Representing the workers’
interest in the German
industry
Co-determination
at establishment and
board level
Hans Böckler
Stiftung
Folie
1
Co-determination
Co-determination defines a set of rights that give
employees the possibility of actively participating in the
shaping of their working environment. This includes
legally stipulated Co-determination rights, companyinternal agreements devised in conjunction with union
contracts as well as informal determination possibilities
that have arisen from Co-determination practice.
The institutional core of Co-determination is the
industrial constitution and corporate Co-determination.
§
Hans Böckler
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2
Representing the workers’
interest in the German
industry
Co-determination at
establishment level
Works Councils (WC)
. Basic features
. Rights
. Special tasks
Hans Böckler
Stiftung
Folie
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Co-determination
at establishment level
[
Works Councils (WC)
Basic features
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
TRADE UNION RIGHTS
AT E S TA B L I S H M E N T L E V E L
. Right of Action
. Right of Access
. German Constitution,
Art. 9 sec. 3
. Works Constitution Act
( WCA )
§
§
§
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
RIGHTS OF TU MEMBERS
– F R E E D O M O F A S S O C I AT I O N –
. Collective Agreement
. Works Constitution
Act
. Legal claim for
TU members only
. No restriction
on TU members‘
activities
§
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
VERTRAUENSLEUTE
– ELECTED WORKPLACE UNION REPS –
. Nominate candidates for the WC
. Elect reps for other TU committees
. Communicate between WC and workforce
. Mediate between and advise workforce,
WC and TU
. Possess no legal rights or duties
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
C O - O P E R AT I O N B E T W E E N W C S A N D
TRADE UNIONS (1)
WCA
. Right of Access (§ 2 (2) WCA)
. TU officers granted access to establishment
. Employer must be notified in advance
. Dereliction of statutory duties (§ 23 WCA)
. Application to Labour Court for:
. Dissolution of WC for grave neglection of duties
. Order for employer to cease certain acts
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
C O - O P E R AT I O N B E T W E E N W C S A N D
TRADE UNIONS (2)
WCA
. Attendance at WC meetings (§ 31 WCA)
. TU officers may attend if WC members agree
. WC notifies TU of agenda in good time
. Attendance at work meetings (§ 46 WCA)
. TU officers entitled to attend in advisory capacity
. Written notification of date, time and agenda
of meeting
. Collective bargaining policy may be discussed
(§ 45 WCA)
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
C O - O P E R AT I O N B E T W E E N W C S A N D
TRADE UNIONS (3)
WCA
. Conciliation committee assessors (§ 76 WCA)
. WC appointed assessors may be TU officers
. Collective agreement monitoring (§ 80 (1) WCA)
. WC duty to ensure collective agreements are
enforced
. Experts (§ 80 (3) WCA)
. WC may call in experts (including TU officers)
. Obstructing election/work of WC (§ 119 WCA)
. TU or WC may instigate legal proceedings against
individuals
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
ELECTION OF THE WC
( B E T R I E B S R AT )
. WC elected by all employees at the
establishment
. Number of employees determines WC size
. If there are 9 or more WC members –
Plant Committee may be set up by WC
. Other committees may be established
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✗
llo
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pa
pe
r
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
WC MEMBERS
. Equal rights
. One person, one vote
. Perform duties free of charge
. Enjoy special protection e.g. against dismissal
. Elect chairperson & vice-chairperson
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
C O M PA N Y W O R K S C O U N C I L
( G E S A M T B E T R I E B S R AT )
. Established in companies with 2 or more WCs
. Equal status with individual WCs
. Deals with matters affecting company as a
whole or more establishments
(no higher organ)
. Votes weighted according to number of
employees in establishment
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
GROUP WORKS COUNCIL
( K O N Z E R N B E T R I E B S R AT )
. Established (optional) by resolutions
of WCs within group
. No hierarchical WC structure
. Deals with matters which CWC are unable
to settle
. Votes weighted according to number of
employees in company
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
C O - O P E R AT I O N B E T W E E N W C
AND EMPLOYER
. Trusting Co-operation (§ 2 (1) WCA)
. “Spirit of mutual trust ”
. General Co-operation
(§ 74 (1 and 2) WCA)
. Duty of information
. Industrial action ban
. Peace obligation
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W O R K S C O U N C I L S ( W C ) B A S I C F E AT U R E S
