representing the workers’ interest in the german … · industry co-determination at...

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Hans Böckler Stiftung

Representing the workers’

interest in the German

industry

Co-determination

at establishment and

board level


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C o - d e t e r m i n a t i o n

Co-determination defines a set of rights that giveemployees the possibility of actively participating in theshaping of their working environment. This includeslegally stipulated Co-determination rights, company-internal agreements devised in conjunction with unioncontracts as well as informal determination possibilitiesthat have arisen from Co-determination practice.

The institutional core of Co-determination is the industrial constitution and corporate Co-determination.

§


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industry

Co-determination at

establishment level

Works Councils (WC)

. Basic features

. Rights

. Special tasks

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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

T R A D E U N I O N R I G H T S

AT E S TA B L I S H M E N T L E V E L

§§§. Right of Action

. German Constitution,Art. 9 sec. 3

. Right of Access

. Works Constitution Act(WCA)

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R I G H T S O F T U M E M B E R S

– F R E E D O M O F A S S O C I AT I O N –


§

. Collective Agreement

. Legal claim for TU members only

. Works Constitution

Act

. No restriction on TU members‘ activities

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V E RT R A U E N S L E U T E

– E L E C T E D W O R K P L A C E U N I O N R E P S –

. 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


C O - O P E R AT I O N B E T W E E N W C S A N D

T R A D E U N I O N S ( 1 )

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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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. 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)

WCA

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. Conciliation committee assessors (§ 76 WCA)

. WC appointed assessors may be TU officers

. Collective agreement monitoring (§ 80 (1) WCA)

. WC duty to ensure collective agreements areenforced

. 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 againstindividuals

WCA



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. 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

E L E C T I O N O F T H E W C

( B E T R I E B S R AT )

b a l l o t p a p e r✗

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W C M E M B E R S


. 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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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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G R O U P W O R K S C O U N C I L

( 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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C O - O P E R AT I O N B E T W E E N W C

A N D E M P L O Y E R


. General Co-operation

(§ 74 (1 and 2) WCA)

. Duty of information

. Industrial action ban

. Peace obligation

. Trusting Co-operation (§ 2 (1) WCA)

. “Spirit of mutual trust”


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W O R K S A G R E E M E N T S

( B E T R I E B S V E R E I N B A R U N G E N )


. 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


Works Councils (WC)

Rights[


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W O R K S C O U N C I L S ( W C ) R I G H T S

F O R M S O F PA RT 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

V E T O

O P P O S I T I O N

G I V E A D V I C E

R E C O M M E N D AT I O N

S U P E RV I S I O N

I N S P E C T I O N

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 RT I C I PAT I O N


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. Monthly meeting with employer

(§ 74 (1) WCA)

. Info from employer in good time

(§ 80 (2) WCA)

. Construction of works, working procedures andoperations (§ 90 (1) WCA)

. Manpower planning (§ 92 (1) WCA)

. Recruitment, regrading and transfer (§ 99 (1) WCA)

R I G H T T O I N F O R M AT I O N



R I G H T T O I N S P E C T D O C U M E N T S

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. Access to any documentation (§ 80 (2) WCA)

. Any time

. Includes payroll and salary of employees


R I G H T O F S U P E RV I S I O N

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. Legal and equitable treatment of all employees

(§ 75 (1) WCA)

. Acts and ordinances (§ 80 (1) WCA)

. Safety regulations

. Collective agreements

. Works agreements


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

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. Duty to make recommendations for the benefit

of establishment and staff (§ 80 (1) WCA)

. Examples:

. Smoking ban

. Canteen

. Information and communication

. Health promotion etc ...

X


R I G H T T O B E C O N S U LT E D

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. 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)

§


R I G H T T O A D V I S E

– E . G . M A N P O W E R P L A N N I N G –

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. 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)

?


R I G H T O F O P P O S I T I O N ( 1 )

– E . G . D I S M I S S A L –

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. 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


R I G H T O F O P P O S I T I O N ( 2 )

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. 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

§


R I G H T O F V E T O ( 1 )

– E . G . P E R S O N N E L M E A S U R E S –

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. Notification of intended measure

. Submission of appropriate documents

. Consent of WC sought

. WC discusses and passes a resolution


§


R I G H T O F V E T O ( 2 )

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. 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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. Consent of WC required (§ 87 WCA):

. Examples

. Order and operation of establishment andemployee conduct

. Working time, breaks and distribution ofworking hours

. Time, place and payment form of remuneration

. Protection of health and accident prevention

. Principles of leave arrangements andschedules

. Form, structure and administration of pension schemes

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 –

,,

0 1 2 3 4 5 6 7 8 9 10 11 12


R I G H T T O I N I T I AT E M E A S U R E S

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. Selection Guidelines (§ 95 (2) WCA) in

establishments with 1000 plus employees:

