parliament  (Bundestag) on this draft law is expected in the first half of 2021. The draft law represents a reaction of the  Federal Ministry to the failed attempt to establish a right to work from home at the end of last year.

The draft law in particular provides for the following amendments:

1. Special dismissal protection during the establishment of a works council

Employees who intend to establish a works council shall be protected more effectively against dismissal during the establishment. They shall be protected to the same extent as members of works councils. Preparatory actions are defined as any conduct recognizable to third parties that is suitable for preparing a works council election. This includes, for example, contacting a trade union in order to obtain information on the works council election or discussions with other employees in order to ascertain support for the establishment of a works council or in order to plan steps which may be relevant for the implementation of a works council election. This provision is intended to for the first time protecting preparatory actions and close a loophole that has long been criticized. Currently, protection against dismissal only applies from the point in time at which the employee invites the staff  to a works council meeting or election meeting. The initiators of this election and the candidates for the election committee do not enjoy separate protection against dismissal until they are elected. Therefore, employers often successfully  pre-empt the establishment of works councils by issuing notices of termination.

However, the special protection against dismissal is still not intended to be all-encompassing. Employees who wish to establish a works council for the first time will only be protected for three months if they have submitted a publicly certified declaration stating that they intend to establish a works council.

2. Simplified process for  works council elections for companies with up to 200 employees

Furthermore, the election of a works council shall be further simplified by applying a so-called simplified election process also to small companies up to a size of 200 (instead of previously 100 employees) entitled to vote, and mandatorily for companies with up to 100 employees entitled to vote. Consequently, shorter election process deadlines will apply and the election will be according to the principles of majority voting instead of proportional representation. Similarly, in companies with up to 20 employees entitled to vote, there will no longer be a requirement for supporting signatures for the signing of election proposals. This may simplify the formation of a works council. However, it can also lead to applications not being taken seriously and the attempt to establish a works council being initiated solely on the basis of individual interests.

3. Permanent regulation for resolutions by means of video or telephone conferences

Even after the end of the temporary validity of section 129 of the German Works Constitution Act (BetrVG) (according to the current status, valid until 1 July 2021), which was introduced for the pandemic, the works council shall have the possibility to hold meetings and adopt resolutions also by means of video or telephone conferences under certain conditions. To this end, the requirements for participation by means of video and telephone conferencing must be regulated by the works council in rules of procedure. However, such use should only be permitted if a quarter of the members of the works council do not object to this procedure beforehand. The final requirement is to ensure that third parties cannot gain knowledge of the content of the meeting. As a practical matter, this is an obstacle that is difficult to overcome. As soon as individuals not entitled to participate enter the room, a meeting must theoretically be interrupted. This could be ensured by an assurance from the respective participant that no person enters the room or listens in in any way. It cannot be ruled out that in future, labour courts will increasingly have to rule on the regularity of the passing of resolutions and their legal validity.

4. Mandatory right of co-determination regarding mobile working arrangements

The co-determination of the works council regarding arrangements for mobile work is to be of decisive importance. In the case of mobile work, the employee's place of work is not fix, such as in the company or at home, but the employee is entitled to determine their place of work freely. The new co-determination provision is intended to expand the catalogue of section 87 (1) of the Works Constitution Act.

As it is, the introduction of any type of teleworking is already subject to co-determination rights (pursuant to section 87 (1) No. 1, No. 2, No. 3, No. 6 and No. 7 Works Constitution Act), irrespective of the new regulation. In addition, any subsequent assignment of the work location constitutes a transfer that is subject to co-determination (pursuant to section 99 (1) Works Constitution Act) if it is to last longer than one month. The same applies to mobile work. The new regulation would therefore only lead to an extension of co-determination and could otherwise be regarded as a catch-all provision with regard to the arrangement of mobile work. For example, the new co-determination provision will make the choice of location for mobile work subject to co-determination.

5. Perspective

If the bill is passed in its current wording during this legislative period, it is to be expected that the efforts of employees to establish a works council will tend to increase, particularly in small and medium-sized companies. The law would significantly lower the inhibition threshold for initiating works council elections.

In addition, the new right of co-determination regarding mobile work arrangements will become increasingly important in the flexibilization of workplaces in the coming years.

Although limited, there will still be opportunities to try to avoid the establishment of new works councils. However, it should be noted in this context that obstructing works council elections might represent a criminal offense (section 119 Works Constitution Act).