WORKS AGREEMENTS
( BETRIEBSVEREINBARUNGEN )
. Mandatory and directly applicable
. Waiving of rights only with WC agreement
. Enforceable Agreements
. E.g. Co-determination in social matters
(§ 87 WCA)
. Voluntary Agreements
. Other areas of WCA (§ 88 WCA)
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Co-determination
at establishment level
[
Works Councils (WC)
Rights
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WORKS COUNCILS (WC) RIGHTS
F O R M S O F PA R T I C I PAT I O N
O B L I G AT I O N T O A G R E E
I N I T I AT I O N
N E G O T I AT I O N
VETO
OPPOSITION
GIVE ADVICE
R E C O M M E N D AT I O N
SUPERVISION
INSPECTION
I N F O R M AT I O N
§
E X T E N T A N D S T R E N G T H O F PA R T I C I PAT I O N
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WORKS COUNCILS (WC) RIGHTS
R I G H T T O I N F O R M AT I O N
. Monthly meeting with employer
(§ 74 (1) WCA)
. Info from employer in good time
(§ 80 (2) WCA)
. Construction of works, working procedures and
operations (§ 90 (1) WCA)
. Manpower planning (§ 92 (1) WCA)
. Recruitment, regrading and transfer (§ 99 (1) WCA)
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WORKS COUNCILS (WC) RIGHTS
RIGHT TO INSPECT DOCUMENTS
. Access to any documentation (§ 80 (2) WCA)
. Any time
. Includes payroll and salary of employees
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WORKS COUNCILS (WC) RIGHTS
RIGHT OF SUPERVISION
. Legal and equitable treatment of all employees
(§ 75 (1) WCA)
. Acts and ordinances (§ 80 (1) WCA)
. Safety regulations
. Collective agreements
. Works agreements
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WORKS COUNCILS (WC) RIGHTS
R I G H T T O M A K E R E C O M M E N D AT I O N S
. Duty to make recommendations for the benefit
of establishment and staff (§ 80 (1) WCA)
. Examples:
. Smoking ban
X
. Canteen
. Information and communication
. Health promotion etc ...
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WORKS COUNCILS (WC) RIGHTS
R I G H T T O B E C O N S U LT E D
. Consultation before every dismissal
(§ 102 (1) WCA)
. Information on reason for dismissal
. Dismissal without consulting WC is null and void
. Consultation before every new employment
(§ 99 (1) WCA)
§
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WORKS COUNCILS (WC) RIGHTS
RIGHT TO ADVISE
– E.G. MANPOWER PLANNING –
. Employer notifies WC (§ 92 (1) WCA)
about:
. Present and future manpower needs
. Vocational training measures
. Resulting staff movements
. WC recommendations on introduction and
implementation (§ 92 (2) WCA)
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WORKS COUNCILS (WC) RIGHTS
RIGHT OF OPPOSITION (1)
– E.G. DISMISSAL –
. Consultation before every dismissal
. Who, when and why
. Consideration of social matters
. WC objection to routine dismissal
. Written notification within one week
. WC objection to exceptional dismissal
. Written notification within three days
?
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WORKS COUNCILS (WC) RIGHTS
RIGHT OF OPPOSITION (2)
. Grounds for WC opposition (§ 102 (3) WCA):
. Insufficient regard for social aspects
. Non-observance of selection guidelines
. Job transfer within company possible
. Re-training or further training possible
. Contractual change with agreement of employee
§
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WORKS COUNCILS (WC) RIGHTS
RIGHT OF VETO (1)
– E.G. PERSONNEL MEASURES –
. Notification of intended measure
. Submission of appropriate documents
. Consent of WC sought
. WC discusses and passes a resolution
§
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WORKS COUNCILS (WC) RIGHTS
RIGHT OF VETO (2)
. WC notifies employer in writing within one
week of refusal/consent
. Measure carried out with WC consent
. Refusal of consent only if § 99 (2) 1-6 WCA is
fulfilled
. Labour Court decision in lieu of WC consent
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WORKS COUNCILS (WC) RIGHTS
R I G H T T O N E G O T I AT E
– E . G . S O C I A L M AT T E R S –
. Consent of WC required (§ 87 WCA):
. Examples
. Order and operation of establishment and
employee conduct
. Working time, breaks and distribution of
working hours
. Time, place and payment form of
remuneration
. Protection of health and accident prevention
. Principles of leave arrangements and
schedules
,
. Form, structure and administration of
pension schemes
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WORKS COUNCILS (WC) RIGHTS
R I G H T T O I N I T I AT E M E A S U R E S
. Selection Guidelines (§ 95 (2) WCA) in
establishments with 1000 plus employees:
. Recruitment
. Transfer
. Regrading
. Dismissal
. No agreement:
Conciliation Committee decides
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WORKS COUNCILS (WC) RIGHTS
O B L I G AT I O N T O A G R E E
– E . G . C O M PA N Y C H A N G E –