. Recruitment

. Transfer

. Regrading

. Dismissal

. No agreement:

Conciliation Committee decides


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 –

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. 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


Works Councils (WC)

Special Tasks[


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 )

( § 8 7 W C A )

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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 –

R

R

R

Operation of the Establishment

Technical Devices

for Employee Performance Monitoring

Suggestion Schemes

in the Establishment

Distribution

of Working Hours

Establishment

of Leave Arrangements

Form and Structure

of Social Services

Temp. Reduction or Extension

of Normal Working Hours

Company-owned

Housing

Remuneration arrangements

in the establishment

Time, Place & Form

of Payment of Remuneration

Health and Safety

Arrangements

Fixing

of Bonus Rates


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 )

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. 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


F I N A N C E C O M M I T T E E ( 1 )

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§

. 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


F I N A N C E C O M M I T T E E ( 2 )

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. 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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Y

H E A LT H A N D S A F E T Y AT W O R K ( 1 )

– W C R I G H T S –

YYYYYYY

. Statutory Protection

. Right to Information (§ 80 (1) WCA)

. Right of Co-determination (§ 87 (1) No7 WCA)

. Additional Regulations (§ 88 No1 WCA)

. Right of Supervision (§ 89 WCA)

. Autonomous Protection

. Right to Initiate Measures (§ 80 (1) No2 WCA)

. Right of Co-determination (§ 91 WCA)



– R O L E O F W C –

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Y

. 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

R


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Manpower

Planning

Implications

Hazards for Life

and Health

Conduct and

Performance

Monitoring

Retraining and

Further Training

Transfer of

Employment

Info § 92 (1) WCA Consultation

§§ 96,97 WCA

Co-determination

§ 87 (1) No 7 WCA

Co-determination

§ 87 (1) No 6 WCA

Co-determination

§ 98 WCA

Veto

§ 99 WCA


– E . G . C R E AT I O N O F C O M P U T E R

S C R E E N W O R K P L A C E S –

.

.

.

.

.

LH


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. Established in companies with 20 plus

employees


– H E A LT H A N D S A F E T Y C O M M I T T E E –

. Members:

. Employer

. Two WC Members

. Works‘ Doctor

. Health and Safety Experts

. Safety Representative(s)

Y


C O N C I L I AT I O N C O M M I T T E E ( 1 )

( E I N I G U N G S S T E L L E )

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. 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


C O N C I L I AT I O N C O M M I T T E E ( 2 )

– T H E H E A R I N G –

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. 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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industry

Co-determination

at board level


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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: . . .

L E G A L F O U N D AT I O N S


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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 )

T H E B O A R D O F M A N A G E M E N T

Manages the company, plans, coordi-

nates and supervises the company’s

activities.

T H E S U P E RV I S O RY B O A R D

. Appoints and monitors the Board of

Management

. Possesses rights of information and audit

. Can also have the right to approve

business decisions

T H E G E N E R A L M E E T I N G O F

S H A R E H O L D E R S

. 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 in-

corporation and disposal of profits


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C O M P O S I T I O N A C C O R D I N G T O C O A L A N D S T E E L

C O - D E T E R M I N AT I O N L AW 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 )

( 1 9 8 5 V E R S I O N )

B o a r d o f

M a n a g e m e n t

P e r s o n n e l

D i r e c t o r

G e n e r a l

M e e t i n g o f

S h a r e h o l d e r s

2 p r o p o s a l s Tr a d e u n i o n r i g h t o f

o b j e c t i o n

3 p r o p o s a l s

Wo r k s

C o u n c i l sTr a d e U n i o n

E l e c t o r a lb o d i e s

S u p e r v i s o r yb o d y

C o m p a n y m a n a -g e m e n t

B l o c k i n g m i n o r i t y

..

.

.

.

S u p e r v i s o r y B o a r d


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C o m p a n y

e m p l o y e e s

..


C O M P O S I T I O N A C C O R D I N G T O 1 9 5 2 I N D U S T R I A L

C O N S T I T U T I O N L AW




B o a r d o f

M a n a g e m e n t


G e n e r a l

M e e t i n g o f



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Tr a d e U n i o n

..

.

.

.

. .


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

D e l e g a t e s ‘ a s s e m b l y / E m p l o y e e s

Manageria lemployees

White-col larworkers

Blue-col larworkers

E l e c t o r a l p r o p o s a l sD e l e g a t e s

. . . .

