Germany: New works constitution Act enters into force

The new provisions, in the form of amendments to the works constitution Act (Bundesverfassungsgesetz) were passed by the lower house of the German parliament on 22 June. The amendments came into force on 28 July. The impetus for amending the law came from the government - unveiling the draft proposals in December 2000, labour minister Walter Riester stated that he wished to make German legislation regulating co-determination at the workplace "fit for the future". The amendments concentrate on modernising existing structures, including the simplification of elections to works councils, increasing the size of works councils, extending the rules governing works councils officials and widening the powers of works councils in some areas.

In the months that followed the initial publication of the draft proposals, an intense debate was held between all interested parties. Trade unions broadly welcomed the modernisation proposals, although they felt that they did not go far enough in some areas, such as employment security, extension of co-determination rights and veto rights (in the case of fixed-term contracts) and the simplification of election procedures. Employers, on the other hand, were less positive, maintaining that the proposed amendments would increase costs for business. They were particularly concerned about the lowering of the workforce size threshold for the mandatory creation of a full-time works councillor's post from 300 to 200 employees.

The text, which was adopted on 22 June, has been amended to reflect some of these debates and concerns, although it does not differ significantly from the original draft. As EIRR reported on the original proposals in some detail earlier this year, this feature concentrates on the main amendments to the text between the original draft and the final adoption.

Election and operation of works councils

Provisions aimed at simplifying the election to works councils and making it easier for them to function were at the heart of this reform. Much of the original amendments remain unchanged in the final text, although some revisions have taken place. For example, the provisions relating to the more flexible creation of works councils have been clarified. In the case of mergers and demergers, the former works council will remain in place for up to six months on a so-called transitional mandate (übergangsmandat) until a new works council has been set up.

In order to simplify election procedures, the amendments state that in companies of between five and 50 employees, a new, simplified procedure for the election of works councillors will be put in place. This will comprise two stages: the nomination of candidates by an electoral board, followed one week later by the secret and direct election of candidates. The final adopted text states that the social partners may also decide to put this procedure into place, by agreement, in companies of between 51 and 100 employees.

As originally proposed in the draft text, one election will take place for both blue- and white-collar workers, replacing the previous practice under which separate elections were held for both categories of worker. This single election practice will take place for the first time during the works councils elections in 2002.

Further, if there is no works council in place in an undertaking, the group-level works council (Konzernbetriebsrat) may set up an electoral committee under the so-called mentoring principle.

The composition of works councils is enlarged and remains unchanged between the draft and the final text. Under the amended provisions, employee representative structures range from one person in companies of between five and 20 people, to 35 people in companies of between 7,001 and 9,000 people.

Despite employer protests, the workforce size threshold at which a person may be released to carry out works councillor duties is reduced, as planned, from 300 to 200 employees. However, there have been changes to the original proposals relating to the subsequent workforce size thresholds for calculation of the number of full-time works councillors, lowering further the ratio of workforce to full-time works councillors for smaller companies. The table on p.28 shows the new provisions in detail. As in the draft provisions, works councillor posts may be filled on a part-time basis, which means that this opportunity can be taken up by part-time employees or by those who wish to dedicate half of their working time to these duties.

In order to ensure that works councils are not overburdened, they may delegate some of their tasks to working groups by agreement. The workforce size threshold at which this will be possible has been changed between the draft and final provisions, from 50 to 100 employees. The final provisions also tighten up on the protection of employee representatives. The consent of the works council will be required not only if a works councillor is dismissed, but also if they are to be transferred.

Co-determination rights

Most of the extended rights given to works councils in the original draft proposals remain unchanged. However, rights have been strengthened in some areas. Works councils are now given co-determination rights over the provision of training in the case of a potential lack of qualified personnel in the undertaking, within the context of safeguarding employment, acknowledging a key union concern. In the case of structural changes to the business, the works council will in the future have a right, in companies of more than 300 workers, to avail of the services of an expert without the prior consent of the employer.

One further innovation is a provision to the effect that if at least 5% of the workforce wishes the works council to examine a specific issue, it must do so. This provision is designed to increase employees' involvement in the works council.

Participation of women and other employee groups

Within the framework of encouraging the participation of women in works council work, the final adopted text states that part-time female works council members will not be obliged to carry out duties in their own time. This acknowledges the fact that this was often the case prior to these reforms. The final text also contains an amended provision stating that the underrepresented sex in the firm must in future be represented proportionately in the works council. This provision replaces the original draft provision, which applied specifically to women. However, this final provision is likely to affect women to a greater extent than men.

The measures aimed at integrating foreign workers into the workforce and works councils have been strengthened. The final text states that the works council has the power to block the recruitment or transfer of an individual displaying racist tendencies, and also has the power to request the removal of an individual worker on the basis of racist actions.

Reactions

Labour minister Walter Riester has expressed his satisfaction with the new legislation. He maintained that the government has been able to put into place a modern framework for employee representation at the workplace which addresses a range of current workplace developments, including the needs of part-time workers. He added that the new legislation was important in ensuring the continuation of industrial peace and will be instrumental in creating a successful economic base and a motivated workforce.

Trade unions have broadly welcomed the finalised text of the law, acknowledging that some changes have been made which reflect union views and concerns. In particular, unions have welcomed the strengthened provisions encouraging the participation of women and the new provisions relating to co-determination in the area of training in the context of job security. The provision allowing simplified works councils elections to be held by agreement in companies of between 51 and 100 people has also been praised by trade unions. However, there were some criticisms. Michael Sommer, deputy chair of the service sector union ver.di, now Germany's largest trade union, stated that the provisions obliging works councils to elect members according to the proportions of certain categories of worker in the workforce mean that "the works council will not be able to elect members solely on the basis of competence". Mr Sommer also complained that the new provisions will be ineffective against what his union sees as the widespread misuse of fixed-term contracts.

However, the central German employers' organisation BDA characterised the new provisions as "an additional burden for German businesses and for the labour market". BDA president Dieter Hundt stated his concern that the new law would increase costs for small and medium-sized businesses in particular, rather than create more flexibility and room for manoeuvre, as the employers had originally hoped. Mr Hundt also warned that the new law would act as a deterrent for new investment in Germany, particularly from abroad, and called on the government to amend the legislation within the ongoing reform of legislation governing the operation of the labour market.