. WC informed of proposed company changes
(§ 111 (1-5) WCA)
. Reconciliation of Interests and establishment
of Social Compensation Plan (§112 WCA)
. Enforceable agreement on SCP
(restricted by § 112a WCA)
. Info and negotiation:
implementation of change
. No agreement:
Conciliation Committee (§112 (4) WCA)
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Co-determination
at establishment level
[
Works Councils (WC)
Special Tasks
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
C O - D E T E R M I N AT I O N I N
S O C I A L M AT T E R S ( 1 )
(§ 87 WCA)
Operation of the Establishment
Distribution
of Working Hours
R
Technical Devices
for Employee Performance
Monitoring
Establishment
of Leave Arrangements
Suggestion Schemes
in the Establishment
Form and Structure
of Social Services
Temp. Reduction or Extension
of Normal Working Hours
Time, Place & Form
of Payment of Remuneration
Company-owned
Housing
Health and Safety
Arrangements
Remuneration arrangements
in the establishment
Fixing
of Bonus Rates
R
R
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
C O - D E T E R M I N AT I O N I N
S O C I A L M AT T E R S ( 2 )
. Negotiation between WC and employer:
. “Spirit of mutual trust“
. “Earnest desire to reach agreement”
. Agreement:
. Works Agreement (§ 77 WCA)
. No agreement:
. Decision of Conciliation Committee
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
FINANCE COMMITTEE (1)
. Established in companies with 100 plus
permanent employees (§ 106 (1) WCA)
. Members appointed and removed by WC or
CWC (§ 107 (2) WCA)
. Members must be company employees
. Monthly meeting with employer
. Access to documents and consultation of
experts
. Committee reports to WC
§
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
FINANCE COMMITTEE (2)
. Employer informs FC about economic
and financial matters.
Examples (§ 106 (3) WCA):
. Company‘s economic and financial situation
. Production techniques and working methods
. Any reduction of operations or closures
. Amalgamations or the divison of companies
. Any change in company objectives
. FC has to inform the WC
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
H E A LT H A N D S A F E T Y AT W O R K ( 1 )
– WC RIGHTS –
. Statutory Protection
Y
. Right to Information (§ 80 (1) WCA)
. Right of Co-determination (§ 87 (1) No7 WCA)
. Additional Regulations (§ 88 No1 WCA)
. Right of Supervision (§ 89 WCA)
YYYYYYY
. Autonomous Protection
. Right to Initiate Measures (§ 80 (1) No2 WCA)
. Right of Co-determination (§ 91 WCA )
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
H E A LT H A N D S A F E T Y AT W O R K ( 2 )
– ROLE OF WC –
. Offer suggestions, advice and information
(§ 89 (1) WCA)
. Right of access to whole establishment
. Right to undertake unannounced spot checks
. Participation in employer inspections and
Health and Safety issues
Y
R
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
H E A LT H A N D S A F E T Y AT W O R K ( 3 )
– E . G . C R E AT I O N O F C O M P U T E R
SCREEN WORKPLACES –
Manpower
Planning
Implications
. Info § 92 (1) WCA
Consultation
§§ 96, 97 WCA
Hazards for Life
and Health
. Co-determination
§ 87 (1) No 7 WCA
Conduct and
Performance
Monitoring
Co-determination
. § 87 (1) No 6 WCA
Retraining and
Further Training
. Co-determination
§ 98 WCA
Transfer of
Employment
. Veto
§ 99 WCA
L
H
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
H E A LT H A N D S A F E T Y AT W O R K ( 4 )
– H E A LT H A N D S A F E T Y C O M M I T T E E –
. Established in companies with 20 plus
employees
. Members:
. Employer
. Two WC Members
. Works‘ Doctor
. Health and Safety Experts
Y
. Safety Representative(s)
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
C O N C I L I AT I O N C O M M I T T E E ( 1 )
(EINIGUNGSSTELLE)
. Purpose to settle WC/employer differences
(§ 76 (1) WCA)
. WC and employer appoint assessors
(§ 76 (2) WCA)
. Equal number
. Agreed independent chairperson or Labour
Court decision for that person
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W O R K S C O U N C I L S ( W C ) – S P E C I A L TA S K S –
C O N C I L I AT I O N C O M M I T T E E ( 2 )
– THE HEARING –
. Objective: Voluntary agreement through
discussion
. Simple majority vote (without Chairperson)
. Written decision binding for both parties
. No agreement:
. Discussion resumed
. Chairperson participates in subsequent vote
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Representing the workers’
interest in the German
industry
Co-determination
at board level
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Stiftung
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L E G A L F O U N D AT I O N S
Corporate Co-determination is based on three laws:
. The Coal and Steel Industry Co-determination Law
of 1951;
. the Industrial Constitution Law of 1952 and
. the Co-determination Law of 1976.