C V C




B o a r d o f

M a n a g e m e n t

P e r s o n n e l

D i r e c t o r


G e n e r a l

M e e t i n g o f



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O V E RV I E W O F R I G H T S A N D D U T I E S

1 . A P P O I N T M E N T O F M E M B E R S O F B O A R D O F

M A N A G E M E N T

The Supervisory Board appoints the members of theBoard of Management. Every Board member (includingthe Personnel Director – but see special procedural pro-visions for coal and steel industries) is appointed onthe basis of a majority decision.

2 . M O N I T O R I N G O F B O A R D ’ S M A N A G E M E N T O F T H E

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 theBoard of Management. The latter is obliged to informthe 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 RV I S O RY B O A R D A P P R O VA L

The Supervisory Board can decide that certain im-portant business operations require its approval. If the Supervisory Board withholds approval, the Share-holders’ Meeting can if requested by the board ofmanagement reverse this decision, but only with a 75% majority vote.


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4 . S C R U T I N Y O F A N N U A L A C C O U N T S

The Supervisory Board scrutinises the annual accounts,the annual report and the proposals for disposal of pro-fits. It commissions an auditor who draws up a finalreport on its behalf.

5 . D U T Y O F C A R E A N D C O N F I D E N T I A L I T Y

The Supervisory Board and every member thereof isbound by the duty of care of any properly authorisedsupervisor. Confidentiality has to be maintained on mat-ters 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 -

V I S O RY B O A R D

These should not be perceived as isolated represen-tatives – they work in close collaboration with themembers of the Works Councils and the trade unionsrepresented within the company / group. They can also elucidate the problems related to their work to the workforce in general.


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A N N E X

F U RT 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 . A P P O I N T M E N T O F M A N A G E M E N T

The Supervisory Board appoints the members of the Board of Managementfor a fixed period of time and is also responsible for the employment con-tracts (salary) and the size of top management.

Every Board member is appointed on the basis of a majority decision. In thespheres covered by the Coal and Steel Industry Co-determination Act and the1976 Act, a so-called Personnel Director has to be appointed. In the Coal andSteel Industry this cannot occur against the votes of a majority of the work-force representatives on the Supervisory Board, so in effect the trade unionrepresentatives on the Supervisory Board have a right of nomination in thisrespect. In the case of the Co-determination Act 1976, the first vote has toproduce a two-thirds majority in the case of all managerial appointments. Ifthis is not forthcoming, the matter goes to arbitration by a committee basedon equal representation. In practice, therefore, decisions on such matters areagain made on a consensual basis.

2 . M O N I T O R I N G O F T H E B O A R D ’ S M A N A G E M E N T O F T H E

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 latteris obliged to inform the Supervisory Board on business policy and other basicaspects of corporate planning at least once a year and to provide informationon business operations on a regular – at least quarterly – basis. This shouldnot only occur within the framework of meetings (minimum number of mee-tings varies from 2 to 4 – with a minority right to special meetings) but also inother contexts. The Supervisory Board and individual members (with thesupport of one other), can request further information required for the pur-poses of monitoring and discussion.

The Supervisory Board as a whole can also decide to launch investigationseither by individual members or by experts.


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 RV I S O RY 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 impor-tant 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 theSupervisory Board. The Board of Management may not then undertake suchactivities without the approval of the Supervisory Board. It is thus possible, viadiscussion, to exert an influence on company policy. This is one of the reasonswhy, in practice, disagreements can occur over such lists and the latter some-times display inadequacies. If the Supervisory Board withholds approval, themeeting of shareholders can reverse this decision but only by a 75% majorityvote.

4 . S C R U T I N Y O F A N N U A L A C C O U N T S

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 theseto 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 reportsduring 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 ofShareholders about the manner and extent to which it has scrutinised the mana-gement of the company’s business operations during the business year.

In public limited companies, the Board of Management and the Supervisory Boardcan jointly approve the annual accounts. This means that the accounts have thenbeen certified and the Meeting of Shareholders can only make decisions regardingdisposal of the net profit for the year.

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A N N E X



5 . D U T Y O F C A R E A N D C O N F I D E N T I A L I T Y

The Supervisory Board and every member thereof is bound by the duty of careof any properly authorised scrutineer. By the nature of things, the different ori-gins 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 bymanagement and their implementation within the company (especially withregard 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 itscompetitors and not to isolate the employee representatives on the SupervisoryBoard.

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 RV I S O RY

B O A R D

The individuals elected to represent the workforce on a body within an incor-porated firm clearly have a special role allocated to them. But there is no suchthing 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 com-patible, provided there is a proper and timely flow of information. This includesthe workforce representatives on the Supervisory Board regarding themselves as part of the system of employee participation. Work on the Supervisory Boardshould be linked to the activities of the Works Council members and carried outin 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 itdoes not conflict with their duty of confidentiality.

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A N N E X


representing the workers’ interest in the german … · industry co-determination at...

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