In the last analysis, the legislation applicable to public
limited companies is relevant. The respective legislation
is illustrated in the following overview:
...
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C O R P O R AT E L E G A L S T R U C T U R E S
A C C O R D I N G T O T H E G E R M A N S T O C K C O R P O R AT I O N
L AW ( A K T G )
THE BOARD OF MANAGEMENT
Manages the company, plans, coordinates and supervises the company’s
activities.
THE SUPERVISORY BOARD
.
.
.
Appoints and monitors the Board of
Management
Possesses rights of information and audit
Can also have the right to approve
business decisions
THE GENERAL MEETING OF
SHAREHOLDERS
.
.
.
Elects representatives of the shareholder
side to sit on the Supervisory Board
Formally approves the actions of the Board
of Management and the Supervisory Board
Makes decisions on the articles of incorporation and disposal of profits
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THE SUPERVISORY BOARD
COMPOSITION ACCORDING TO COAL AND STEEL
C O - D E T E R M I N AT I O N L A W O F 1 9 5 1
( M O N TA N M I T B E S T I M M U N G S G E S E T Z )
(1985 VERSION)
Board of
Management
Company management
Personnel
Director
Blocking minority
.
Supervisory Board
General
Electoral
bodies
Meeting of
.
Shareholders
.
2 proposals
Tr a d e u n i o n r i g h t o f
objection
.
Supervisory
body
Works
Councils
Tr a d e U n i o n
.
3 proposals
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THE SUPERVISORY BOARD
COMPOSITION ACCORDING TO 1952 INDUSTRIAL
C O N S T I T U T I O N L AW
Company management
Supervisory
body
Board of
Management
Electoral
bodies
.
.
Supervisory Board
General
Company
Meeting of
employees
Shareholders
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THE SUPERVISORY BOARD
C O M P O S I T I O N A C C O R D I N G T O 1 9 7 6 L AW O N
C O - D E T E R M I N AT I O N
Board of
Management
Company management
Personnel
Director
C
Supervisory
body
VC
.
.
Supervisory Board
.
.
.
.
Electoral
bodies
Delegates‘ assembly / Employees
.
.
General
.
Tr a d e U n i o n
Meeting of
Shareholders
Ma n a g e r i a l
e mp l o y e e s
White-collar
workers
Blue-collar .
workers .
Electoral proposals
Delegates
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THE SUPERVISORY BOARD
OVERVIEW OF RIGHTS AND DUTIES
1.
APPOINTMENT OF MEMBERS OF BOARD OF
MANAGEMENT
The Supervisory Board appoints the members of the
Board of Management. Every Board member (including
the Personnel Director – but see special procedural provisions for coal and steel industries) is appointed on
the basis of a majority decision.
2.
MONITORING OF BOARD’S MANAGEMENT OF THE
C O M PA N Y ’ S B U S I N E S S O P E R AT I O N S
The Supervisory Board has the task of monitoring the
Board of Management. The latter is obliged to inform
the Supervisory Board on business policy and
operations.
3.
C O - D E T E R M I N AT I O N O F B U S I N E S S O P E R AT I O N S
R E Q U I R I N G S U P E R V I S O R Y B O A R D A P P R O VA L
The Supervisory Board can decide that certain important business operations require its approval. If
the Supervisory Board withholds approval, the Shareholders’ Meeting can if requested by the board of
management reverse this decision, but only with a
75% majority vote.
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4.
SCRUTINY OF ANNUAL ACCOUNTS
The Supervisory Board scrutinises the annual accounts,
the annual report and the proposals for disposal of profits. It commissions an auditor who draws up a final
report on its behalf.
5.
DUTY OF CARE AND CONFIDENTIALITY
The Supervisory Board and every member thereof is
bound by the duty of care of any properly authorised
supervisor. Confidentiality has to be maintained on matters related to company secrets.
6.
W O R K F O R C E R E P R E S E N TAT I V E S O N T H E S U P E R VISORY BOARD
These should not be perceived as isolated representatives – they work in close collaboration with the
members of the Works Councils and the trade unions
represented within the company / group. They can
also elucidate the problems related to their work
to the workforce in general.
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ANNEX
F U R T H E R D E TA I L S
C O M PA N Y C O - D E T E R M I N AT I O N
1.
APPOINTMENT OF MANAGEMENT
The Supervisory Board appoints the members of the Board of Management
for a fixed period of time and is also responsible for the employment contracts (salary) and the size of top management.
Every Board member is appointed on the basis of a majority decision. In the
spheres covered by the Coal and Steel Industry Co-determination Act and the
1976 Act, a so-called Personnel Director has to be appointed. In the Coal and
Steel Industry this cannot occur against the votes of a majority of the workforce representatives on the Supervisory Board, so in effect the trade union
representatives on the Supervisory Board have a right of nomination in this
respect. In the case of the Co-determination Act 1976, the first vote has to
produce a two-thirds majority in the case of all managerial appointments. If
this is not forthcoming, the matter goes to arbitration by a committee based
on equal representation. In practice, therefore, decisions on such matters are
again made on a consensual basis.
2.
MONITORING OF THE BOARD’S MANAGEMENT OF THE
C O M PA N Y ’ S B U S I N E S S O P E R AT I O N S
The task of the Supervisory Board is to monitor the management. The latter
is obliged to inform the Supervisory Board on business policy and other basic
aspects of corporate planning at least once a year and to provide information
on business operations on a regular – at least quarterly – basis. This should
not only occur within the framework of meetings (minimum number of meetings varies from 2 to 4 – with a minority right to special meetings) but also in
other contexts. The Supervisory Board and individual members (with the
support of one other), can request further information required for the purposes of monitoring and discussion.
The Supervisory Board as a whole can also decide to launch investigations
either by individual members or by experts.
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ANNEX
F U R T H E R D E TA I L S
3.
B U S I N E S S O P E R AT I O N S R E Q U I R I N G S U P E R V I S O R Y B O A R D
A P P R O VA L
The Supervisory Board can draw up a list of business operations that are important for the company and which it has therefore decided will require its approval.
It is, however, not permitted for management activities to be transferred to the
Supervisory Board. The Board of Management may not then undertake such
activities without the approval of the Supervisory Board. It is thus possible, via
discussion, to exert an influence on company policy. This is one of the reasons
why, in practice, disagreements can occur over such lists and the latter sometimes display inadequacies. If the Supervisory Board withholds approval, the
meeting of shareholders can reverse this decision but only by a 75% majority
vote.
4.
SCRUTINY OF ANNUAL ACCOUNTS
The Supervisory Board scrutinises the annual accounts, the annual report and
the proposals for disposal of profits and has to provide a written report on these
to the shareholders’ meeting. To help it in this task it also commissions an auditor,
who draws up a report for the members of the Supervisory Board and reports
during the Supervisory Board meeting on the main results of his audit. The
profitability of the company also has to be discussed at this meeting.
In its report, the Supervisory Board also has to inform the General Meeting of
Shareholders about the manner and extent to which it has scrutinised the management of the company’s business operations during the business year.
In public limited companies, the Board of Management and the Supervisory Board
can jointly approve the annual accounts. This means that the accounts have then
been certified and the Meeting of Shareholders can only make decisions regarding
disposal of the net profit for the year.
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ANNEX
F U R T H E R D E TA I L S
5.
DUTY OF CARE AND CONFIDENTIALITY
The Supervisory Board and every member thereof is bound by the duty of care
of any properly authorised scrutineer. By the nature of things, the different origins of the members of the Supervisory Board mean that in practice there can
be disagreement on this. The same goes for the corporate goals pursued by
management and their implementation within the company (especially with
regard to human resources measures.)
Confidentiality has to be maintained on matters related to company secrets.
Properly interpreted, this is provision intended to protect the company from its
competitors and not to isolate the employee representatives on the Supervisory
Board.
6.
W O R K F O R C E R E P R E S E N TAT I V E S O N T H E S U P E R V I S O R Y
BOARD
The individuals elected to represent the workforce on a body within an incorporated firm clearly have a special role allocated to them. But there is no such
thing as „company interests“ which have priority above all else – and that is
why the interests of the employees are brought in here. In practice, the two
principles of co-operation and the representation of diverse interests can be compatible, provided there is a proper and timely flow of information. This includes
the workforce representatives on the Supervisory Board regarding themselves
as part of the system of employee participation. Work on the Supervisory Board
should be linked to the activities of the Works Council members and carried out
in collaboration with the trade unions represented within the company / group.
The employee representatives can and should elucidate the problems related
to their work to the workforce in general. This can be done in such a way that it
does not conflict with their duty of confidentiality.
Hans Böckler
Stiftung
Folie 53